Real Estate Blog - Cummins Realty and Appraisals

July 25th, 2013 9:31 AM
I am not a mortgage originator, but my job as a real estate appraiser makes mortgages important to me.  Understanding the functions of a dollar is, in my opinion, one of the most important things appraisers need to know and understand.  If you need to be directed to a mortgage person I can give you a list of people that really know mortgages.  With that being said I am going to shed a little light on interest rates for you.
If you are in the process of buying you need to make sure you keep an eye on daily rate lock articles.  A 1/4 of a point can be a large difference over a 5+ years.  A 1/4 of a point is way more important than a $1,000 off the purchase price, $1,500 more in closing costs, or a refrigerator.  Almost all mortgage originators can provide you with information on rates, but if you want to read about rates you can do it anytime on my website under the rate lock advisory. 
I understand that very few homes ever get to the full amortization of a 30 year loan.  The home is sold, refinanced, etc.  Most homes never get to full amortization, but much of your interest is paid in the first few years, so a higher interest rate will directly impact you in the short term.  With that being said here is how 1/4 of a percent interest rate can affect you over a 30 year loan.
A loan balance of $200,000 with a 30 year amortization length will have you pay $154,197 in interest at 4.25%.  An interest rate of 4.00% will have you paying $143,739 in interest over the 30 years of the loan.  If you start talking about a full percent the numbers get much higher.  A 5% interest rate would have you paying $186,512 in interest.  I know I am beating a dead horse by saying this in almost everything I post, but if you have an interest rate over 5% YOU NEED TO REFINANCE NOW! 

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Posted by Walter Cummins Jr. on July 25th, 2013 9:31 AMLeave a Comment

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July 25th, 2013 9:27 AM
A couple of high points I see from this survey.  84% of residential appraisers said their local real estate market is strong.  95% said there is currently more demand for their services than there was a year ago.
There is a quote at the end of the article that says "Real estate trends are typically local in nature, and it's a positive sign for the nation's economy that appraisers around the country reported increased demand for their services."  In my monthly market updates I regularly say each neighborhood/area has it's own positives and negatives, but if the overall market area is strong then most areas are benefiting.
I was at least six months ahead of the local/national publications in stating our local real estate economy was back in good shape.  I went back and looked at my market reports from October/November.  In those months I was saying we are on a good track.  By the time we got into February and March I was saying the market was recovered with all supply and demand factors positive. 

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Posted by Walter Cummins Jr. on July 25th, 2013 9:27 AMLeave a Comment

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June and July are typically the most active months in real estate.  I always make a joke saying kids rule the world.  The real estate market kind of proves this.  The market is twice as active in the summer months because school is out.  Moving from one house to another, especially if a school district is changed, is a major undertaking.     


The good news continues with the real estate market.  Every month this year has seen positive numbers in every supply and demand category.  I feel like the real estate market, as a whole in central MS, has recovered.  The market is not necessarily a seller's market yet, but it certainly is no longer a buyer's market.  A good home should have no problem selling if it is priced right. 


New listings increased 16.2 percent to 855 in the Jackson region.  I have been saying there was a need for more listings.  The next number proves there was a need.  The number of pending sales increased 15.9 percent.  The thing holding the market right now is the number of available homes for sale.  You can only have as many sales as there are homes available for sale.  Inventory levels continued to shrink even with an increase in listings.  10% more homes sold in June of 2013 compared to June of 2012. 


Prices continued to rise in June.  Average days on market for homes in June was 94 days.  12 month average for days on market sits at 120 days.  This is down 9.1% from prior year.  You would have to go back to the summer of 2008 to find average days on market comparable to the current number of 94.   I can continue on and on down the list of supply and demand factors.  Every statistical category shows a strong market.


We are now over half way through 2013.  What I have seen so far in the market for July is exactly the same as every other month this year.  The threat we have going forward is interest rates slowly climbing.  This was predicted by every major financial analyst.  The days of an interest rate around 3.25 are behind us.  I said this last month, and I will say it again.  Any interest rate under 6 is historically an incredible rate.  We have been spoiled the last few years.


Continue to buy and sale those homes!  If you own a home with an interest rate over 5% you need to refinance it NOW.   

