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Expert mortgages: Home Price Trends

Where are the values coming home? Â Â Do real estate pros and Economists inside the fairing â € "and they arena equitable € ™ t? Â Â Â Â â € | Â € | â € | not exactly.

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A number of organizations to compile and analyze Data on the value of homes – often including projections about where prices are headed. For the best possible information for use in mortgages and investment, WEA € â„¢ ve examined a large number of these reports. They usually belong to one of two broad categories, each containing a critical flaw:

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1)      Real estate agents, builders, bankers, mortgage and other interest group â € € œspecial have their own They produce full-time economists. compilations of data and projections on home values and market activity.

     flaw:  Itâ € ™ s biased information. those whose livelihood is directly

     The inked for the number of homes sold have a direct interest in always predict-

     ING values. positive outlook for the home during the market's most inflated

     in our lives, the 2006-2007 housing boom, real estate brokerage € ™ sa industria

     Economist Key informants indicated that the market was stable and no price decrease

1. Tips doesnâ € ™ t be worse than that! Â Â Â

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2) Â Â Â Â Â legitimate research of economists, data providers and government

bodies: a This research tends to be a wider range of sources. These vendors are simply selling their research, (rather than influence buyers) so they tend to give non-biased conclusions on data.Â

major flaw:  The majority of data and analysis available from these suppliers consists of statistics for a whole county, city or postal code, and not a specialized marketa area. Imagine your own zip code â € "if a number of homes priced below happened to sell in a given country period, the sales price of € € œaverage for your area would

be artificially low, failing to include more expensive homes that donâ € ™ t reach sell.Â

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For lenders and real estate investors, this doesnâ € ™ t work.A Given the importance of knowing where a market happens, WEA need accurate, objective information on What € ™ s go to specific neighborhoods in which we invest.

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           Find a better waya € |           Â

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           First, WEA went to look for reliable sources of information.  We spoke to various

           search providers in the area of real estate, executives and real estate

           mortgage companies, and evaluation several firms. We were unable to find a

           reliable source of research and analysis that responded to our concerns.

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           Then, working with our own staff, we have defined what information we needed and

           What are the problems with the data available were. Â

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              As a result of our research, we realized that we needed specific information

              on homes in different markets, with the ability to identify trends in small

1. We had to develop our own

              We system.It. – An exclusive system of data collection, data analysis, and

              tracking. value

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              The system consists of six key elements;

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1) Â Â Â Â Â First, we identified seventeen houses in California and row that

represents a cross section of property types we make loans on-

homes ranging in size from 750 to 3600 square feet, with market values

$ 75,000 to 900,000 $, And in areas ranging from downtown to the outlying suburbs of areas.Â

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2)      We documented all key information in these images on our square, lot size, age, amenities, and similar to other houses in the area. We have always assumed that the property is in average condition, comparable to other auction houses in the same market area.

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3) Â Â Â Â Â We have carefully reassessed the same house every six months, (And sometimes more often if necessary) completely from scratch, looking for homes that have recently sold, and houses similar sale.

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4) Â Â Â Â Â We then analyze the data, noting the specific changes in the value house.

After determining whether HomeAbout € ™ s value has increased, decreased or remained stable, we start in search of other available data on the neighborhood, the immediate market area, zip code, city and county. Often, the details of $ 500,000 house in an area may indicate no change in value, while statistics on $ 900,000 homes in the same market tell a story. very different, we often large differences between our results and general statistics available on the same postal code or city.

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5)      We then search the local economic context and changes in the local city of county etc. We study the reasons for any reduction or increase in value may be different from the available data on trends in the largest market area. This part of the process is critical. Understanding areas "€ â € œpocket and smaller sub-markets beyond completely research the most commonly available can help avoid a â € € œbadâ loan or bad investment decision.

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6)      When we receive a loan application or evaluating an investment opportunity, weâ € ™ re often provided with a property appraisal. We almost always re-evaluate the property ourselves, or for an evaluation appraiser we trust. In our review of assessments, we use our value research. Itâ € ™ is disturbing to realize that most reviewers are generally unaware of such research and analysis to assess property.Â

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That's a lot of extra work â € "but makes a huge amount of loan and placement process. many smaller areas, in cities or postal codes are increasing or decreasing the value, but not in the same direction the postal code or city statistics show – all the information available from special interest groups.Â

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                    The risk of fluctuating values imposed by the property requires special attention,

                    depth research and study. Although we donâ € ™ t have all the answers,

                    assessment approach improves the quality of investment and lending            Â

                    decisions while reducing the risks in the process.

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About the Author

Joffrey Long provides mortgage lending and real estate advice and insight for homebuyers, real estate investors and investors in mortgage loans. He’s a mortgage lender and real estate investor himself, and has been in the industry for 34 years. He’s also called upon to testify as an expert witness in mortgage related litigation matters.