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Old 06-22-2009, 09:03 PM   #81
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In reading these threads and the problem my son is going through in Naples, including the go-arounds with "his" realtor, makes me ask this question. Who does the realtor work for in this modern era? When I was a real estate salesperson in the 90's, the listing broker, the listing agent and any agents showing the property worked for the seller because the seller was paying the commission. About the time I was bowing out of that profession, along came the buyers broker or buyers agent. Here the buyer is paying the agent to find him a property that fits his specs and the agent has a fiduciary duty to the buyer. All this brings up the point about disclosure. I for one would never tell an agent how much I was willing to spend, that I might be willing to go higher on the price, or any other thing that might influence that agent. You have to know the responsibilities of the realtor and at this point I don't know who to trust and who not to trust.
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Old 06-22-2009, 09:48 PM   #82
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I like the idea of a buyer's broker who is paid by the buyer on an hourly basis making it clear who the broker represents. If the seller is paying the buyer's broker (like in a normal sale), isn't the broker working for the buyer? No agents or brokers involved in this deal financially. We paid a discount broker to get listed in an MLS to get into Realtor.com and then we are on our own. The prospective buyer is being represented by her BIL for free.
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Old 06-22-2009, 10:44 PM   #83
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they will be calling you tomorrow with a counter offer of 245k. i have a feeling
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Old 06-22-2009, 11:06 PM   #84
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thefed - and we will counter with ?
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Old 06-23-2009, 05:46 AM   #85
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I like the idea of a buyer's broker who is paid by the buyer on an hourly basis making it clear who the broker represents. If the seller is paying the buyer's broker (like in a normal sale), isn't the broker working for the buyer?

Yeah, they should be honest and call themselves 'transaction agents'. That's 'who' they work for after all.
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Old 06-23-2009, 06:33 AM   #86
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So if thefed is correct and we get a call regarding a counter to our counter, while I have the BIL realtor on the phone do I ask him "If this offer isn't acceptable to us, should we counter or just not respond?"

A counter of $245,000 is still too low so if that number comes through it's either another counter or non-response. $255,000 is the middle of the road of their initial offer and our listing price and we could live with something around that.
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Old 06-23-2009, 06:58 AM   #87
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One does not need to meet in the middle of the road. And a counter-offer does not need to go lower in price and a non-response is not productive. You can simply restate your previous counter-offer. Let them make the decision to walk away. And I wouldn't be telegraphing my feelings to the BIL realtor.

We made a low-ball offer on our house. The indication that the seller wasn't going to move was a counter-offer equal to the previous counter-offer. We walked at the time, but eventually bought the house a few months later from the original owner's relocation service at a much lower price.
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Old 06-23-2009, 08:03 AM   #88
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Tryan - That's a a very interesting idea. We would definitely do that especially since returns are so pathetic everywhere else. If I don't hear from them after a couple of days, do I call to propose something like that? I could see the dad getting bent out of shape if we proposed a solution to bridge the gap because they couldn't afford to pay a "reasonable" price.
Best to propose holding paper with the counter. As it is a major part of the deal (no banks required, negotiated/flexible terms/rates).

FWIW, most of the country will/has returned to the 2001 pricing, IMO. This was the last time investment property cash-flowed. Investors will build a bottom there.

Leaving OH for FL, you'll do very well (as FL was hit harder than most other states). Point being, it's tough to play hard-ball in a soft market with only one offer ... I would expect they're looking at EVERYTHING else on the market for their initial offer.
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Old 06-23-2009, 11:45 AM   #89
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In reading these threads and the problem my son is going through in Naples, including the go-arounds with "his" realtor, makes me ask this question. Who does the realtor work for in this modern era? When I was a real estate salesperson in the 90's, the listing broker, the listing agent and any agents showing the property worked for the seller because the seller was paying the commission. About the time I was bowing out of that profession, along came the buyers broker or buyers agent. Here the buyer is paying the agent to find him a property that fits his specs and the agent has a fiduciary duty to the buyer. All this brings up the point about disclosure. I for one would never tell an agent how much I was willing to spend, that I might be willing to go higher on the price, or any other thing that might influence that agent. You have to know the responsibilities of the realtor and at this point I don't know who to trust and who not to trust.

Way Way WAAAAAYYYY back when my dad was an agent (in the 60s)... he was like you said.. all agents worked for the SELLER even if they were showing you a house... so any discussions you had with him or her was relayed to the seller... my dad got furious with my sister when they were on a call and he was talking strategy with her.... and then he found out the agent was sitting there listening to the call...


