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Thread: Real Estate

  1. #31
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    The other thing which hasn't been mentioned yet, is the role of the real estate agent. A local professional real estate agent knows real estate values and comps just as much and perhaps more than an appraiser. Hire a good real estate agent and get the three magic numbers--listing price (high), probable low value (rock bottom), and the Cinderella sweet spot (the middle, what the property is actually worth, and the likely purchase price). Trust your agent's advice. Homes will sell for a higher price if vacant, so the buyer can see exactly what he or she is buying. Also the home is easier to spruce up if vacant, like drywall and electrical sockets.

    If the bank appraisal is way off target from your own real estate agent's opinion, then it might be time to either sit out the market (let it sit on the market for a month or two) or lower the price.

    Ultimately actual recent real estate sales are indicative of the property's value. Obviously there are variables (you'll see them as a + or - in the Form 1004) such as number of bedrooms, HVAC, remodeled kitchens and baths), number of baths, fireplaces, swimming pools, upgraded electrical and the like). Those variables might drive the value (and the purchase price) up or down by as much as 15%, but not as much as anyone thinks.
    Regards,

    Tom

  2. #32
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    Not appraising high enough doesn't necessarily stop the buyer from getting the property, depending on how the contract offer was written and other factors, such as state law since that's where the actual contract form comes from. With the correct boxes checked, the buyer can often take the risk of it not appraising and make up the difference between appraised and the offer when a lender will not provide financing beyond a certain amount with a given appraisal number. We did exactly that for this property we live in now. We took the risk on appraisal, but got lucky that the seller blinked anyway and allowed the sale at a lower cost as I mentioned previously. We only took a $5K hit that way (after another reduction because of inspections) which we were already prepared to pay it.
    --

    The most expensive tool is the one you buy "cheaply" and often...

  3. #33
    Quote Originally Posted by Thomas McCurnin View Post
    Having a sale contingent on Buyers' obtaining a loan could conceivably stretch out the process for months and months and might be a nice bargaining chip for the Buyer to lower the price significantly. Don't do it, sale is listed with no contingencies.
    Unless the market is really hot, it's tough to sell without an inspection contingency. Any rational buyer would want to know what they're getting into.

    My wife and I sold a condominium without any contingencies but the buyer, who was a contractor, did an inspection on his own before he put his bid in.

    Mike
    Go into the world and do well. But more importantly, go into the world and do good.

  4. #34
    25 years ago, there were a lot of crooked appraisers ut there and a few were prosecuted. I know of one that appraised a house and gave a value on the house and the 2 car garage with in-law apt over the garage. It was supposed to be an in person appraisal. The garage had burned down 6 years earlier and was never rebuilt. Jus a concrete pad where the garage had been. That guy was convicted. Most appraisers reined in their appraisal values after a few of their colleagues went to jail.

    One tactic that might be useful, is to get an appraiser to come and advise you what minor things can be down to increase the appraisal. Some times it is simple things. An auctioneer buddy who sells a lot of real estate came and walked through our place and told us a few things to do to get a higher appraisal for a bank loan.

    While real estate maybe tight. My neighbor just got a contract on her house for 14 K over the asking price. .A steep wooded property on the next road, 28 acres with 25 yr old double wide, dirt driveway and parking area. no out buildings, just brought $556,000, a month ago.

  5. #35
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    Quote Originally Posted by Jim Becker View Post
    Not appraising high enough doesn't necessarily stop the buyer from getting the property, depending on how the contract offer was written and other factors, such as state law since that's where the actual contract form comes from. With the correct boxes checked, the buyer can often take the risk of it not appraising and make up the difference between appraised and the offer when a lender will not provide financing beyond a certain amount with a given appraisal number. We did exactly that for this property we live in now. We took the risk on appraisal, but got lucky that the seller blinked anyway and allowed the sale at a lower cost as I mentioned previously. We only took a $5K hit that way (after another reduction because of inspections) which we were already prepared to pay it.
    There are a lot of buyers who would not have the cash to cover the difference.

  6. #36
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    Quote Originally Posted by Brian Elfert View Post
    There are a lot of buyers who would not have the cash to cover the difference.
    Agreed. But my point was that it's an available option. It's honestly the same situation relative to inspection contingency. The successful buyers of our old property opted for an "informational inspection", but there was no contingency for the sale on that inspection. It was "as is" legally. (and there really were not any issues given I had taken care of them already) But they were also buying the property with an offer price that meant we could get to close quickly and not have to pay for two properties anymore (despite the pain to us around the lower net)
    --

    The most expensive tool is the one you buy "cheaply" and often...

  7. #37
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    Appraisals are crazy things. I had an appraisal done about two years ago and it came in lower than anyone thought it would. I had an appraisal done a year later and it came in a good 30% higher. It was higher than I thought the house was worth.

  8. #38
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    The most interesting appraisal experience I had with the old property was that the guy that same out for the buyers was the same guy who did the appraisal for a refi years ago. He (and we) had ages, but he remembered the last visit and we had a nice group chuckle about it. (there is a pool used an this was just the "luck of the draw" that he got the assignment that day)
    --

    The most expensive tool is the one you buy "cheaply" and often...

