[rajmelk]

Folks--I apologize if this is not the right forum for this. We were under contract on a home in West Hartford (Bishops Corners area), and everything was going great until the bank appraisal came in. It was > $50,000 lower than the sales price!

We fully expect to have to pull out of this deal as a result, and while we have some backup choices lined up, we are feeling a bit gun-shy about making another offer...what if this happens again? Anyone experienced this lately in West Hartford or other parts of the Hartford metro? Any weird dynamics with over-optimistic pricing, or worse yet, depreciation over the past few months? Thanks!

[skytrekker]

Obviously the housing downturn is the blame. The best thing to do is offer a price at the 'appraised' value. The seller will have to take it or leave it- the housing problem is going to become worse.

[Bob The Builder]

Rajmelk

You are brave to be buying so soon. I fully expect the banks to be playing conservative. I suspect the banks are going to be gun shy on any other property offer you make. perhaps it is just their way of saying no without saying no. Sky's suggestion sounds good.

Why West Hartford?

[rajmelk]

Bob: You asked why West Hartford? We are relocating for a job in Farmington. After looking at Farmington and Avon, we are much more attracted to the ambience of West Hartford as well as the stellar schools.

We do have a "Plan B" home in that same area we wish to go after, but if the same thing happens again with the appraised value, will most likely go into temporary housing and defer the home purchase until spring when the inventory goes up.

Appreciate any words of wisdom specific to local dynamics...Thanks

[Bob The Builder]

RajMelk

I went to CT earlier this month to kick the tires. I sold all my RE back in Nov 2005 in anticipation of this market move. I got hit hard in the 1990's and did not want to relive it. This time it looks way way worse. But I am ready.

The professional builders are dumping their inventory while the mom and pops are still talking tough. The market is just starting to trend down. I am thinking of coming to CT and renting for a year to really look for the perfect house and the perfect buying op. Good luck-

[skytrekker]

Bob The Builder

more anecdotal evidence about housing and the economy Friday with the markets 367 point swoon. Housing here in Vernon, quality townhouses sitting on the market since spring- still not sold. Prices still too high. The 'dream days' are over. You are right- the slide is just starting here and will become worse next year.

If I was buying now I would offer 15-20% below the asking price.

[Bob The Builder]

Sky

There are a lot of moving parts to this market decline.

Most sellers have never experienced a loss on their home value. They are pricing by just paring down the gains they thought they expected when they bought.

As a buyer now, I have to ask myself how much risk I am willing to take to buy. The answer for me is "not too much". Why rush? Instead, I want to be compensated for taking on the risk.

Most brokers and agents have NEVER experienced this imbalance before. The market in the late 80's left housing prices up 25-50%. When the market hit the skids we saw a painful slow down and slight pull back. People could ask their friends and family to spot them a few grand to get by.

In the last 10 years, we saw some tripling and quadrupling as the banking and real estate industry got greedy, dishonest, irrational and in denial. Some of the "ordinary" buyers out there have got to be carrying 5k+ monthly carrying charges with little hope of someone coming along to make them whole. This time, the drop is off a much higher cliff.

Some states like California have anti deficiency laws (Civ Code Sec 580) which prevent lenders from going after the borrower after a foreclosure sale for any mortgage amount exceeding the sale price. In Connecticut, the borrower does not have this luxury and is not as motivated to just walk away.

The right time to buy is during market capitulation when the sellers are fighting over themselves to unload a liability the can no longer tolerate. I am still hearing ridiculous talk about how certain markets are safe because 1) immigrants will band together and buy for higher prices 2) the rate of appreciation is just slowing 3) the slow down is caused by the media etc etc...

The last few sales are being held out by the industry as examples of how the values have only dropped a bit. I DISTRUST THEM. I want to see the closing prices on contracts entered after September. That appraisal that was 50k below contract was low for a reason. The banks do not want to make loans in this market on a declining security. Would you?

[skytrekker]

Bob

you are a smart man- and are brutally honest about this current situation. You are right about many working in the RE industry not seeing a real estate decline before- and they as well as many sellers are in fact in denial about what is happening.

The lenders have tightened up on who they loan money to- and the days of no income doc is OVER. Prices currently in CT and the northeast from DC to Maine reflect that easy lending period. Now that the buyers are gone- prices will have to fall to reflect this new reality.

Places like AZ, NV and Florida where ahead of us in the bust- and have still not reached bottom- we have a long way to go here, as they do there- the ramifications for the economy here has been very understated by the FED- but they said even a year ago there was no bubble. Should the Federal reserve under 'easy Al' Greenspam and now 'helicopter Ben Bernanke' be believed? Hardly. California is also at about the same stage as us in CT-especially along the coast- the inland empire is further along.

Frankly the current Governor of CT Jodi Rell has been nothing but a caretaker- she has offered no real agenda, no major legislation has passed, and offered no plans about health care reform or solving the states transportation problems in the SW part of CT. Her administration has hoped the housing market and stock market rise would keep the state out of recession- that hope is going to evaporate soon.

[rajmelk]

Skytrekker & Bob--just wanted to end on a happy footnote. We indeed went with a "take it or leave it" offer at the appraised value ($57K lower than the sales price), back to the Seller. Had no expectation they would accept, and in fact had started drafting the contract termination, since the deadline is tomorrow.

To our shock, the offer was accepted today. Feel good that we're getting something priced more realistically for today's market, with some upside down the road. Thanks for weighing in.

[skytrekker]

Glad you took Bob The Builder's and my advice- it worked out great for you! Best of luck and welcome to the state!