Today, at least in Texas, the agent works for the person... either the buyer or seller.. I just bought a house and the agent was both the buyer's agent and my agent... they even have rules about what the agent can say in this case... if I say something to her, she can not tell the seller unless I give her permission IN WRITING... go figure..

But like you , I only told her stuff that I would not care if the seller heard...
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Old 06-23-2009, 12:32 PM   #90
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I had a bit of back and forth with a person who hasn't seen the place we have for sale - after 3 emails i lost a bit of patience - she was quoting a tax assessed value for the place at me rather than appraised Real Market Value and basically trying to grind the price down before even looking. Not going to waste my time on someone who isn't going to get in the ballpark. An excerpt:


"What is your willingness to pay a commission to Realtor who may/may not represent me?

If I wanted to pay a realtor I would have listed it with a realtor. I am selling it myself to keep the price low - it's really not that complicated to supply necessary disclosure forms and close through a title insurance company".

end quote

In my opinion the primary purpose of a realtor for the seller is to get get the property listed in the MLS , keep the seller at arms length from the buyer, and to make disclosure more difficult. I know i disclose more than i should when talking to lookers - some agents i know don't want to know every little thing - if they knew they would be obligated to disclose.
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Old 06-23-2009, 01:33 PM   #91
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Kind of an interesting thread in that almost everyone appears to have put themselves in the shoes of the seller. The market is still declining in most places, except for modest starter homes for first-time buyers. And I don't see it advancing for any segment of the market for a long time. Reminds me of 1989-2001, where things pretty much went sideways.

Professor Shiller and others have indicated that the housing market generally appreciates very, very slowly over the years, historically, except for major peaks and valleys, and the peaks generally suggest an animal spirits change in homeownership attachment.

The current shift downward appears consistent with the approach the sellers here are taking (even if aided by the Sugar Daddy banker). Buyers are no longer primarily looking at the house as an investment (though Sugar Daddy might be doing that a bit). They are looking for a house to call home for a long, long time -- I doubt they want to "flip" it. And they have the patience to wait around for it. The only disincentive for them is that if they wait too long they might lose the $8,000 first-time buyer tax credit

My daughter was in the same boat as these buyers and I was in the role of the Bank of Dad too, furnishing essentially the down payment for her new home. We made an offer -- and we actually were willing to walk if the seller -- a bank on foreclosed property -- did not accept our initial offer. We did our due diligence and established that the listing price was pretty much close to appraised value (the listing price had already been dropped big time too), minus 5 percent we attributed to a declining market. My daughter loved the property and saw a lot of potential in remodeling it to her desires. The bank accepted our offer.

When the initial listing price is way overpriced, as it appears to be the case here, why would you expect buyers, under no incentive to move quickly and in a declining market, to make a reasonable initial offer and play ping-pong with you? I think most first-time buyers are now in the "take it, or leave it" mode unless they think there might be other first-time buyers out there looking for the same property, which does not appear to be the case and BIL agent knows that too.
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Old 06-23-2009, 02:09 PM   #92
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$257,950 would be my counter.........BACK to the buyer.......
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Old 06-23-2009, 02:47 PM   #93
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ChrisC - My prospective buyers are not first-time homebuyers. They recently sold a home and are looking for a replacement. That's the good news/bad news for us. They don't have a home to sell but they want to be in a home before school starts in late August as the husband is a teacher. They need to get an accepted offer very soon to meet that goal so I'm not sure they will be waiting us out. The county they are currently living in (and I guess sold in) has been hit hard enough to have been tagged as a "declining market." That hasn't been the case in our country based on a conversation with our local CU president who has worked in banking in this county for probably 20 years at multiple banks.

Do you think professional appraisals are valid for determining the price of home today? I have one for $268,000 in Feb '09 and one for $270,000 in May '09. My original listing price of $299,900 was definitely too high but I lowered it after 8 weeks (after receiving my refi appraisal which corroborated the Feb appraisal) and it is now $279,900? Do you think that's out of line given the appraised value? Of course, a home is only worth what someone will pay for it but it seems like a formal appraisal is a good guideline for determining value prior to an actual sale.

Homes valued over $200,000 are a small percentage of the local inventory and few of them turn over each year. Because of that, I figured it would take one year to sell the home even before all the housing troubles started.
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Old 06-23-2009, 03:34 PM   #94
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Chris C.... you are correct that it is more of a buyer's market... and I was a buyer. I waited out one house for over 210 days... The agent took me to see it and I asked "why?". it was way to high...

