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Old 06-10-2021, 03:25 PM   #321
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I'm getting 2007 pre-crash vibes. The news here in the Bay Area has had a number of homes here going for $1M+ over asking.


Last crash we hesitated and didn't end up buying a near by condo that had dropped in price to under $100K. We aren't really the real estate investing types but it was such a good deal we gave it some thought. I think this time around we might go for it if that happens again.
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Old 06-10-2021, 03:36 PM   #322
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When this is over they will do what they have always done. Blame the appraisers.
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Old 06-10-2021, 03:46 PM   #323
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When this is over they will do what they have always done. Blame the appraisers.
To be honest the appraisers were a big problem last time. They were in the pocket of hedge funds asking what do you need the price to be? I have not seen anything yet that they are a problem (this time). People are offering over asking & not worrying about an appraisal. Just throwing more cash at the deal
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Old 06-10-2021, 04:07 PM   #324
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Just remember, this time it is different.
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Old 06-10-2021, 04:12 PM   #325
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^^^ Speaking of appraisals, here's a real story.

A house down at the corner of my street was on the market recently, and was sold the same day it was listed. The realtor never bothered to put up a "For Sale" sign. The buyer paid the asking price.

However, the appraisal came in at $85K lower than the asking price, and the buyer's bank did not approve the purchase. The seller already bought another home out of town, so quickly accepted $85K less in order for the deal to close.

So, the appraiser was holding back the price in this case, and not pouring oil into the fire.

PS. I heard the story from another neighbor, as it was happening. Just now went into Zillow, and was able to verify the asking price, and the eventual sale price being $85K lower.
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Old 06-10-2021, 04:18 PM   #326
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^^^

However, the appraisal came in at $85K lower than the asking price, and the buyer's bank did not approve the purchase. The seller already bought another home out of town, so quickly accepted $85K less in order for the deal to close.

So, the appraiser was holding back the price in this case, and not pouring oil into the fire.

P
So, the actual real time arms length free market said the market value was $x. Then the professional appraiser comes in and says the market value is really $x-$85k. Yeah, that makes sense---NOT!
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Old 06-10-2021, 04:22 PM   #327
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So, the actual real time arms length free market said the market value was $x. Then the professional appraiser comes in and says the market value is really $x-$85k. Yeah, that makes sense---NOT!
It seems a little more complicated than that to me. The bank which is fronting the money for this transaction has to have reasonable certainty that they aren’t underwater on the deal the moment the ink dries. I’m sure the buyer could have paid the difference between the appraised value and the selling price in cash, if they were so inclined.
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Old 06-10-2021, 04:27 PM   #328
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It seems a little more complicated than that to me. The bank which is fronting the money for this transaction has to have reasonable certainty that they arenít underwater on the deal the moment the ink dries. Iím sure the seller could have paid the difference between the appraised value and the selling price in cash, if they were so inclined.
Buyer may well have been prepared to make up the difference, IF a weak kneed seller stood his ground in this wild market. But seller may already have been getting far more than deemed possible not long ago, and was also under pressure of having bought a replacement home himself. I think his buyer lucked out. That buyer can likely flip that house for the $extra $85k or more himself now.
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Old 06-10-2021, 04:28 PM   #329
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I'm getting 2007 pre-crash vibes. The news here in the Bay Area has had a number of homes here going for $1M+ over asking.


Last crash we hesitated and didn't end up buying a near by condo that had dropped in price to under $100K. We aren't really the real estate investing types but it was such a good deal we gave it some thought. I think this time around we might go for it if that happens again.
The housing meltdown in 2007 was caused mainly by subprime mortgages, right? Did they start having subprime mortgages again, or people are just willing to pay a lot more money over asking? I now live in Ontario, Canada and the housing prices in my area have increased over 30% just in one year. That is insane, but the interest rate is at an all-time low, and people are moving in from Toronto where houses are even more expensive - The government tightened the buyers' criteria a few years ago in anticipation of higher interest rates in the future, but people seem to have a lot of money. I don't think things will calm down until the interest rate starts going up, or/and more houses are built.

There are even some talks about abolishing the silent auction and doing an open-type auction, and that may curtail the crazy selling prices, but I don't think that's going to happen.
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Old 06-10-2021, 04:29 PM   #330
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So, the actual real time arms length free market said the market value was $x. Then the professional appraiser comes in and says the market value is really $x-$85k. Yeah, that makes sense---NOT!
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It seems a little more complicated than that to me. The bank which is fronting the money for this transaction has to have reasonable certainty that they aren’t underwater on the deal the moment the ink dries. I’m sure the seller could have paid the difference between the appraised value and the selling price in cash, if they were so inclined.
Who knows what the house value really is?

Do we know what Gamestop share price should be, or that of Tesla?

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Buyer may well have been prepared to make up the difference, IF a weak kneed seller stood his ground in this wild market. But seller may already have been getting far more than deemed possible not long ago, and was also under pressure of having bought a replacement home himself. I think his buyer lucked out. That buyer can likely flip that house for the $extra $85k or more himself now.

