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.
The same thing you do when all of your comps are driven by people getting 0% down liar loans that they can't really afford. You either choose to participate in the market as it currently is or wait things out, hoping they will get better in the time frame you need to buy and/or sell.
Assuming there are not obvious attempts to unnaturally interfere with the market (i.e. obvious fraud, non-arms length transactions, monopoly actions, etc), the market is what it is regardless of the reasons for pricing action in your area.
But is it really fair for one individual to have to compete with the banks? (Seriously don't want to hear the 'Life's not fair bit').
Banks sell houses WAY under value just to ditch them. They've made their money in interest in the first few years someone owned it and made the payments and have no incentive to hold it while they wait for a proper offer. They just sell it dirt cheap because they can. They do not care what it does to the market. Sounds like they've destroyed cjones' market.
And...
Why is it that one house has to be judged not by for it's value alone but by the value of those houses in it's area? What if this house is the shiny dime in a jar of corroded penny's. Is it still only worth a penny?
What I'm saying is if you just blindly look at how much the comps sold in price per square foot and use that for how much you're willing to appraise the value of another house you're completely missing it! You could do that without walking through the front door of the house you're appraising! ANYBODY COULD DO THAT!
cjones' house could be super nice compared to the comps but an appraiser who only looks at price/sq ft would never bother to realize that. Maybe the house is worth a little more because it has a sprinker system and a nice kitchen? Maybe the floorplan is special? Maybe the backyard is larger than average? BAH! All that matters to Mr appraiser is price/sq ft.
But is it really fair for one individual to have to compete with the banks? (Seriously don't want to hear the 'Life's not fair bit').
Banks sell houses WAY under value just to ditch them. They've made their money in interest in the first few years someone owned it and made the payments and have no incentive to hold it while they wait for a proper offer. They just sell it dirt cheap because they can. They do not care what it does to the market. Sounds like they've destroyed cjones' market.
I'm not sure how much to respond to, because really the answer is that life isn't fair. Or at least, life isn't fair to you at the exclusion of others. For everyone selling their house at a loss, some buyer is getting a better value than last year.
Banks are trying to get as much money from the houses as possible in a reasonable time frame. Their definition of a reasonable time frame might be different from yours, but they're not going to dump a house just to destroy comps for the next foreclosure they have to sell. That makes no sense.
What you see as dumping, they see as a rational economic choice to maximize their profits in a tough economic situation. They value time, upkeep and holding costs and so on differently than a home buyer, but no one's forcing an individual to compete with them. As I mentioned, if you don't want to you can choose not to participate in the market. If you find it worthwhile enough to sell in the current market, that's what the market is right now.
Quote:
Why is it that one house has to be judged not by for it's value alone but by the value of those houses in it's area? What if this house is the shiny dime in a jar of corroded penny's. Is it still only worth a penny?
Because with a few exceptions for unique historical properties, houses are essentially commodities. So it's not that the house is a dime, it's the shiny penny in a jar of corroded pennies. What's that make it worth? A penny.
There's way more of them for sale then there are buyers in many cases, so there's no reason for buyers to get fixated on any one particular house. This is especially when other similar ones are available for significantly less - price overcomes a lot of minor differences. It's the same reason that Ford can't charge a million dollars for a family car - people will just go an buy one from Chevy. Sure, the cars aren't identical but they're close enough to easily substitute for each other.
In any market, the value of commodities is driven by sales at the margins. In an up market, these would be the properties with multiple offers that drive prices up. In down markets, the sales which set the price are generally the sales on the low end.
Quote:
cjones' house could be super nice compared to the comps but an appraiser who only looks at price/sq ft would never bother to realize that. Maybe the house is worth a little more because it has a sprinker system and a nice kitchen? Maybe the floorplan is special? Maybe the backyard is larger than average? BAH! All that matters to Mr appraiser is price/sq ft.
All of these things would be taken into account. The sad truth is that they're just not worth that much more to the average buyer. Market value is set at what you can get a buyer to pay, and currently in many markets there are not many buyers willing and able to pay a premium for these things.
Look, if these houses were really being dumped by the bank, why isn't the original poster (or any investor) buying them and reselling them for a profit? This would earn him some extra cash and at the same time drive up comps on his own house. If there's nothing to push comps higher, the foreclosures are the only way to measure the market, regardless of the prices buyers wish they could get.
But is it really fair for one individual to have to compete with the banks? (Seriously don't want to hear the 'Life's not fair bit').
Banks sell houses WAY under value just to ditch them. They've made their money in interest in the first few years someone owned it and made the payments and have no incentive to hold it while they wait for a proper offer. They just sell it dirt cheap because they can. They do not care what it does to the market. Sounds like they've destroyed cjones' market.
