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Shortsales and Forclosures breed Shortsales and Foreclosures.
True but, let's face it ... most of these prices had nothing to do with reality, especially in places like California. It's going to be bloody and painful but this needs to happen until the market gets back to basics.
My hairdresser makes only $45K a year yet he has a mortgage that just adjusted up to $5K a month. They never should have lent him the money to buy the house in the first place ... his credit was lousy and he's fiscally irresponsible ... always has been.
Whether there's one foreclosure or 20 in his neighborhood ... it isn't going to affect his chances of keeping the house one bit. We knew he was going to get into trouble when he bought the house two years ago ... he just kept borrowing until he couldn't borrow anymore.
Foreclosures and appraisals. Even last year real estate appraisers in the North Texas region would NOT use a foreclosure. This was just the way it was for YEARS as it was WELL KNOWN that a foreclosure was NOT a "typical" sale!!!!!! Typically an appraiser will throw out the lowest and the highest sold prices on their comps to determine a more realistic value. If a foreclosure was stripped down to nothing and had no working plumbing, holes in the walls, no appliances (built in), pool equipment gone, etc they WILL NOT AND SHOULD NOT USE IT! It is NOT A COMPARABLE!!! They ARE bound by their own ethics and laws to use homes as close as possible that ARE TRUE COMP'S TO YOUR PROPERTY! They CAN go in a 2 mile radius to find homes that are comparable in condition, size, age, etc. In rural real estate they can go even further out. They do NOT have to use homes ONLY in your subdivision. Have your own realtor pull comp's and go over them to see what homes in a 2 mile radius that have sold in the last 12 months that ARE comparable to yours went for. NORMALLY, they will not go back 12 months (used to be only about 3 months) but in some areas recently that do not see a lot of sales they have to. This happens a lot in areas that people don't move out of and the appraiser has to go back further than 3 months and in a greater radius. If you know of a home that sold due to a "family deal" (owner sold to a family member at a discount price) you can let the appraiser know and that comp should NOT be used.
If the appraiser uses homes that are foreclosures that were stripped and totally ransacked and don't even come close to being in the same condition as your property they CAN get in trouble.
In some areas most of the sales are short/forclosures. Not much choice there if homes are on a downward spiral. The prices have to get back in line.
But..this is not true of all areas.
Absolutely right. As they say, "Real Estate is Local".
In cjones' case the only sales that are being considered in the comps are shortsales and forclosures. At what point does an appraiser say, 'I cannot look at these properties in determining the value of this home because it doesn't make sense'?
I wouldn't say prices were out of line. They've been pretty stable up until this mess came about. I even thought they were cheap before. The same house if built in my home town in Missouri would probably cost $50-$75k more. The possibility that they could be worth even less is a tough pill to swallow!
What was out of line IMO was the quantity being built! The builders over-saturated the market. You can take a drive about 1mile west of my house and look out over vast feilds where builders intend to sprawl. It's crazy. It used to be all grazing land probably but somebody at some point said....."Hey man lets fill all these feilds with houses that practically touch each other." The market is already oversaturated. Who's going to buy out there?!?! Are they going to clone a bunch of families to live in those houses? Is there some sort of population explosion about to happen that we don't know about? The job market isn't so great right now and I don't see that it's going to improve to the point that they can justify building that many houses.....so are they out of their flippin' minds?
Foreclosures and appraisals. Even last year real estate appraisers in the North Texas region would NOT use a foreclosure. This was just the way it was for YEARS as it was WELL KNOWN that a foreclosure was NOT a "typical" sale!!!!!!
Yeah but, in California ... it has become the typical sale. In many markets two thirds of the properties are short sales and foreclosures ... and a lot of them are decent properties.
So in markets like this, maybe that's all the appraiser has.
