A home-buyer's rant! (Lansing: fit in, for sale, real estate market)

[magellan]

Originally Posted by GeminiGal

I think the argument now is that the appraisels are coming in too low because they are now scared. My neighbor who is a realtor says that she has been many of them lately that are just off the charts low. Absolutely no gray area. Ex: two houses - one really upgraded and basic - same sq footage - same appraisel price. So essentially the appraisers are again dictating the market. She (realtor) is dumbfounded on how to properly price/list/sell a home based on what she has seen.

Basically, the market is saying loud and clear that you should only be trying to sell if you have to. If you're a business and you can't properly price your product (because of a wild market), you can't do business.

There are a lot of good appraisers, but they can't be beholden to anyone. As someone earlier said, overinflated appraisals was part of the problem that led to the current housing bubble burst.

[GeminiGal]

Originally Posted by magellan

Basically, the market is saying loud and clear that you should only be trying to sell if you have to. If you're a business and you can't properly price your product (because of a wild market), you can't do business.

There are a lot of good appraisers, but they can't be beholden to anyone. As someone earlier said, overinflated appraisals was part of the problem that led to the current housing bubble burst.

I certainly agree. However, lowball appraisals are not the answer and don't really correct the problem. It appears home prices are dropping way below what they should be and correct/fair pricing is still tossed aside.
My gosh - this RE is maddening. I thank my lucky stars every day that I am not a current participant in this circus!

[Coldjensens]

You can personally go to the owners directly and tell them what their realtor is doing. You realtor cannot go to them, but you can. A lot of homeowners still have unrealistic expectatons. They hear the market has fallen and they are thinking about a 10 to 15 % hit from 2005 prices. When they learn that is it s 50 to 60% hit they simply cannto beleive it and look for someone to blame (those cheap buyers are trying to take advantage of us).

You need to stick to our guns and be prepared to walk away. As soon as you tell them that the deal is over, you may suddenly see a different attitude. You may get a bunch of threats first. If they do that, when they come back begging, I qould be ncluned to insist on some additional concessions to reinstate a deal. Nothing is selling. They may wait for two more years before they get another offer. There is an abundant supply of houses on the market and now that it is the season, more and more will be listed. You will find something equally nice eventually if this does not work out. The person in the best negotiating position is always the person who is willing to walk away.

[Coldjensens]

The realtor is nuts. What a house is worth, is whatever amount someone is willing to pay for it. It cannot be worth way more than the offer. In Detroit some houses are selling for $1. What are they worth? $1. You cannot say that they are worth way more than $1 becuase no one will pay way more than $1 for them. Your house is the same. Just becuase someone once was willing to pay $240,000 for that house does nto mean that the house is "worth" that much. It is worth whatever you can sell it for. Tell the guy that if the house is worth so much more, he should buy it and make a killing.

[magellan]

Originally Posted by GeminiGal

I certainly agree. However, lowball appraisals are not the answer and don't really correct the problem. It appears home prices are dropping way below what they should be and correct/fair pricing is still tossed aside.
My gosh - this RE is maddening. I thank my lucky stars every day that I am not a current participant in this circus!

Here's another option: ask for a copy of the appraisal. If you think the comps they are using aren't accurate, find 3 other recently sold homes in the same area that are comparable, prepare a report, and appeal the appraisal.

The American public came down hard on the banking industry, so the banking industry is being extra cautious and overly conservative. I wouldn't be surprised if underwriters are telling appraisers to come in 10% below comps or they won't get any future business. It sucks, but this is what we get as Americans for allowing this chicanery to go on for so long.

[magellan]

Originally Posted by Coldjensens

The realtor is nuts. What a house is worth, is whatever amount someone is willing to pay for it. It cannot be worth way more than the offer. In Detroit some houses are selling for $1. What are they worth? $1. You cannot say that they are worth way more than $1 becuase no one will pay way more than $1 for them. Your house is the same. Just becuase someone once was willing to pay $240,000 for that house does nto mean that the house is "worth" that much. It is worth whatever you can sell it for. Tell the guy that if the house is worth so much more, he should buy it and make a killing.

That's not true in today's market. It used to be that "market value" was the price that a ready, willing and able buyer and a ready, willing and able seller came to agreement on, with neither being "under duress". It's not anymore. The appraiser wins out, because the appraiser works for the bank. The reason why is that buyers and sellers, from the late 90's to 2007 or so, were settling on prices that were way overvalued, using funky financing and low payments (provided by mortgage brokers), overinflated appraisals, and the banks down the line were left holding the bag (no sympathy for banks from me, mind you). Now we taxpayers are left holding the bag that we started with (or at least those who took advantage of a corrupt system).

