U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > Arizona > Phoenix area
 [Register]
Please register to participate in our discussions with 1.5 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Jump to a detailed profile or search
site with Google Custom Search

Search Forums  (Advanced)
Business Search - 14 Million verified businesses
Search for:  near: 
 
Unread 05-26-2012, 02:51 PM
 
Location: Scottsdale
272 posts, read 210,887 times
Reputation: 160
Quote:
Originally Posted by Captain Bill View Post
However, they call the difference in purchase price and sale price gross profit, which is not correct.

They need to add the buying costs, the rehab costs, the carrying costs, and selling costs, to the equation in order to determine the gross profit.
Then that would be NET profit. Generally, gross profits are the total monies made, before expenses/payroll/overhead are subtracted.

Net profit is the money you can bank.

And now, back to your regularly scheduled program...
Quick reply to this message

 
Unread 05-26-2012, 03:03 PM
 
Location: Scottsdale
272 posts, read 210,887 times
Reputation: 160
Quote:
Originally Posted by Captain Bill View Post
Requiring the sellers to provide an appraisal, especially because they are subjective and will go out of date quickly, would be an an unrealistic imposition on the free market process.
So is demanding that a buyer legally commit to a purchase before knowing how much of the purchase a bank is willing to write a mortgage for.
Quick reply to this message
 
Unread 05-26-2012, 03:04 PM
 
Location: Gilbert - Val Vista Lakes
6,046 posts, read 7,249,098 times
Reputation: 3598
Quote:
Originally Posted by JoeC View Post
Good point. However, forcing a buyer to abide by an agreed price prior to knowing what a bank is willing to fork over isn't going to work, either. Sellers are demanding (at least up here) qualified, pre-approved buyers; buyers should have the same rights - that the house can be financed for something close to the asking price.
Tides change.
For a few years buyers were low balling and demanding all kinds of concessions.
Now it is reversed for awhile.

Today if I'm the sellers agent then I feel the buyer and her agent should know the market well enough to know how it should appraise, and if they think it will appraise lower, then don't offer the price if the seller is not willing to accept that contingency.

It's all about understanding the market and being able to work with different strategies in different markets to achieve an objective.

I'm not going to let a buyer take advantage of my seller by making a high offer just to win the bid so they can negotiate from a lower appraisal.
Quick reply to this message
 
Unread 05-26-2012, 03:07 PM
 
Location: Scottsdale
272 posts, read 210,887 times
Reputation: 160
Quote:
Originally Posted by Captain Bill View Post
Today if I'm the sellers agent then I feel the buyer and her agent should know the market well enough to know how it should appraise, and if they think it will appraise lower, then don't offer the price if the seller is not willing to accept that contingency.

It's all about understanding the market and being able to work with different strategies in different markets to achieve an objective.

I'm not going to let a buyer take advantage of my seller by making a high offer just to win the bid so they can negotiate from a lower appraisal.
OK. That I agree with.
Quick reply to this message
 
Unread 05-26-2012, 03:15 PM
 
Location: Gilbert - Val Vista Lakes
6,046 posts, read 7,249,098 times
Reputation: 3598
Quote:
Originally Posted by JoeC View Post
So is demanding that a buyer legally commit to a purchase before knowing how much of the purchase a bank is willing to write a mortgage for.
Not at all. A government requirement for sellers to provide an appraisal is an impediment to free trade.

A seller who states an unwillingness to accept an appraisal contingency is simply a point of negotiation.

The buyer has the option of making an offer and negotiating with offsetting terms, or move on. Nothing is forced on the buyer.
Quick reply to this message
 
Unread 05-26-2012, 03:27 PM
 
2,246 posts, read 1,205,621 times
Reputation: 2995
If you own a retail business, you deduct from the sales price your costs for the goods including things like shipping to find direct costs of the goods. Other expenses such as labor, rent, etc., are then deducted from total sales less costs, to determine the net profit for the business.

In real estate, Gross profit is Sales Price, less cost and as the Captain points out cost is considered what one pays for the property and other expenses such as closing costs etc. both when buying and selling the property, which is called adjusted cost basis for tax purposes.

To find the net profit, you deduct other costs such as cost to rehab the property such as painting, advertising costs, commissions, etc.
Quick reply to this message
 
Unread 05-26-2012, 03:56 PM
 
1,232 posts, read 1,110,413 times
Reputation: 614
Quote:
Originally Posted by Captain Bill View Post
It probably was, and was a gross error. I don't think
boiler plate is appropriate in a fluid market.
I agree, it's an error. Are there still checkboxes on the appraisal for if it's a rising, stable or falling market, and if supply and demand are in balance, etc.? I'd be more worried if the appraiser had one of those wrong. The added commentary that is textual stuff I think usually gets added because some bank at some point requested it, and it's easy to forget. But still it should be updated. Usually the boilerplate stuff applies for years at a time, so it seems to me it's ok to have it in there but you do need to read it now and then, to make sure it still applies. It exists for the same reason all boilerplate text does... CYA. It could protect an appraiser in litigation. I doubt the bank pays much attention to any of it, in all honesty.
Quick reply to this message
 
Unread 05-26-2012, 04:10 PM
 
2,246 posts, read 1,205,621 times
Reputation: 2995
No matter how well we think we know the market, we still cannot know for sure what appraisers will value a property at. I have seen appraisals come in both below and far above the agreed upon purchase price that both agents thought was a fair price.