And...
Why is it that one house has to be judged not by for it's value alone but by the value of those houses in it's area? What if this house is the shiny dime in a jar of corroded penny's. Is it still only worth a penny?
What I'm saying is if you just blindly look at how much the comps sold in price per square foot and use that for how much you're willing to appraise the value of another house you're completely missing it! You could do that without walking through the front door of the house you're appraising! ANYBODY COULD DO THAT!
cjones' house could be super nice compared to the comps but an appraiser who only looks at price/sq ft would never bother to realize that. Maybe the house is worth a little more because it has a sprinker system and a nice kitchen? Maybe the floorplan is special? Maybe the backyard is larger than average? BAH! All that matters to Mr appraiser is price/sq ft.
You could always just wait it out and then put on the market when prices come back up. If you don't like the market conditions..then don't play in that market.
Regarding your lease-back question. Here in the North East a deposit is very common. After all you are becoming a renter in their house and you could (intended or not) cause considerable damage. Would you rent out your house to somebody without a security deposit? Of course the deposit is fully refundable.
Regarding your lease-back question. Here in the North East a deposit is very common. After all you are becoming a renter in their house and you could (intended or not) cause considerable damage. Would you rent out your house to somebody without a security deposit? Of course the deposit is fully refundable.
Thank you for answering my question. I understand the deposit and don't have much problem with it our realtor just mentioned it isn't a common practice where we are
As far as the appraisal chat, I think it sucks (for better lack of words) to be compared to foreclosures but I also understand that is all there is. I don't have a choice to wait until the market is better to sell. In the area I'm in you would be stupid to list your house for sell just for the heck of it. I just feel like I'm taking a big hit because of everyone else's action. I'm the "good" person who pays her bills but I get shafted in the end anyway. I'm realize this is how it is and I'm just saying it sucks! Also, all the foreclosures in our area are not because people couldn't afford it, it's because they didn't want to deal with the market so they bought a new house and then walked away from their old house. Knowing the background to some of these foreclosures is what puts a bad taste in my mouth.
but they're not going to dump a house just to destroy comps for the next foreclosure they have to sell. That makes no sense.
You're absolutely right. It does not make sense. The banks do not intend to destroy the market. They are just doing business and trying to make good economic decisions.....for them. They do not care about the people who live next door to the home they're getting ready to sell for peanuts. But you know what????....they ARE setting up the next foreclosure. It makes no sense.
Shortsales and Forclosures breed Shortsales and Foreclosures.
Quote:
Originally Posted by KCfromNC
All of these things would be taken into account. The sad truth is that they're just not worth that much more to the average buyer. Market value is set at what you can get a buyer to pay, and currently in many markets there are not many buyers willing and able to pay a premium for these things.
I suppose I'm not the average buyer because when I look at a home I look at every detail. If one has $5000 worth of options added to it and another doesn't the first is worth more than the second (all things being equal). I'm willing to pay more to get more....if it's really what I am looking for.
Quote:
Originally Posted by KCfromNC
Look, if these houses were really being dumped by the bank, why isn't the original poster (or any investor) buying them and reselling them for a profit? This would earn him some extra cash and at the same time drive up comps on his own house. If there's nothing to push comps higher, the foreclosures are the only way to measure the market, regardless of the prices buyers wish they could get.
Just wait. All these houses that are being bought way below value are going to be on the winning side of this deal. In 5 years it'll all be different. I'm not a finacial advisor so don't take my word for it....but if I were someone with a lot of extra income I'd be looking into buying up some of these forclosures.(not all of them are worth messing with but i've seen some nice homes go for way way less than they should have) Why? Because there is no possible way you could build some of these houses for the money that they are being sold for. One couple that looked at my house said they absolutely loved it....but they were likely going to buy a realatively new two story 2500 sq-ft forclosure for $125000. I mean WTF? That house should easily sell for $25k more in my area.... and it surely will sell for that and then some in 5 years.
Quote:
Originally Posted by HappyTexan
You could always just wait it out and then put on the market when prices come back up. If you don't like the market conditions..then don't play in that market.
Some of us aren't blessed with the option to wait it out. Some of us have to sell to leave the state for another job....not because it was our first choice....but because it was our only choice. Some of us cannot support two mortgage payments....or rent and a mortgage payment.
I suppose I could just do what everyone else in the current market is doing and just shortsale it. But then I'm only contributing to the problem. Shortsales and Forclosures breed Shortsales and Foreclosures.
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.
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.
