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Old 06-23-2009, 06:33 PM   #101
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It really depends on several factors. How fast is the market moving? How old are the comparables? How comparable are the comparables? In a changing market, most appraisers should adjust for time. In fact if I remember, time is the first adjustment made. Therefore if the market is changing 1% per month down and a sale was five months ago, the sale would be adjusted downward 5%.

I agree completely as the the accuracy or preciseness of an appraisal. You will notice most appraisers deal in big round numbers. You should be very cautious of an appraisal that comes in at $289,241.33. No one is that good and in fact appraisers are taught to round this to $289,000 so as to not mislead someone as the the accuracy involved. Most good appraisers will come within 5% of the market value. That does not mean that is what a home will sell for. Some people want more and some are willing to sell for less. And, yes some appraisers miss the value by more than 5%.

I would say, however, that in this case two values around $270,000 is a good indication that the value is in that range. I would not list my house 10% lower than this, unless I was looking for a quick sale. Once more, if the market is going down fast, and the appraisals are several months old, maybe. It is still just like Buckeye said, it is what someone will offer, and what Buckeye is willing to sell for.
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Old 06-23-2009, 10:20 PM   #102
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I would say, however, that in this case two values around $270,000 is a good indication that the value is in that range. . . . Once more, if the market is going down fast, and the appraisals are several months old, maybe. It is still just like Buckeye said, it is what someone will offer, and what Buckeye is willing to sell for.
Yeah but Buckeye said that one appraisal was done in February and the other done 2 weeks ago.

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When we refinanced the house two weeks ago, the appraisal came in at $270,000. We had commissioned a private appraisal back in February that came in at $268,000. I couldn't believe MY house was now only worth only $268,000 (paid $298,000 in December 2004 and then put in $15,000 of appliances and floors) but the refi appraisal confirmed the lowered market value.
So, in a declining market, one appraisal was done in February at $268K, an appraisal done at Buckeye's request. And then another one done in early June, at the lender's request as a refi, at $270K. You don't see something wrong with this picture?

Appraisals, I'm often reminded by real estate appraisers, have a certain "art" to them. The appraisers sometimes paint good pictures, but if the canvas is moving a lot, how can anyone on earth do a good job in painting?
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Old 06-24-2009, 08:16 AM   #103
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No I don't have a problem with this. I don't know Buckeye's market. Is it still dropping? Is it stabilised? Is it slowly going up? A Feb appraisal at $268 (rounded to $270) and an appraisal of $270 three or four months later is well with in any accuracy that should be expected. No appraisal will ever represent that his value is the 'Exact' value of the house no plus or minus. If he does RUN!
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Old 06-24-2009, 09:09 AM   #104
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I am no real estate professional and not especially knowledgable in real estate, but it seems to me that around here they use comps to determine a good selling price and what the house is worth. The reason for that is that appraisals tend to come in at whatever is desired/needed, or at least to be influenced in that direction.

For example, if someone is buying a house for $270,000 and gets an appraisal for the mortgage company, the appraisor is going to say it's worth $270,000 unless it is pretty far off that target (enough that apparently something fishy is up). From what I understand, he's probably not going to say it's worth $275,000, for example.
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Old 06-24-2009, 09:32 AM   #105
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If the house is in good condition, the real reason it won't sell is the price is too high for the prospective buyers in that market. The only options are:

1)Find different buyers
2)lower the price

Maybe it's a budget thing for the buyer?? Lots of lowballs happen when folks have a budget issue they're hiding behind.........
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Old 06-24-2009, 10:38 AM   #106
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W2R,
The appraiser is looking for what a willing buyer and a willing seller will agree on as the value of the property. A contract price often represents this. In looking at the comparable it is often hard to find out what was in the minds of the buyer and seller when they came to their agreement. Some banks do not give the appraiser the contract information. In our office we knew the sales price most of the time. However we arrived at the value based on what the market told us. i.e. comparable sales, market activity, value trends over time and such. When we arrived at the value we compared it to the sales price. If we were out of line we would look to see if we missed anything. Seldom, however, did we change the value. We often did further research to see if we could determine why the sales price was not representative of the market.

In Buckeye's case if they agree to a price below $270, say $240, most appraisers would take a look to see if values in that neighborhood were falling faster than they thought, or if they could contact the seller, were they under preassure for a quick sale. This is easier to do in a small market where most folks know each other. This is not always so in large cities where appraisers have less knowledge of the terms of the comparable sales.

Another thing that happens is that an appraiser may arrive at a value of $270. The sales price is $275. It then depends on how strong his value is. i.e. if the house is a new home, and there are 15 other similar floor plans that sold in the last three months at $270, he is not likely to change his value. If on the other hand the home is a custome home, 20 years old, some comparables are custom and some are tract, he may be more inclined to up his value. As said before there is science/math involved but there is also art and experience. New appraisers use science to confirm their art, old use art to confirm their science. However if the appraisal is $275 and the price is $270, most will not change their value. To quote my brother 'Anyone can give a house away'
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Old 06-24-2009, 11:05 AM   #107
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I have no problem understanding the buyers' outlook. It costs them only some time to look at properties and make offers. Although in one sense all properties are unique, from a more practical POV there is very wide latitude for substitution of one for another.

