The appraiser probably screwed up, but the home buyers would have been equally unhappy if the appraiser had come in with a lower value.

I still can’t believe what people paid…$800,000? There was a picture of one of the homes in the O.C. Register and the house just didn’t look like an $800,000 home to me. These are small homes on very small lots. If you live here, you know what your neighbor has for breakfast!

There’s no law against getting a bad deal. A deal’s a deal. That’s what our whole economic system is based on.

Buyers have tried suing in the early 1990s but have been unsuccessful. Some builders did give rebates to buyers who closed just before a big price drop. I was a recipient of such rebate. Buyers can cause problems for builders who are trying to close out their projects, but buyers are unlikely to prevail in court.

I doubt they’ll have much of a case in court. If they win, then everyone would sue new car dealerships since as soon as you drive the car off the lot, you lost 20% already.

This project almost isn’t even in Garden Grove. It’s just south of where Anaheim and Stanton come together. If memory serves there used to be some apartments in this area that were basically a slum. Maybe the city redeveloped that neighborhood.

The communties in this area of the O.C. (GG, Anaheim, Santa Ana, Westminster, Stanton, etc., were all almost completely built out by the 1970s. Any new developments in town would likely be built on an infill basis. Since most lenders require at least a couple outside sales, the nearest similar subdivision of new homes could easily be 3 or 5 miles away; and it might very well not even be located in Garden Grove itself. 3 miles away could include the south end of Buena Park or the west end of he city of Orange. There’s no telling what that other project looks like, either. An appraiser probably wouldn’t have much in the way of alternatives.

These buyers probably don’t have a case. The sales from inside the project all represent arms-length transactions between the developer and their buyers. This project is (probably) not located close enough to the nearest comparable new home tract for those outside comps to be meaningful. Most buyers (and hence most sellers) would give the sales contracts inside the project more weight than the outside sales as being more indicative of their values. The sale prices probably supported each other as of the dates they were entered into.

The bottom line here is that (unlike several Piggingtonians) these folks didn’t apply their critical thinking skills when they were making their purchases and as a result they timed the market exactly wrong. They’re in the same boat as the people here in SD County who bought in 2004 and 2005. They have nobody to blame but themselves. If misery loves company these people should end up with lots of it.

Exactly. Some people consider themselves brilliant when they make money on the way up, but when they lose money on the way down, it is someone else’s fault. Unfortunately, I expect lawsuits against appraisers, agents, brokers, etc. in the future which in most cases will be unjustified. I’m not a RE professional, but I would be making sure that I had a good lawyer and adequate liability insurance if I were in the business. It never ceases to amaze me that people win lawsuits no matter how ridiculous and irresponsible their own behavior is.

It depends what representations the Realtors made to the buyers. If the Realtor wrote to a client “here’s a great listing, buy this house it’s a great investment. For sure it’s going to double in 5 years and you can move up at that time,” then we have a problem. In this age of email, if a buyer can document such misrepresentation, then he certainly has a case.

Otherwise, it’s caveat emptor.