By the way, Zillow's estimate is currently at the original asking price. And the record shows that the previous sale of the house was in 2005. In the 16 years since then, the recent closing price is only 18% above the price in 2005. Maybe the new buyer got one heck of a deal.
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Old 06-10-2021, 04:34 PM   #331
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To be honest the appraisers were a big problem last time. They were in the pocket of hedge funds asking what do you need the price to be? I have not seen anything yet that they are a problem (this time). People are offering over asking & not worrying about an appraisal. Just throwing more cash at the deal
Manipulating appraisals as you have suggested is a federal crime. What special qualifications do you have that allow you to make such blanket accusations against an entire industry?
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Old 06-10-2021, 04:50 PM   #332
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Manipulating appraisals as you have suggested is a federal crime. What special qualifications do you have that allow you to make such blanket accusations against an entire industry?

Checkout a few lawsuits from back then before you put on your indigent face... ....
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Old 06-10-2021, 05:37 PM   #333
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Just remember, this time it is different.
That's right. It won't be sub-prime mortgages or "frothy" appraisals. It will be.... drum roll please... something we have never seen before!
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Old 06-10-2021, 05:45 PM   #334
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^^^ Speaking of appraisals, here's a real story.

A house down at the corner of my street was on the market recently, and was sold the same day it was listed. The realtor never bothered to put up a "For Sale" sign. The buyer paid the asking price.

However, the appraisal came in at $85K lower than the asking price, and the buyer's bank did not approve the purchase. The seller already bought another home out of town, so quickly accepted $85K less in order for the deal to close.

So, the appraiser was holding back the price in this case, and not pouring oil into the fire.

PS. I heard the story from another neighbor, as it was happening. Just now went into Zillow, and was able to verify the asking price, and the eventual sale price being $85K lower.
Real story from 1 week ago. BIL selling his house tells the buyer he will only accept the offer if the buyer agrees to pay the difference if the appraisal comes in low. Appraisal came in $25k under contract price - buyer had to bring that at closing. Apparently this is not uncommon in BIL's old area (he's moving out of state.)


On a slightly different topic - related to this thread... Home that is the same model as ours - no additions, similar "fixed up" state, smaller lot, busier location (at a stop signed intersection vs mid block of a dead end street). Just list for $1.4M. This is a 1960's 2000sf tract home. Redfin has it listed as a "hot home". I saw a realtor taking folks on a tour when we driving out of the neighborhood this morning.

We were leaving the neighborhood to go look at two condos. They are in a sought after urban neighborhood that has a lot of condos in the multi-million $ range. (These were $850k and 950k). One that we are *toying* with making an offer on is not taking bids till next week. I suspect the realtor is hoping for (and will likely get) a bidding war.

Not sure it's worth making the offer because it would take a few months to get our house ready to get on the market... and we'd have to carry a mortgage for that time. We agreed to take 24 hours (since we can't put a bid in till Monday) to think about whether the timing is right. The condo is awesome... but...
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Old 06-10-2021, 06:00 PM   #335
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Manipulating appraisals as you have suggested is a federal crime. What special qualifications do you have that allow you to make such blanket accusations against an entire industry?
From the horses mouth...the appraisal institute. It's just the first one that popped up in a search

https://www.appraisalinstitute.org/R...HousingBubble/

IIRC the appraisal standards changed a lot after the Great Recession. That probably tamped down speculation this time. Every bubble is different (and the same)

let's not forget the ratings agencies. S&P (IMO) was complicit in letting hedge funds slice & dice pools to get the rating they needed to go to market. Was it the Big Short movie that brought this to light?

*edit: I incorrectly said appraisers in my OP when I should have said Ratings agencies. There is lots of blame to go around
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Old 06-10-2021, 06:21 PM   #336
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Rodi, why do you need to ready your house for market? Things are so hot it might not bring you more money.
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Old 06-10-2021, 06:27 PM   #337
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You do have to spruce up the house in any market to sell it for the right price. Fresh coat of paint, carpet, take care of deferred maintenance, deep cleaning, declutter and/or move out. Having said that, I have always done buy first sell later approach. It's just easier to move and no double move. Yes, you do have to come up with the extra down payment and carry two mortgages so there is that.
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Old 06-10-2021, 06:30 PM   #338
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Real story from 1 week ago. BIL selling his house tells the buyer he will only accept the offer if the buyer agrees to pay the difference if the appraisal comes in low. Appraisal came in $25k under contract price - buyer had to bring that at closing. Apparently this is not uncommon in BIL's old area (he's moving out of state.).
Maybe my friend is buying your BIL house. She bid on a house for $749k, then ended up paying $925k. The appraisal came in at $900k. She needs to fix the house up to code on her dime and bring $40k to close for difference and closing costs to close or she loses her $40k earnest money by June 20th.

It apparently is different this time. People aren't getting crazy mortgages they are just buying way over sanity and throwing more money at it. I believe it is 45% of her income.
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Old 06-10-2021, 06:31 PM   #339
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Speaking or appraisals, we were afraid that the appraisal for the house we just sold would be lower than the offer price so we selected from the bids which had appraisal waiver. It turned out that the appraisal came 30K more than the highest offer price. I thought we undersold but then again I am happy NOT to be a greater fool.
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Old 06-10-2021, 06:32 PM   #340
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You do have to spruce up the house in any market to sell it for the right price. Fresh coat of paint, carpet, take care of deferred maintenance, deep cleaning, declutter and/or move out. Having said that, I have always done buy first sell later approach. It's just easier to move and no double move. Yes, you do have to come up with the extra down payment and carry two mortgages so there is that.
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