  9. #39
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    Mortgage rates down for two weeks in a row. Good news for Buyers. Usually lower rates are bad news for Sellers, as more buyers drives market values of homes down.

    https://www.cnn.com/2023/03/23/homes...-23/index.html
    Regards,

    Tom

  10. #40
    Quote Originally Posted by Thomas McCurnin View Post
    Mortgage rates down for two weeks in a row. Good news for Buyers. Usually lower rates are bad news for Sellers, as more buyers drives market values of homes down.

    https://www.cnn.com/2023/03/23/homes...-23/index.html
    Are you sure you didn't reverse Buyer and Sellers? When you have more buyers chasing a product the price usually goes up. For example, in the stock market.

    Mike

    [Also, as rates go down, buyers can afford to pay more because they mostly worry about their monthly payment (cash flow), not the total amount.]
    Last edited by Mike Henderson; 03-23-2023 at 3:47 PM.
    Go into the world and do well. But more importantly, go into the world and do good.

  11. #41

    Us too!

    Quote Originally Posted by Jack Frederick View Post
    Given the market is tightening everywhere, we definitely timed our move at the wrong time so we are not coming out of the sale/buy on our new place. That is the market and that’s the way it is. I’ve not bought a lot of property in my time but the process kinda sets me off. My complaint is the process, specifically, the appraisal. The lender selected an appraiser known for his conservative views on valuations according to the realtor group we have. Now, our property is old by CA standards, showing on maps from the 1860’s. It is known locally as the “Cabin in the Sky” and has that on a sign hangin off the front of the house. A grandson of the 1920’s owner said the sign was there when his Grands bought it back then and the views are spectacular to the W. The appraiser, comes in and does his walk through and gave no value to the view as it was not visible from the living room, which faces the road. We completely re-built this place in 13/14 and actually talked about switching the lay-out, but the best parties are kitchen parties and on out to the yard so we have a fabulous view out the 8’window and the 6’ on the side. That valuation is according to the realtor worth about $40k of value. My bi*** is the complete arbitrariness of this opinion and as a result the places did not appraise at value that we had agreed with the buyer, and why would the bank want a higher value in this market with all that is going on, so there it sits. The lender ignores appeals and it is a one and done deal. I think the place has a view. What do you think? Oh, and that tire swing in the picture hangs 16’ off the 54” blk walnut beside the house. the grandkids have loved it but it scares the heck out of you when they are flying so high
    I feel for you. It is hard to see a good place undervalued. We have a house in Tennessee for sale. The one on one side sold at peak of prices at 700k for a smaller and much less well made home.( new owners have spent big bucks to update)
    Home on other side is listed for over 800k and has no garages.
    Our agent says we should expect 660k at best.
    Ours is bigger, nicer and better maintained, in my humble opinion.
    I guess I ought to be happy with the appreciation in the years we’ve had it, but wish we had been ready to sell at peak of the frenzy!
    "Time flys like an arrow........ Fruit flies like a bannana."

  12. #42
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    Quote Originally Posted by Thomas McCurnin View Post
    Mortgage rates down for two weeks in a row. Good news for Buyers. Usually lower rates are bad news for Sellers, as more buyers drives market values of homes down.

    https://www.cnn.com/2023/03/23/homes...-23/index.html
    Huh? Lower rates drive more Buyers to the market it then swings to being to the Sellers advantage to have more people shopping for homes. Prices tend to be higher. One of the largest employers here Wells Fargo mortgage department laid off thousands of people because the high interest rates have depressed home sales.
    Last edited by Bill George; 03-23-2023 at 3:17 PM.
    Retired Guy- Central Iowa.HVAC/R , Cloudray Galvo Fiber , -Windows 10

  13. #43
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    Higher interest rates mean higher price growth, e.g., the value of real estate goes up. Supply and Demand. Higher demand means higher prices.

    This explains it. https://www.latimes.com/business/sto...me-prices-drop
    Regards,

    Tom

  14. #44
    Quote Originally Posted by Thomas McCurnin View Post
    Higher interest rates mean higher price growth, e.g., the value of real estate goes up. Supply and Demand. Higher demand means higher prices.

    This explains it. https://www.latimes.com/business/sto...me-prices-drop
    It's true that higher demand drives prices up, but higher interest rates cause a reduction in demand because potential buyers cannot afford the homes at the existing prices. So prices fall. That's what's happening right now in the market. The peak of prices was perhaps a year or so ago when interest rates were 2%.

    Mike
    Go into the world and do well. But more importantly, go into the world and do good.

  15. #45
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    Quote Originally Posted by Mike Henderson View Post
    It's true that higher demand drives prices up, but higher interest rates cause a reduction in demand because potential buyers cannot afford the homes at the existing prices. So prices fall. That's what's happening right now in the market. The peak of prices was perhaps a year or so ago when interest rates were 2%.

    Mike
    Houses have a price to interest rate ratio that can be compared to bonds. As interest rates rise prices tend to drop. The big difference is a bond has a set limit on its appreciation whereas a house can rise or fall without limit.

    jtk
    "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."
    - Sir Winston Churchill (1874-1965)

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