We then stopped looking for houses for a few months as there was little to see and the prices were still coming down. I was waiting for the foreclosures to start up again and see if there was a gem out there...

The agent took us to the house again and said the price had dropped... I said 'not enough'... and I was still waiting... a few more months and looking at a few more houses... the agent said I should just make an offer on that house... I made a lowball offer and they took it... their counter was weak and I said I would only pay more if the roof and air were newer than 10 years old... both are older so I got it at my price... in over 7 months this was the first offer they received...


Buckeye.... from what I read from you, you are willing to wait... and if that is a year or even longer than great... but the last housing crisis in the '80s my sister was going to do the same thing... wait for the price to go up some and then buy a better house... I said 'what makes you think that the better house will not go up in price?'... If both go up 10%, they you lose... if you do plan on buying in Florida, then buying now (or at least in the next 6 months or so) might be a smarter move than waiting for the higher offer... just a thought....
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Old 06-23-2009, 03:59 PM   #95
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Texas - No plans to buy in FL at this point. From reading another thread, buying a house in FL means getting a job or paying cash. I might pay cash for a mobile home (i.e. disposable hurricane magnet) but not for a "real" house. I've got no job prospects lined up in FL...and I like it that way!

A sales price of $232,000 (buyers initial and only offer) is just too low for this house even with everything that is going on in the housing market. The home is only 6.5 years old (occupied for 4.5 so that is the age of appliances) and the first appraiser (from out of the area and totally independent) calculated the replacement cost at $348,000. She also included the comment "subject is beautiful home in nearly new condition." I know everyone says their house is great but it really is!
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Old 06-23-2009, 04:02 PM   #96
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Buckeye,
I would guess you will get two points of view on your question 'Do you think professional appraisals are valid for determining the price of home today?' My opinion is from the viewpoint of the appraiser. After retiring from the Air Force I joined my brother in the appraisal business, and just for your information, I am retired retired, and don't do appraisal any more.

Now to your question. Appraisals are about the closest you will get to the 'Market Value' of your home. In the 80's, due to problems with the appraisal industry, the government enacted new laws governing banks and appraisers. Most of these were aimed at insuring the independence of the appraiser. That is why, for loan purposes, your bank must engage the appraiser and not the property owner. In fact, a bank is not suppose to use an appraiser 'suggested' by the client. On the banking side the appraiser is suppose to be engaged by the underwriting side not the lending side of the bank. While folks think the bank wants a low appraisal, this was not what I found in my dealings. (I was the head of the appraisal department for one of the largest banks in CA.) We wanted an accurate value. If the value was two low we would not be able to make the loan, and the bank was in business to make loans. If it was too high the banks loan would not be covered. We made it clear we wanted an honest value, and would scratch appraisers from our list if they gave consistently low or high values.

Now to some of the problems the appraiser has. In residential appraising the Market Approach/Sales Comparison Approach is almost exclusive used (exception new construction). I have always that the Sales approach is somewhat of a lagging indicator as it depends on prior sales. Most institutions want to see sales within 6 months of the date of the appraisal. In a changing market value may increase or decrease during this time, however, for most purposes not enough to make a real difference. Next, adjustments to sales, i.e. there are not sales of comparable properties sold near you, is more of an art than a science. That is why there are three approaches to value, Cost, Income and Market. In the Cost approach the appraiser looks at what it would cost to by your land and build your home new, then he subtracts depreciation. The income approach looks at what other homes like yours are currently rented for and sold while rented. If you think it is difficult to find these sales, it is! And, this is why the income approach is seldome used in residential properties.

This was may have not answered your question, but in my opinion, yes, if you ask an appraiser to give you a value, you will get a gppd idea as to your properties value. Depending on the sales available, most will be within 5 to 10%. Now before the rath of examples where someone was 'screwed' by their appraiser, there will always be exceptions, and always be good and bad appraisers. Also your appraisal will be no better than the information provided/discovered in the market. Buy the way, if you sell your home below $270,000 and the appraisal will use your property as a comparable. If they don't know you were in a hurry to sell and take less than market for your home they will assume the market has dropped. If they have two sales at 270 and yours at 240 they will look for why your's sold less. If they don't talk to either you or your realtor, they will have to make assumptions. The may be right or may be wrong. In the current climate, most will assume that your home as the most recent sale represents a decline in the market.
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Old 06-23-2009, 04:26 PM   #97
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Rustic23 - I thought I had been screwed by the first appraiser I commissioned in February 2009 when the value came back at $268,000. Two comp's were not geographically close but close with respect to construction and one was close in construction and geography but 2 years old and a known non-arms length sale. The second appraisal (the refi appraisal) in May 2009 came in at $270,000 with one house/sale truly comparable (comp'd $281,080 against that house) and two other houses/sales with comparable square footage and very close geographically but definitely not comparable construction.