Only a few things can happen. The market improves, and they may wind up paying a bit more than they might now; the market continues to deteriorate and they get a house cheaper than they would now; they continue making low (reasonable to them) offers, and eventually they encounter a seller who has had enough of showing and jumping to clean house ever time a realtor (TM) calls, or has had a divorce, transfer, or job loss or other change and is highly motivated to sell. In this case they will have equity from day one.

I have been looking at some places, and I really don't like the current system. Agents want to show you a few mostly unsuitable properties, then they are frustrated and worried that they are spending time and gas on nothing. Meanwhile, I know that there are literally thousands of properties that would fit my needs, and I have the time to look around all I want. So the agent wants to lock me up with a buyer's agreement. Sure, if I transferred into town and was spending $3000/ month on temporary quarters, but otherwise, no, gracias.

In Buckeye's situation, the buyers might be expected to have a greater unity of purpose than the typical buyer and his mercenary.

Agents and the Sunday paper are forever chirping about the market hardening, but all I see are for-rent signs, for-sale signs, and cranes.

Not only are we in a deep recession with local unemployment nearing 10%, but mortgage rates are up month over month, and lenders are looking over applications like a dog groomer with a flea comb. A communicative young lending officer yesterday told me that they are such sticklers because Fannie and Freddie will kick back an otherwise conforming loan with no recourse for any small error or gap in the documentation. Then the lender is stuck with inventory he doesn't want- like he said they are the business of origination, packaging, and turnover, not spread lending. They want to retain servicing and no more.

For cash to really talk loudly, all we need is a nice bump in mortgage rates. That doesn't seem impossible to me.

I would also like to make a comment on appraisals and market value. What a house is worth is about as complex a problem as what is sin. It really depends on how you are looking at it. For example, friends of mine about two years ago bought a 2 bedroom co-op apt built in 1927, with no parking and shabby hallways, stairs, etc. They paid $399,000 which a realtor and close friend told them was market price or a bit below. Realistically though, they would struggle to keep it rented at $1500-$1600/mo, with the owners paying the HOA and taxes. How real or enduring is the market value?

Another point of interest to me is that people will pretty much pay the monthly payment that they can qualify for, taking the down payment issues into account. They can't pay more, and middle class buyers don't often look to pay less. But imagine- this creates an interesting inverse relationship between mortgage rates and sales price, since the payment is usually what is fixed by buyer circumstance. Since home mortgage loans are due on sale, I for one would much rather spend my monthly qualification when rates are up, and prices are down. Only neutral to good things are likely in this scenario- rates stay the same, your house value and your payment stays roughly constant. Rates decrease, you re-finance down, or if you are selling your potential buyers have more firepower. The negative situation is that rates go up. But so far in the history of this country rates seem bounded, and when we get down around 5% it seems like a bad bet to imagine rates decreasing meaningfully from there. And 8 or 9 or 10% has to be closer to the upper bound than 5% is.

Ha
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Old 06-24-2009, 06:53 PM   #108
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I did a little research and discovered my county's foreclosure rate actually declined in 2008 versus 2007. The reasoning was the strong family support in tough times and the overall fiscal conservatism of the area which got even more conservative as things began to go haywire 2007. I don't know the numbers for 2009 but I thought this was an interesting bit of information.
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Old 06-25-2009, 01:37 PM   #109
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The call came today.

The phone call finally came today.

BIL realtor called and said the husband and wife had a short sale offer accepted. It's in the area they are currently living which is 20-25 miles from our house and wife's parents and the town she grew up in. During the showing, I questioned wife about being willing to live in my town rather than in the neighboring town she grew up in (our towns are rivals). She said living in our town would be a heck of a lot better than the area she was currently living in.

BIL said they would really rather have our house if we could come to an agreement on price. If the short sale story is true, it appears they were going to try and wait us out but are now forced to take action.

BIL asked me to provide a take it or leave it price unless my previous counter-offer was the bottom line price. I told him it was not and I would have to talk to my husband before giving him a number.
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Old 06-25-2009, 02:40 PM   #110
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The phone call finally came today.

BIL realtor called and said the husband and wife had a short sale offer accepted. It's in the area they are currently living which is 20-25 miles from our house and wife's parents and the town she grew up in. During the showing, I questioned wife about being willing to live in my town rather than in the neighboring town she grew up in (our towns are rivals). She said living in our town would be a heck of a lot better than the area she was currently living in.

BIL said they would really rather have our house if we could come to an agreement on price. If the short sale story is true, it appears they were going to try and wait us out but are now forced to take action.

BIL asked me to provide a take it or leave it price unless my previous counter-offer was the bottom line price. I told him it was not and I would have to talk to my husband before giving him a number.
If they would rather live in your town they should be paying more to move there.

