Home Loans To Get More Scrutiny In 2014
If you're planning to buy a house this year, closing on the deal will come with some changes. The two biggies, says Seattle area real estate appraiser Richard Hagar, involve appraisals and the final approval of your bank loan.
Starting this month, every borrower who is buying a house is entitled to a copy of the appraisal three days prior to closing. This will allow the buyer to review the appraisal to see if there are any red flags.
"This might make some buyers back out of the deal," said Hagar. "For example, the appraisal might show that the house is in a flood zone."
Prior to 2014, the buyer didn't automatically get a copy of the appraisal before the sale went through unless the buyer requested it in writing.
Another change that Hagar says may slow down house sales is closer scrutiny by banks of home loans. This increased level of analysis follows some rocky years of home loans flying through the banking system with little or no monitoring, leading to loan defaults and foreclosures.
Changes aside, how does the regional housing market look like for 2014? Hagar says property at the lower end of the market is looking very good.
"Real estate values are increasing and at the bottom end of the market we've seen increases of $100,000 to $150,00 over the last two years," he said.
That's great news for sellers who are seeing their property appreciate, but can the buyers afford it? Hagar's not so sure.
"The problem is we're running into a point where the middle class doesn't have the money to make these purchases," he said.
As for the higher end of the market, apparently the sky's the limit. Hagar says one of the most expensive sales in 2013 was in Hunts Point for a house and its property that clocked in at $17 million.
"It's actually an empty lot now," said Hagar, adding the house got bulldozed to make way for new construction.
Post script: Street Cents has been a regular monthly segment on KPLU since 2010. This segment is the last one in the series. We thank John Maynard and Richard Hagar for sharing their expertise and good humor with us over the last few years.