Only a fool, will make an offer on a property where there is not an escape clause to void the offer, if the property will not appraise at or above the offered price. Especially when there is going to be a mortgage, and the lenders will not lend on a property at an above appraisal price. If the first appraisal is low, often a second appraisal is done using a different appraiser, to make sure the first one gave a fair appraisal. Lenders will allow this, as long as the second appraiser if one they approve of.

Quote:
I'm not going to let a buyer take advantage of my seller by making a high offer just to win the bid so they can negotiate from a lower appraisal.
By laws of agency, an agent is required to present all offers no matter what the agent thinks is a good offer, and it is the seller that makes the decision to take the offer or not, and the agent that refuses to submit an offer to the seller, has broken his/her contract with the seller.

My daughter sold a home in California. The agent (an agency partner) did not like the written cash offer as she thought it was too low in her opinion and did not present it to my daughter. My daughter realized at the time prices were dropping rapidly, and would have gladly taken the offer. A number of months later (over a year) the home had fallen $120,000 further in value below the first offer. It finally had a buyer. My daughter found out about the first offer as the sales agent that sold her home was the one that had the original offer and gave her a copy of the first contract. She took it to arbitration as required by the listing contract, and the listing office (a major franchise) had to pay her the $120,000 difference between the final sales price and the first offer plus some other carrying costs such as interest paid, etc. Today, the home is worth about $50,000 less that she sold it for 3 years ago. (It was very nice executive home in a very good area but got hit hard by the housing bubble bursting.)

By law, every contract must be presented and it is the sellers that make the final decision on the contract. The agent may recommend, but the agent cannot make the decision for the sellers. That is the law of agency, or my university law classes I took on real estate law were not valid.
Quick reply to this message
 
Unread 05-27-2012, 09:24 AM
 
Location: Gilbert - Val Vista Lakes
6,046 posts, read 7,249,098 times
Reputation: 3598
[quote]
Quote:
Originally Posted by oldtrader View Post

Only a fool, will make an offer on a property where there is not an escape clause to void the offer, if the property will not appraise at or above the offered price. Especially when there is going to be a mortgage, and the lenders will not lend on a property at an above appraisal price.
We're talking about special circumstances where the supply is short and prices rising and appraisals not keeping up.

In a normal market I agree.

Quote:
By laws of agency, an agent is required to present all offers no matter what the agent thinks is a good offer, and it is the seller that makes the decision to take the offer or not, and the agent that refuses to submit an offer to the seller, has broken his/her contract with the seller.
You are absolutely correct, and I have never suggested not presenting the offer.
I said that the agent offers advice and strategies, and as a team they develop the plan, and as a team the client is the boss and makes all final decisions.

In my statement that I would not allow a buyer to take advantage of my seller by making a high offer just to win the bid and later negotiate down from a lower appraisal, it means that I would advise my seller that if he accepts the offer the home can be tied up for up to 2 months and fall through, wasting valuable marketing time. Together we would devise a counter offer strategy.

Just as a point of clarification, the seller can instruct the agent to not present certain offers. It is good practice for the agent to still fill out a net sheet and send that along with the offer, with a note that this an offer the seller asked to not be presented, and ask the seller to sign the field formally rejecting the offer
.
Quick reply to this message
 
Unread 05-27-2012, 10:39 AM
 
Location: Gilbert - Val Vista Lakes
6,046 posts, read 7,249,098 times
Reputation: 3598
Quote:
Originally Posted by ReadyFreddy View Post
I agree, it's an error. Are there still checkboxes on the appraisal for if it's a rising, stable or falling market, and if supply and demand are in balance, etc.? I'd be more worried if the appraiser had one of those wrong. The added commentary that is textual stuff I think usually gets added because some bank at some point requested it, and it's easy to forget. But still it should be updated. Usually the boilerplate stuff applies for years at a time, so it seems to me it's ok to have it in there but you do need to read it now and then, to make sure it still applies. It exists for the same reason all boilerplate text does... CYA. It could protect an appraiser in litigation. I doubt the bank pays much attention to any of it, in all honesty.
Textual explanations according to the fnma guidelines are to be used to explain things like declining or increasing markets, etc.

As you said boilerplates are for conditions that last a long time. Any text explaining a current market condition should be current and not boilerplate.
Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


 
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Options
X
Data:
Loading data...
Based on 2000-2011 data
Loading data...

123
Hide US histogram

Over $74,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > Arizona > Phoenix area
Similar Threads

All times are GMT -6.

2005-2014, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25 - Top