Transcript - Appraisal Institute

You Might Adjust for That
Frank Lucco, SRA, CRP
Managing Director
Accurity Qualified Analytics
1004 FORM ADJUSTMENTS
Thinking Outside the Grid
ENERGY EFFICIENCY
Saving Energy: Inside and Out
• Solar panels aren’t always considered the
most aesthetically pleasing
• Solar shingles can also be used which have the
appearance of standard shingles but function
the same as large solar panels
• Spray foam insulation fills cracks and crevices
better than traditional fiberglass
Saving Energy: Inside and Out
• Energy-efficient HVAC systems with regular
maintenance will help cut down on energy
bills
• Smart appliances – fridge, washer, dryer – will
help save energy, water, and money
Photovoltaic Panels
• Photovoltaic (PV) systems convert sunlight directly into
electricity
• PV systems are most common in Arizona, California, and
Hawaii
• Approximately half a million homes use PV systems as a
source of power in the U.S., with about 32% of the total PV
systems in the U.S. added in 2013
Photovoltaic Panels
According to a December 2013 Lawrence Berkeley National
Laboratory study:
• $24,705
– Average price increase for homes sold with a typical 3.1kilowatt PV system
• $5,911
– Sale premium for each 1-kilowatt increase in generating
capacity
• $2,411
– Sale price decrease each year that a system ages
Light Bulbs
• Described by The Daily Green as “one of the
easiest changes someone can make, with
some of the quickest payback period and best
ROIs.”
• According to HGTV’s “Kitchen Cousins” – “the
two biggest savings are thermostats and light
bulbs.”
• Adding motion sensors or dimmer switches
can also decrease energy expenses
Windows
• Marvin, Anderson, Pella, Gulf Coast - $2,000
each
• No Name - $200 each
SMART HOME
Broadband Speeds
• Young people – this is a make or break feature
• Fiber optic, high speed, upload and download
speeds
Technology
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Media
Digital
Remote Control
Kitchen Equipment
Whole House Generator
EXTERNAL INFLUENCES
Nasty Neighbors
• Nasty neighbors can hurt home values by as
much as 10%-the New York Times
• A nasty neighbor, cranky neighbor or sloppy
neighbor can bring down property values and
it tends to be outside of your control
Schools
• Location in a good school district can be a
prime factor for families buying a home
• School district can be so important that many
families will take out riskier loans or otherwise
stretch their financial situation
• Owners may stay in homes long after they’ve
outgrown them to stay in desirable districts
Schools
• Sometimes buyers will pay more for a home in a
good public school district because it’s seen as
offsetting costly private school tuition
• According to a study by Zip Realty best property
values often correlate with the best school districts
• Strongest correlation was seen in cities like: Chicago,
Denver, Los Angeles, Orlando, Phoenix, Sacramento,
San Diego, San Francisco
Spite Houses
Generally built to annoy or as a form of protest
Dating back to the 1700s, reasons for spite
houses can include:
• Wreak havoc and protest local authorities
• Feuding neighbors
• Familial strife
Spite Houses
Aesthetic Protest
Purple House, Lubbock, TX
Equality House, Topeka, Kansas
Spite Houses
Obstruct neighbor’s
view
Skinny House,
Boston, MA
The Alameda Spite
House, Alameda, CA
Foreclosures
• Foreclosed properties can sit vacant for
extended periods of time, even years
• Sitting vacant, yards become overgrown,
houses fall into disrepair or can become
inhabited by stray animals or squatters
• If a neighborhood becomes increasingly full of
run-down foreclosed properties, the
neighborhood can become blighted
Foreclosures: Health Effects
• The stress of going through a foreclosure is selfevident, but what about living next to a foreclosed
home?
• A new study by the Harvard Center for Population
and Development Studies suggests living adjacent to
a foreclosure can elevate blood pressure
• Add another foreclosure within 100 meters and add
an additional 1.71 millimeters or mercury in systolic
blood pressure
Foreclosures: Health Effects
• The study also suggests not just blood pressure may
be impacted, but also increased alcohol consumption
and minimal weight gain - typical health effects of
stress
• Neighbors can become stressed, worrying that the
neighborhood may be in decline
• That stress can also increase when you’re living
within the 100 meters and trying to sell your own
home
Blight
• Generally characterized by neighborhood, city,
or other market area falling into disrepair,
decay, or deterioration
• Common in many cities across the country
and globally; especially common in areas still
suffering the effects of the Great Recession
• Blight is a common problem that may not
always have interested parties pursuing
solutions
Blight:
The Problem
Blight:
An Aesthetic Solution
A new company offers a novel
solution – life-size, realistic
decals of doors and windows
that can be adhered to plywood
ECONOMIC INCENTIVES
AND DISINCENTIVES
Economic Incentives
• Grants and tax break programs, particularly
for energy efficient improvements
• Grants for first-time home buyers and
affordable housing candidates
Economic Disincentives
• Increased flood insurance premiums
• Restrictions on rebuilding, renovating or
remodeling
• Property Taxes
HIGH END HOMES
High End Homes
• A study by Redfin and Grammarly suggests that
listings written in complete sentences and without
spelling or grammatical errors sell three days faster
and are 10% more likely to sell above the list price
• Elsie de Wolfe, credited by some as the inventor of
Interior Design as a profession, described moldings,
light-openings, door-handles and hinges as “the
unconsidered things that make or mar your house.”
One could surmise this is particularly true for high
end homes.