I am sure no expert, but maybe it truly is local. some areas have more foreclosures and short sales than others, to cjones does your agent or broker know how this works in your area?? that would be your best bet, or maybe the title office or escrow?? I am curious but when in the past we have sold and bought in CA ss and foreclosures were not considered as
'comps' but then times have changed..
it is a rotten pill to swallow for those of us who are responsible and pay our bills and did not over extend ourselves to the point of demolition!
My agent told me generally foreclosures are not considered BUT every single house sold in the last 6 months has been a foreclosure so that is all they have to go by. She is pulling every single possible comp and is going to try and fight to get a good appraisal but it's not sounding good.
We were worried people would make us a really low offer since everything around is a foreclosure. We get a decent offer and now we may not be able to do it because it is a good offer. No matter what we are getting the shaft. We will be writing a big check the day of closing and it just doesn't seem right.
My agent told me generally foreclosures are not considered BUT every single house sold in the last 6 months has been a foreclosure so that is all they have to go by. She is pulling every single possible comp and is going to try and fight to get a good appraisal but it's not sounding good.
We were worried people would make us a really low offer since everything around is a foreclosure. We get a decent offer and now we may not be able to do it because it is a good offer. No matter what we are getting the shaft. We will be writing a big check the day of closing and it just doesn't seem right.
I know, it's just crappy...we are also for sale and the market here is not horrible, just not good. we are already listed below what we paid in 2005, and then on top of it we put in about 25,000 in improvements. But we know we are not going to get what we paid and that's how it is.
I would be happy with an offer that isn't 125,000 below our asking....we still have folks looking so we must be in the ballpark anyway.
At least you have a good offer, try to take a deep breath, think positively and it will probably come out alright. I get so tired of the doom and gloom thrust upon us...I am trying to be positive! It makes life a little more pleasant, and try to think of the good things ahead of you!
Barb
I know, it's just crappy...we are also for sale and the market here is not horrible, just not good. we are already listed below what we paid in 2005, and then on top of it we put in about 25,000 in improvements. But we know we are not going to get what we paid and that's how it is.
I would be happy with an offer that isn't 125,000 below our asking....we still have folks looking so we must be in the ballpark anyway.
At least you have a good offer, try to take a deep breath, think positively and it will probably come out alright. I get so tired of the doom and gloom thrust upon us...I am trying to be positive! It makes life a little more pleasant, and try to think of the good things ahead of you!
Barb
Normally I'm not all about the doom and gloom!! I'm just having a rough couple of days. I know in the end everything will work out. I'm just praying it all works out very soon!!!
We did counter back tonight. Nothing big just April 30 closing instead of May 6, retaining our mineral rights and adding earnest money because they didn't put any in. We know the closing date is ok with them already so we should be a go. I just hope and pray it all works out.
My agent told me generally foreclosures are not considered BUT every single house sold in the last 6 months has been a foreclosure so that is all they have to go by. She is pulling every single possible comp and is going to try and fight to get a good appraisal but it's not sounding good.
We were worried people would make us a really low offer since everything around is a foreclosure. We get a decent offer and now we may not be able to do it because it is a good offer. No matter what we are getting the shaft. We will be writing a big check the day of closing and it just doesn't seem right.
IF the ONLY houses that sold in the last 6 months were foreclosures the appraiser CAN go back a bit further (had one go back a year two weeks ago in an area that does NOT have a lot of foreclosures but doesn't see a huge turnover in people moving). Then the appraiser CAN and SHOULD adjust the price accordingly based on CONDITION!!! If the foreclosures had things ripped out and needed a lot of work then that sale SHOULD be LESS than YOURS! They CAN compensate for that and still use the foreclosure as a "comp". A house that has been ripped up and needs work is NOT a "comparable" to a home that does not and is completely fixed up to be LIVED IN! Now that doesn't mean that "faux paint" gets you extra money BUT it DOES mean that having all the electricity in good working order, all appliances properly in place, no holes in the walls, etc WILL get you extra money IF the foreclosures are in bad condition.
Good luck
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