I would stick to my guns somewhat, and only move down a little, unless you are desperate to sell..........
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Old 06-25-2009, 03:02 PM   #111
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FinanceDude - Your previous post had a $257,950 counter-counter-counter offer. I can't say we are desperate but it sure would be nice to get on with the next phase of our life. The $257,950 is a $10,000 reduction from our first counter and 95% of appraised value. That doesn't sound too bad for an all-cash offer in today's market.
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Old 06-25-2009, 03:42 PM   #112
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FinanceDude - Your previous post had a $257,950 counter-counter-counter offer. I can't say we are desperate but it sure would be nice to get on with the next phase of our life. The $257,950 is a $10,000 reduction from our first counter and 95% of appraised value. That doesn't sound too bad for an all-cash offer in today's market.
Sounds like it's down to what you and husband want to accept, i.e. your joint decision.

The suspense is killing me BTW.
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Old 06-25-2009, 04:06 PM   #113
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The phone call finally came today.

BIL realtor called and said the husband and wife had a short sale offer accepted. .... BIL said they would really rather have our house if we could come to an agreement on price. If the short sale story is true, it appears they were going to try and wait us out but are now forced to take action.

BIL asked me to provide a take it or leave it price unless my previous counter-offer was the bottom line price. I told him it was not and I would have to talk to my husband before giving him a number.
If they had their short sale offer accepted, how can they just back out of it now if you come down in price? They likely will go back to the short sale with your new price and see if that seller will come down and so on and so on, it sounds like. Perhaps you can ask them to make you their take it or leave it offer?
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Old 06-25-2009, 05:13 PM   #114
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Bestwifeever - I had the same question. Maybe they got a counter they know they will accept if they aren't going to buy our home. They may be lying about the short sale but it doesn't really matter. I still need to talk to DH when he gets home from volunteering for the Red Cross but I think the number we will give is $257,900. Basically, I'll tell BIL to take $10,000 off the price and submit another offer since we still need to work out closing costs and possession.

They will miss a gem of a house if they don't buy it!

freebird5825 - The suspense is killing me, too! I am conflicted since I love the house but it's time to move on to the next phase of our lives. I'm not sure my stomach is knotted because we might sell the house to these buyers or because we might not sell the house to these buyers!

FinanceDude - I will also tell BIL we'll seller finance up to $25,000 if our lien is in first position.
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Old 06-25-2009, 06:57 PM   #115
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From what I read on our local realtor blog a 'short sale' isn't really a sale. The home owner can think it is acceptable but the bank's internal process make the transaction a big maybe. You may want to look through this thread: What you may be missing about a short sale | Seattle Real Estate | Rain City Guide
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Old 06-25-2009, 07:11 PM   #116
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Called BIL realtor and told him we would be able to agree on price if the offer was presented at $257,500, a $10,000 reduction from our counter offer.

$257,599 is $22,400 below our listing price, 92% of listing price, 95% of the appraised value, 86% of our original purchase price (ouch!) and 80% of the purchase price plus improvements (double ouch!). We really can't complain because the money for the down payment and the improvements was funded by the profit from the sale of my crackerbox Sacramento rental property. I bought it as a primary residence in 1998 and sold it at the height of the market (or very close to it) in November 2004. That 850 square foot dump sold for nearly as much as this house.

I also offered seller financing of up to $25,000 if our lien was in first position. He sounded very upbeat and said he was sure we would be hearing from the buyers with an answer tomorrow.

Here we go!
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Old 06-25-2009, 08:13 PM   #117
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Brat - We know all about short sales. We watch the homebuyer shows on HGTV! I figured if an offer had been accepted, it was probably just the first stage with the buyer. In the end, it doesn't really matter to us. We needed the conversation to resume and it did.

One of the comments at the end of your linked article had a link to a very interesting response.
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Old 06-25-2009, 09:09 PM   #118
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IMHO making offers on short sales is only for the patient. As we eventually, perhaps, will be in the market to buy - reading these discussions is an education.
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Old 06-26-2009, 09:53 AM   #119
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FinanceDude - Your previous post had a $257,950 counter-counter-counter offer. I can't say we are desperate but it sure would be nice to get on with the next phase of our life. The $257,950 is a $10,000 reduction from our first counter and 95% of appraised value. That doesn't sound too bad for an all-cash offer in today's market.
That's why I brought it up. Hopefully the buyers see that they are getting a nice house at a good value.......obviously they were hoping to "steal" a house because they believed the whole "it's a buyer's market" mantra, but maybe they will come to their senses.

They have a time crunch so they need to move fast. If they took your deal this week, it would still be tight to get you out and them in by August..........

Best of luck, keep us updated.......
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Old 06-26-2009, 10:08 AM   #120
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Called BIL realtor and told him we would be able to agree on price if the offer was presented at $257,500, a $10,000 reduction from our counter offer.

Do you think this could be a negotiation ploy? Perhaps they'll offer to split the difference between their first bid and your new counter.


If I were you I would decide what you will say if they treat it like an ongoing negotiation. If they do so and you hesitate, they could view that as weakness or indecision.
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