High End Homes: Over $20 million
• A study by Zillow indicates the median sale-tolist price ratio is 72% for homes listed at
$20 million or more
• According to Zillow’s analysis, approximately
50% of the homes demonstrated at least one
price change compared to 36% of inexpensive
homes
• Quantity and quality of comparable data often
leads pricing to be more of a “guessing game”
High End Homes
• Top important luxury features for both luxury
home owners and non-luxury home owners
are view and a chef's kitchen.
$20 million or more
• 40% of luxury homebuyers are willing to go
over their budget as opposed to 29% of nonluxury homebuyers
LISTINGS
Technology
• Smart phone technology has put the power to
search, view, and even buy homes, literally in
the buyer’s hands
• Instead of pre-recorded virtual tours online, a
video call can give a buyer a real-time video
tour
Technology
• A study by Realtor.com shows that more than
50% of all listing page views happen on a
mobile device
• Users on mobile devices on average submit
five times as many inquiries as Web users
What's a word worth?
• According to an article in the Wall Street
Journal there is a 1% increase on average, in
the sale price when positive opinion words are
added to a listing, according to a study:
• Words like beautiful and fabulous can boost
the sales price
Selling Turnkey Properties
• According to zip Realty a turnkey sale
describes selling a property that doesn't
require any major repairs or renovations
• Nationwide, listings billed as turnkey are 3.1%
more expensive than listings without the term
Turning off buyers
• Biggest mistake is not getting the home in the
best possible condition
• Various odors, outdated fixtures and
appliances, displaying personal items and
having sellers hang around the house during
the showing along with poor curb appeal and
clutter can have a disastrous outcome on the
potential offers.
Bless Our Happy Home Sale: St.
Joseph Statues
• According to an article in the Wall Street
Journal from 2009 to 2010, when home prices
were stagnant, the number of sales of St.
Joseph statues slightly more than doubled
• When home sale prices began to creep back
up, St. Joseph statue sales dropped
A Whiff of “Welcome Home"
• Buying real estate involves a lot of factors:
location, price, etc., but how about smell?
• Developers are creating custom scents to sell
high end luxury condos, this goes well beyond
baking fresh cookies or a loaf of bread
• Should there be a scent dispensing machine in
your condo project?
Bidding for a House: Strategies
That Win
• According to national real estate brokerage
Redfin, 44% of winning offers were all cash–
making that one of the most successful ways
to come out of it ahead of others
• Other successful strategies include waiving
appraisals, inspections and submitting a
personalized cover letter
Word Play for Agents-WSJ
• Using local terms sells real estate
• According to Redfin, local customs are
important, replacing stove with range, powder
room with half-bath and study with office can
make a big difference if those terms are
common and customary for your region
How a Dual Agent Affect’s Sales
Price
• Dual agency sales that occur in the first 30
days of a listing contract sell for a roughly 18%
premium because agents may be able to more
efficiently match the property with the right
buyer if they search within their own network
• On the other hand dual agency sales in the
last 30 days of a listing contract sell at about
6% discount
The New Old Home
• Psychic comforts of yesterday-selling the new
old home
• Selling a new authentic old house can be seen
as a psychic comfort of yesterday, a concept of
the past that's happier and less disposable
than life in 2014. Supposedly, people have this
visceral memories of their grandmothers
house. Memories are an underrated idea in
terms of making people feel comfortable
Staging Your House for a Quick
Sale
• According to a real estate agent with Martha
Turner Properties, the interior of the home
needs to be de-cluttered and re-arranged for
maximum space and light. You may need to
rearrange furniture and pack up some
personal belongings
The Popularity of Trees
• According to a recent article over 5% of
current listings in the US are on streets with
tree names. Median listing price of homes on
Oak Street is $187,000 for Cherry Street is
$169,900
• Homes with actual trees can boost the sale
price of a property
The Popularity of Trees
• Research done recently found that homes
with street trees sold for $7,130 more on
average and 1.7 days quicker then houses
without trees planted between the sidewalk
and the street.
Tricks
• As of May, a Redfin study of 37 major metropolitan
markets showed that 58% homes sold above list
price when there was a published offer deadline
• The same study also indicated DOM averaged 31
days compared to 61 days on listings without
published deadlines
• Deadlines can push buyers who are on the fence or
otherwise delaying to make a decision and take
action
Pets
• Pet odors are an obvious turn-off, but even
just the presence of an animal at a showing
can turn away buyers
• For stubborn sellers who do not heed their
agent’s advice, it is crucial that the listing
provides that an animal is on-site.
• Agents also suggest another reminder at the
door or other clearly visible location before a
showing
Pets
• Pets are a distraction: from buyers wanting to
pet them to being afraid to barking
• Barking, or any loud noises, can impede
discussion and viewing making it difficult to
focus on the positive aspects of the home
• Remove evidence of pets from the home for
best results – from the usual bedding, bowls,
and toys to photos and refrigerator magnets
Buyers Personality
• Know the buyer's personality as it can impact
the final negotiation and price
• Aggressive-procrastinator-perfectionistinvestor
Photos
• Everyone knows a picture is worth a thousand
words; this is especially true for home listings
• Brokers may spend hundreds of dollars for
high-end photography to set off their listing
• In the hottest markets, where buyers can
make offers without even seeing the home,
photos become even more important than
usual
Photos
• The best photographers make the home look
even better in pictures than in person
• Photographers will get the frame just right,
avoiding power lines just above the roof for
example
• Dusk or twilight shots can be popular
favorites, with some photographers calling it
“the magic hour”
Photos
• Similar to pets, personal belongings in the
home can distract buyers and have them
thinking more about the homeowners than
the home
• Photographers may add a blue sky in the
background if it was cloudy or replace the
brown grass with green
• While they often use tricks, it should never
rise to deception
VIEWPOINTS