Finding comp's for this house is very, very difficult but two different appraisers coming at it from two different angles four months apart came to pretty much the same value, $268,000-$270,000. Again, the house is ultimately worth what someone will pay for it but I think $232,00 is way off the mark.

The depreciated Value By Cost done by the Feb '09 appraiser was $321,772.
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Old 06-23-2009, 04:44 PM   #98
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Do you think professional appraisals are valid for determining the price of home today? I have one for $268,000 in Feb '09 and one for $270,000 in May '09. My original listing price of $299,900 was definitely too high but I lowered it after 8 weeks (after receiving my refi appraisal which corroborated the Feb appraisal) and it is now $279,900? Do you think that's out of line given the appraised value? Of course, a home is only worth what someone will pay for it but it seems like a formal appraisal is a good guideline for determining value prior to an actual sale.

Homes valued over $200,000 are a small percentage of the local inventory and few of them turn over each year. Because of that, I figured it would take one year to sell the home even before all the housing troubles started.
Rustic23 gave a pretty good answer to this question. However his view merely suggests that professional appraisals are the best available evidence of market value but it doesn't mean they constitute accurate, let alone precise, judgments of such value. It's true that there isn't a good substitute for professional appraisals whether commercial or residential real estate. But in a rapidly declining or ascending market I simply wouldn't place a lot of value on the appraisal, as a buyer or seller -- it's information that's stale as soon as it's written!

It's like comps when the real estate market was on steroids -- the comps mean little to anyone as the price keeps going up; the same is true for comps in a declining market when, as a buyer, you're trying to figure out how much blood might be on your hands if you're catching a falling knife!

So, in my view, I'd take the appraisal and slash it by 10 percent, immediately, in this declining market. That would bring you at a listing price of around $243K. If you've underpriced and there are more than one buyer, then you'll have an escalation in offering prices. But if these potential buyers are the only game in town, well then I think you know the drill.

Personally, in this market, I think one of the misteps we can make, as sellers, is to misprice the house initially, which is what I did a few years ago, and my house just sat and sat until I took it off the market. I'm in no rush to sell my house (though it's now vacant) but when I sell, I'll probably price it for a quick sale and forget about squeezing all the juice out of the orange.
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Old 06-23-2009, 06:00 PM   #99
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A couple of more thoughts before I bow out of this interesting thread, to reinforce some of Chris's points.

I think the psychology of the real estate market is extraordinarily important in attempting to price a house. In a rising market when prices are going up a 1-2% every month a buy waits means it will cost you thousands or even $10,000 (in crazy places like California, or Hawaii). In a declining market there is very little incentive to buy now. Sure it would be nice to move in while the buyers is on summer vacation, but it isn't the end of the world if they don't. I imagine for most folks if they think they can get the place for $10-20,000 less if they wait a few months it is worth the hassle. I imagine that housing prices decline in Ohio starting in Nov or so... When you take unmotivated buyers and add in the legions of buyers who are terrified that they'll buy a place only to lose their job and join the ranks of the unemployed and foreclosed, it is easy to see why many smart people are predicting further declines in housing prices.

I am not sure that even replacement costs is that accurate of measurement right now. Ohio unemployment is about 11%, so I am sure that carpenters drywallers etc that were use to getting $25-30/hour a few years ago would be happy to work for half those wages right now.

So that leaves income. Lets say you don't sell the house and you decide to wait out the recession. How much could you rent the place for?
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Old 06-23-2009, 06:32 PM   #100
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I'm not sure I could handle being a long distance landlord again but never say never. I have seen what humans (they looked like humans) can do to a home and it's not pretty. Only 2 adults have lived in the house. We have treated it like a queen and the condition reflects it. Also, I would hesitate to rent it out because of the unbudgeted expenses that could be generated due to tenant damage that would not be covered by insurance.

I don't know what it would rent for. I guess I should do some research.
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