San Jose currently most expensive metro in USA (Los Angeles, San Francisco: 2013, lofts)

[krudmonk]

Originally Posted by otterprods

Well that MUST be something great because why would any fool ever overpay for real estate in SJ?

You do realize that, unless they paid cash, it's hard to actually overpay and have the lender agree to finance the supposedly bad deal, right?

[otterprods]

Originally Posted by krudmonk

You do realize that, unless they paid cash, it's hard to actually overpay and have the lender agree to finance the supposedly bad deal, right?

Because lenders can tell the future?

[krudmonk]

Originally Posted by otterprods

Because lenders can tell the future?

Because the value would be pegged to other comparable sales on the appraisal report. It's not a complete statistical outlier.

[otterprods]

Originally Posted by krudmonk

Because the value would be pegged to other comparable sales on the appraisal report. It's not a complete statistical outlier.

Oh, I see... Fool-proof! 2.2 mill for a condo at 88 SJ sounds like a great idea!
I used to work right next to that place, no way is any of it (penthouse or not) worth that kinda money long term for anyone not looking to prove something… But who listens to me when they have 'comparable sales' and 'market trends' to go by?

Besides, I was talking about more than just a the investment value of a particular "home".

[jbunniii]

Originally Posted by krudmonk

You do realize that, unless they paid cash, it's hard to actually overpay and have the lender agree to finance the supposedly bad deal, right?

It was only a few years ago that half the banks in the country seemed in danger of failing because they did precisely that...

[Azmordean]

Originally Posted by jbunniii

It was only a few years ago that half the banks in the country seemed in danger of failing because they did precisely that...

Actually they were failing mainly because they gave financing to people who couldn't actually afford the home. Not because they weren't doing due diligence on the home's value.

Banks are very careful about value... the appraisal must match, or be greater than, the purchase price. Usually it matches, because for an appraiser the fact a buyer and seller agreed a price as part of an arms length transaction is strong evidence of market value. But appraisers still look at comps in the area, overall condition of the home, and so forth.

There are plenty of examples here in the Bay Area where the appraisal does not support the sale price. In that case, usually the buyer must come up with extra cash to pay the difference, because the bank will only lend against the appraised value.

[krudmonk]

Originally Posted by otterprods

Oh, I see... Fool-proof! 2.2 mill for a condo at 88 SJ sounds like a great idea!
I used to work right next to that place, no way is any of it (penthouse or not) worth that kinda money long term for anyone not looking to prove something… But who listens to me when they have 'comparable sales' and 'market trends' to go by?

Besides, I was talking about more than just a the investment value of a particular "home".

You worked next to a building so you know the value of the condominiums inside it? Is this a magic trick you perform on the street?

Originally Posted by jbunniii

It was only a few years ago that half the banks in the country seemed in danger of failing because they did precisely that...

Because of market value approach to appraising? Really?

Or was it because the people who produced such comparisons of value were corrupted by flaws that have since been largely reformed?

[otterprods]

Originally Posted by krudmonk

You worked next to a building so you know the value of the condominiums inside it? Is this a magic trick you perform on the street?

Well I've been to them and in them, so I have some idea of what they might be worth, but you're right that I don't really know and so I will not be purchasing one. (Here's a hint though: NOT $2.2m)

Originally Posted by krudmonk

Or was it because the people who produced such comparisons of value were corrupted by flaws that have since been largely reformed?

Oh. Reform. Right. That always solves problems like people poorly educated investors buying into volatile markets with money they can't afford to lose.

I'll admit that physical appraisals are a lot better than things like 'comparable sales' and 'market trends' (a.k.a. 'past results') because at least they involve some sort of tangible valuation of assets. But still, when your potential date of closure is nowhere in the foreseeable future, even the best appraisal means little more than wherever you think that ace is hiding in a blackjack deck.

Frankly it's pretty disturbing that I still (IN 2014) even have to explain these sorts of common sense things, much less be incessantly argued with by people who reject it all as 'old fashioned', 'un-enlightened' or whatever…

[krudmonk]

Originally Posted by otterprods

Well I've been to them and in them, so I have some idea of what they might be worth, but you're right that I don't really know and so I will not be purchasing one. (Here's a hint though: NOT $2.2m)


Oh. Reform. Right. That always solves problems like people poorly educated investors buying into volatile markets with money they can't afford to lose.

I'll admit that physical appraisals are a lot better than things like 'comparable sales' and 'market trends' (a.k.a. 'past results') because at least they involve some sort of tangible valuation of assets. But still, when your potential date of closure is nowhere in the foreseeable future, even the best appraisal means little more than wherever you think that ace is hiding in a blackjack deck.

Frankly it's pretty disturbing that I still (IN 2014) even have to explain these sorts of common sense things, much less be incessantly argued with by people who reject it all as 'old fashioned', 'un-enlightened' or whatever…

1. "Physical appraisals" are usually based on market data in the form of comparable sales, where sufficient data is available, so I don't see how you're differentiating them. In the case of a multi-million dollar penthouse, there won't be much comparable data, but value will still be calculated by adjusting concrete figures such as square footage, etc. It's never about eyeballing and ballparking.

2. Poorly educated investors can spend all their cash how they want, but most residential real estate transactions still require loans from financial institutions. They do not sign off on bad deals that will lose them money, like an idiot overpaying for a penthouse. Purposefully misjudging an applicant's financial standing, as in the 2008 collapse, is a different matter than misjudging the worth of property which stands as collateral, and misjudging the worth of property is tougher now that brokers and appraisers cannot systematically collude to inflate the illusion of value.

3. Appraisal reports have been supplemented since 2008 with more market projections pertinent to the specific properties being appraised, and that data is parsed into temporal groups to reflect past and future trends. The real estate market may by constantly fluctuating, but the blackjack metaphor is grossly overexaggerating the volatility of things.

[LexusNexus]

Originally Posted by neutrino78x

According to the Guiness Book, this is the largest monopoly board in the world, and it is not in SF

Homepage

A monopoly board as a tourist attraction? You can't be serious.