[jeanniepep]

I totally agree that the banks/appraisers are freaking out and skewing prices a bit lower than they have to right now. This situation is similar to the one that GeminiGirl mentioned; it is totally renovated and fixed up but is judged the same as houses that are not. They basically have to go by square footage and number of bedrooms/bathrooms, period. I actually don't agree with this even though it could potentially get me a nicer house for less money! I think a house with all kinds of new amenities (not just cosmetic stuff, but things like copper plumbing, energy-efficient windows, etc. I really WANTED the appraisal to be closer to the sales price, then we would be packing up to move into our new house instead of stuck in limbo waiting for this agent to put on his big boy pants and deal with reality.

As far as contacting the sellers directly...there's another wrinkle in the situation that I don't think I mentioned. The seller's realtor is also the seller's father. So, I'm sure that part of his problem is that he's defending his son's investment. And, I'm sure he promised he'd get a great price for the house despite the market. I know he's in an uncomfortable situation. I wish it were different but it's not. The appraisal is what it is, now we have to decide what to do about it.

I do have a copy of the appraisal and it appears more than fair - of course the seller's realtor does not think so, but the comments he is making about it really make no sense. I mean, I'm not a rocket scientist but even I can understand how this works. For example, he keeps citing the fact that the house across the street recently appraised at $119K. However, it actually SOLD for $111,500 minus seller concessions. So that's the number the appraiser has to use for comparison. How come I can understand that and he can't?

At any rate, they basically have 3 choices: a) get a 2nd appraisal, b) reduce the price to meet the appraisal, or c) back out and just stay in the house for a few more years. It's their choice, they just better make it soon. We love the house but aren't going to screw around with these folks for much longer, there are other fish in the sea.

[dagnabit9]

Good for you, Jeannie. I think you're seeing things realistically and the sellers are not. You must keep in mind that you will walk away from any deal you think is unfair. THAT is the bottom line...

[daddythreepointoh]

Originally Posted by jeanniepep

Please pardon me while I vent a little here, I'm extremely frustrated and need an outlet!!

About a month ago, my husband and I decided to move from our current rural community in Lapeer County down to Ferndale (we're in our 30's, no kids, love to go out & have fun, are sick of driving 90 minutes to see our friends or do anything else). Long story short, we quickly found the perfect house: totally remodeled, the neighborhood we wanted, etc. They had received another offer a few days after we saw it, so we went in and offered list price but asked for 3% seller concessions toward closing costs (we have great credit but no savings). The seller's realtor responded angrily that it was a crappy offer and the house was worth way more than that, and the sellers were not going to bring one penny to the table. Maybe I'm naive but I thought the list price was a starting point for negotiation - not the absolute bottom line. Geez.

So, their counteroffer was to raise the home price by about $2500 and bring the corresponding cash to the closing table. Our realtor expressed concern that it might not appraise that high because the market has been so low, but he was adamant that he was selling the best house ever and it would appraise way higher than everyone's wildest expectations. We really wanted the house so we offered him the opportunity to hand-pick the appraiser. He declined, so we used our lender's usual appraisal company.

Couple of weeks later, the appraisal comes back and surprise: it's low. Way low. About $10K less than the purchase agreement and nearly $8K below the original list price. Because we're going FHA, we can't get a loan for more than the appraised price. However, since it appraised so much lower, we could potentially afford all the closing costs and not need any sellers concessions.

Meanwhile, the sellers realtor has gone off the deep end, sending nastygrams to the appraiser and our loan officer, going so far as to say that the first-time buyer tax credit means that we (the buyers) are "double-dipping the system without any adjustment to credit the seller" and that the sellers "want to sell but do not wish to be abused in the process." (Ironically, he hasn't said one word to our realtor yet, just the financial people which is not only inappropriate but sort of pointless).

First of all, the tax credit is between the buyer and the government and has nothing to do with the seller or the appraisal. For one thing, it's a CREDIT and not a pile of cash that we have access to before closing. Even if we did have access to the money, it doesn't seem right that we should be forced to use it to close the gap between the list price and the appraised price. Why should we start our mortgage off with negative equity on Day 1? And since when does selling a house at the appraised market value constitute ABUSE of a seller? It's a down market, has been for a while. They put it on the market, nobody's holding a gun to their head forcing them to sell it. The fact that the FHA won't loan us more than what the house is worth is not our fault!

I thought this was supposed to be a buyer's market - why does it have to be so flippin hard to buy this house?? We were supposed to be closing in a few weeks and moving in July, we were so looking forward to moving in! I know there are other fish in the sea, but at this point I'm wondering if we're going to have a big fight on our hands with ANY house in this market! They're ALL going to appraise low, the market sucks! Is every seller going to freak out and kill the deal right when we're about to move in?

AAAAAARRRRRRRRGGGGGHHHHHHHHH!!!!!!

Not only is this realtor way out of line, it sounds as if he has some sort of personal interest in this sale...he seems to be taking all of it rather personally, anyway.

Cut your losses...the bottom line is it appraised way to low. They won't budge? Move on.

[jeanniepep]

GREAT NEWS!

After a week of silence, the sellers have decided they're willing to accept the appraised price after all. We're getting our house!