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I think the difference between a foreclosure value and a conventional is that it might cost you $50-75K or more to bring the dwelling back to liveable condition. We had one around the block from us last year that sold for about $110K to a contractor who rebuilt it and was able to sell it for $244K, however I don't think he made much if anything off the deal other than covering his expenses, his salary and that of his employees. In many cases these foreclosed houses are stripped of anything of value and are nowhere near as valuable as a well maintained conventional home in the same neighborhood. So the real problem these days is "are these foreclosed homes to be considered true comparables"?
My point is that if a good portion of the sales in a neighborhood are foreclosures then foreclosures are the market. Meaning that they should be used as comparables.
[quote=Annemieke Roell;10676135]My point is that if a good portion of the sales in a neighborhood are foreclosures then foreclosures are the market. Meaning that they should be used as comparables.[/quote]
Let's not forget allowances for comparable condition.
Not all foreclosed properties are stripped down meth labs and might compare favorable to owner-occupied housing.
Conversely, it might cost $100K to get the foreclosure into decent shape.
It's comp specific....no way one can generalize, foreclosure versus not.
My point is that if a good portion of the sales in a neighborhood are foreclosures then foreclosures are the market. Meaning that they should be used as comparables.[/quote]
Let's not forget allowances for comparable condition.
Not all foreclosed properties are stripped down meth labs and might compare favorable to owner-occupied housing.
Conversely, it might cost $100K to get the foreclosure into decent shape.
It's comp specific....no way one can generalize, foreclosure versus not.
I know. My answer was the short version because, as you pointed out, there are very many variables.
My comment was basically to the poster who was upset because foreclosure sales were used in his/her appraisal. My point being that perhaps that foreclosures IS the market.
I know. My answer was the short version because, as you pointed out, there are very many variables.
My comment was basically to the poster who was upset because foreclosure sales were used in his/her appraisal. My point being that perhaps that foreclosures IS the market.
I know. My answer was the short version because, as you pointed out, there are very many variables.
My comment was basically to the poster who was upset because foreclosure sales were used in his/her appraisal. My point being that perhaps that foreclosures IS the market.
I was talking about two of my collegues, and my only point was that I know two people that brought money to the table to close a home sale. Just passing on stories i have heard first-hand
Anyway, one bought in an area that didn't have recent sales within a decent range, so the appraiser used a foreclosure and a house about 10 miles away in a different school district (from what i was told). I am told the seller took a 7-8% loss from buying one year ago. That is about all I know.
Now that I think about it, I dont think the other home had a foreclosure in the apprasial, it just didnt appriase out and the buyer brought $ to the table.
I also know someone in CA that is selling. She got 6 offers within 7 days...the home didn't appraise out ($10K off on a $600K house), and she said she will not sell for lower than asking since she got so many offers in such a short period of time. We'll see how that ends up.
OK, we have one contract on the house and another being presented today. The first was at full value with a minimal FHA down payment and no seller contributions to the buyers closing costs. The other will likely be a similar bid, a conventional loan, and they have a lot of cash for about a 20% down payment. My concern though is over the appraisal. We priced at the high end for what houses have recently sold for in our area. I figured we might have to drop the price some to meet an appraisal if it comes in low. However with the backup bid having the cash what are the options for a low appraisal?
1. Is the appraisal required to meet the full agreed to asking price?
2. Can the buyer literally pay down the difference between the agreed to price and the appraised price in their down payment?
3. Can the buyer give me the difference directly and I then lower my asking price accordingly?
4. Can I take back a second mortgage for the difference?
5. What are the options here?
Thanks
I would suggest that you post these questions on the mortgage board as well... but I will try to answer...
First, in the contract to purchase OFFER (not a contract until you sign one of them), there is surely a contingency regarding appraisal... so regardless of which offer you take either buyer can be out of contract. UNLESS they come out of pocket (which you know). Now, putting that aside, I would like the conventional loan buyer a little better. That mortgage *should* be easier to close than the FHA and the buyer will have more skin in the game.
Q1: No, appraisal is what it is.
Q2: Yes, buyer can pay down the difference OOP (out of pocket)
Q3: Must be done on paper. No deals under the table and no need to in this case.
Q4: second mortg. for the difference? do you own the home outright or have enough equity too? and it must be disclosed to the mortg. company and buyer must be able to afford both....
Well 5k over is not that major of an issue but 25k+ over appraisal is another story, especially if it already has been somewhat updated.
Right. It all depends.
Which makes this statement
Quote:
Buying over the appraised value is dumb dumb dumb
silly.
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