Please register to participate in our discussions with 2 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.
One can agree to everything you just said, while also agreeing on the definition of fair market value. The two aren't mutually exclusive.
Note that I said 'accurate' fair market value. There is such a thing. An executed transaction does not necessarily mean it was fair. It means a deal happened, that's it. Whether it was a good deal or not is measurable. And I know a bad deal when I see one, believe me.
People in this area overpay for a lot of reason. Some do it because they can and they don't want to haggle. Some do it because they have time constraints. I know a realtor who's client accepted an offer $110K less than ask recently. This after insisting for months they would not budge on ask. Why? Health issues. Others hold out till the very last minute because they're actually in a lot of trouble and are trying to stall the bank. Or the shame of other people knowing.
Just because overpaying happens doesn't make it right, a good thing for the economy or 'fair'. It means a business transaction occurred (and someone gave up or got suckered or didn't care what the price was), and that's it.
Note that I said 'accurate' fair market value. There is such a thing. An executed transaction does not necessarily mean it was fair. It means a deal happened, that's it. Whether it was a good deal or not is measurable. And I know a bad deal when I see one, believe me.
People in this area overpay for a lot of reason. Some do it because they can and they don't want to haggle. Some do it because they have time constraints. I know a realtor who's client accepted an offer $110K less than ask recently. This after insisting for months they would not budge on ask. Why? Health issues. Others hold out till the very last minute because they're actually in a lot of trouble and are trying to stall the bank. Or the shame of other people knowing.
Just because overpaying happens doesn't make it right, a good thing for the economy or 'fair'. It means a business transaction occurred (and someone gave up or got suckered or didn't care what the price was), and that's it.
Just curious but how are all these people overpaying getting approved for mortgages with bank appraisal requirements (based on comps!)?
Just because two people agree doesn't mean it's a good deal or good value. In this market, it can mean someone overpays. And if you knew the condition of the house I'm talking about, I think you'd have a hard time disagreeing with me.
Underpayment or overpayment is determined at a later time. Kind of like a trade in baseball. It is not always clear which side ultimately made a good deal till much later. Clearly there are anecdotal examples where a seller is forced to sell for under market or a buyer makes a decision to pay up for something no one else will. But in your circumstance if you feel the house is priced too high then theoretically the seller will have to come down to attract a buyer.
Jay makes a good point in that it is all relative with respect to time. For example, even if you bought during the ridiculous "hot" period from early 2000s till 2006 you could have made money if you also sold before the market crashed in 2007. So two scenarios:
1. Buy for $500k in 2004, sell in 2006 for $600k. Result: "wow i made a GREAT buy BELOW market".
2. Buy for $500k in 2004, try to sell in 2009 for $550k, but market crashed....can only get $425k. Result: "wow I really OVERPAID for that dam house".
Both bought for exact same price. One buyer thinks he made a great deal, the other feels he got screwed. BOTH dealt with FAIR MARKET pricing at the time of the buy and sell.
Easy. Appraisals. Otherwise known as 'wheel greasers.'
It's not 2006/2007. Far more stringent processes came out of meaningful litigation in the appraisal business post the housing crisis. Every asset has a clearing price and for many sellers who are not distressed and or "motivated", why price aggressively? Also with interest rates as low as they are, why not spend an extra 300/month for a property you have an emotional affinity towards? You are talking about fairly high price points so why are you hitting he panic button over 200-400/mo higher mortgage payments.
It's not 2006/2007. Far more stringent processes came out of meaningful litigation in the appraisal business post the housing crisis. Every asset has a clearing price and for many sellers who are not distressed and or "motivated", why price aggressively? Also with interest rates as low as they are, why not spend an extra 300/month for a property you have an emotional affinity towards? You are talking about fairly high price points so why are you hitting he panic button over 200-400/mo higher mortgage payments.
Easy. Appraisals. Otherwise known as 'wheel greasers.'
That's what I said - appraisals - done by the bank, not you or the realtor.
If the appraisal comes in significantly over recent comps, an "over-payer" is not getting a mortgage approved. I've been through a few transactions in the past few years, I know.
Wheel greasers is a thing of the past, early to mid 2000s, outdated.
Sorry Wilton, that sounds like realtor speak. $400 month is $48k over 10 years. Not exactly chump change. I know there is wealth is FFC but vast majority of people have tight budget constraints. I was told by two realtors that I should look above 700k for a good starter home after I told them 550k was my price point. Pure self interest of course...trying to make you feel like a loser. Must be in the realtor handbook.
That's what I said - appraisals - done by the bank, not you or the realtor.
If the appraisal comes in significantly over recent comps, an "over-payer" is not getting a mortgage approved. I've been through a few transactions in the past few years, I know.
Wheel greasers is a thing of the past, early to mid 2000s, outdated.
I agree that the wall between lenders and appraisers has been improved. I think appraisal management companies have taken hold so lender does not know who specifically is providing appraisal. Still, can you ever fully trust a process where person is given the answer to the question before stepping foot in the house? If appraiser continously scuttles real estate deals, I can assure that person will be castigated somehow.
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 register to participate in our discussions with 2 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.