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Posted by Walter Cummins Jr. on July 22nd, 2013 1:51 PMView Comments (1)

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I started completing inspections with my dad on homes in the summer of 2003.  Every summer during college I would work with my dad.  After graduating college in 2007 I became a full time appraiser.  In the last 10+ years I have seen a lot.  I have not seen everything because I regularly see something that shocks me, both good and bad things.  I get asked a lot of questions by friends, realtors, clients, mortgage brokers, etc.  One of the most common questions is "what needs to be done prior to getting an appraisal completed".
Some houses I would say a lot, but that would involve a tremendous amount of updating/remodeling.  I am not getting into what remodels maximize value or what color paint looks the best.  This is a simple guide to helping you present yourself and your home in the best way possible without spending major money.
5 Tips for homeowners to help appraisers:
1.  Be available!  I have set up and made many appointments.  Most of the time the homeowner and I get an appointment date/time agreed on very quickly.  However, there are some people that make it nearly impossible to get an appointment set.  I have turned down a few appraisals before because the homeowner made no attempt to work with me.  Just be willing to help make it happen.
2.  Clean your house up some.  You don't have to clean like your in laws are coming over, but at least pick up clothes, make beds, clean dishes, etc.  Probably 25% percent of the houses I go into are spotless, 25% are anything but spotless, and the other 50% fall in the middle.  You don't have to be able to eat off your floor, but at least try to put your home somewhere in the middle.  Think of an appraiser as someone who is coming to look at your house to buy it.   
3.  If you have done updating or remodeling have it all written out with a date of completion.  It is my job to notice updating or remodeling, but I am not perfect.  If you feel like you have done something to make your house better then you need to tell the appraiser.  You are not going to offend them by pointing out something you think they may have missed. 
4.  Don't talk about what you are going to do to the house unless you are getting it appraised subject to a remodel.  The effective date of an appraisal is the date of the inspection.  Your home is getting a value based on what is present that day. 
5.  Don't be stressed about someone coming to your house to value it.  Appraisers go in countless houses.  You may be stressed, but they are not.  Just relax and be honest with the appraiser. 

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Posted by Walter Cummins Jr. on June 26th, 2013 11:25 AMLeave a Comment

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Market Indicator for Jackson Metro Area for May 2013. 


The month of May brings the end of school and the start of summer.  Summer is always the most active time of year in the real estate industry for obvious reasons.    All market activity the first part of this year has been positive, but the market report(s) I have been really anticipating is May and in the future June/July. 


It seems attention has been shifted from monitoring price and sale gains to monitoring new listing activity.  This shift seems to be related to a shift in supply and demand.  There currently is a strong demand for quality homes.  In some markets, offers are being written right after a showing with a property only being on the market for a few days.   Multiple offer situations and buyers paying more than list price were unheard of 36 months ago.  These are not uncommon right now for a desirable home.     


New listings increased 10.1%, this was really needed in the market.  Pending sales were up.  Even with the increase in listings the inventory levels shrank due to the abundance of home closings.  Prices, both average and median, continued to increase.  DOM and absorption rates both decreased almost 8%.  Another month shows every single category having positive numbers. 


The real estate market continues to show great signs of a part of the economy that is no longer in recovery.  The real estate market is strong in both Jackson and the country as a whole.  The million dollar question going forward is.. What are interest rates going to do?  My answer to that is they are going to go up.  They couldn't have gone down anymore.  In my opinion a 1-3 point rise in rates does not give us a rate that shuts down the market.  A 5-7% interest rate is really where the market should be once everything evens out.  Throughout history a 5-7% interest rate is a good rate.  In the early 1980s mortgage rates for 30 years loans were 16-19%.  The 2-4% we have been seeing over the last couple of years has just spoiled us.  The rate lock advisor on my website updates every Monday.  It is a great resource for anyone interested in current rate activity/predictions. 


I am in no way qualified to give financial advice, but I have strong understanding of economics.  If you are an investor, the last 5-6 years have presented you an opportunity to invest in real estate.  That opportunity has passed with the shift back to a demand market.  At this point you have the opportunity to liquidate some of those assets and move into other investment markets. 


If you are not seeing the writing on the wall then I will say it to you in black in white.  If you have a home that you consider to be a quality a home and think you may be ready to upgrade.  Right now is the time to do it.  I can not tell you your home will sale in 1 day for list price because every home and neighborhood is different, but I can tell you that the market is strong.


I hope everyone has a great summer!  Keep buying and selling those houses! 



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Posted by Walter Cummins Jr. on June 20th, 2013 10:16 AMLeave a Comment

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