- This topic has 16 replies, 10 voices, and was last updated 17 years, 9 months ago by kev374.
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December 13, 2006 at 10:22 AM #8055December 13, 2006 at 10:40 AM #41583powaysellerParticipant
Now I know why builders don’t like to lower prices: when they lower prices, they risk getting sued from prior buyers.
December 13, 2006 at 10:46 AM #41584VanMorrisonFanParticipantThe 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!
December 13, 2006 at 10:49 AM #41586poorgradstudentParticipantI’m no lawyer, but I’d imagine it would be difficult suit to win. “I bought a house I couldn’t afford at the peak, and now I want someone else to pay for it.”
I guess their arguement hinges on the claim that the builder knew the appraisal was too high. Even if it’s true, it sounds very difficult to prove in a court of law.
Of course, it might be more cost-effective for the builder to settle rather than go to court.
December 13, 2006 at 12:43 PM #41609PerryChaseParticipantThere’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.
December 13, 2006 at 12:59 PM #41613(former)FormerSanDieganParticipantWhere is the personal responsibility ?
Maybe they should sue their high school economics teacher, or the “media.”December 13, 2006 at 2:08 PM #41620anParticipantI 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.
December 13, 2006 at 5:40 PM #41652powaysellerParticipantWell, everyone expects their car to lose value when they drive it off the lot. But who expects their home to worth 20% less after 2 months of purchase? Could an appraisal be so much off? In this case, the nearest appraisal was 3 miles away, so maybe it wasn’t a good appraisal. You’re supposed to stay within one mile or something like that.
December 13, 2006 at 7:07 PM #41662BugsParticipantThis 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.
December 13, 2006 at 8:06 PM #41667anParticipantSo if you say you didn’t know and didn’t expect the car to lose 20% driving off the lot, then you have the same case as these home owner. Pleading ignorance doesn’t make it a valid reason.
December 14, 2006 at 5:27 PM #41740powaysellerParticipantAN, sometimes I don’t know if you like to just argue, because this is such a ridiculous comment you made. Even people with no financial knowledge know that cars are worth less when used than new, and that houses increase in value. It’s common knowledge. And you are a very smart guy, so you would be aware of this common knowledge.
It’s rare in this country that houses lose value. Historically, they climb with inflation. When they have lost value, it’s gradual. In SD’s last downturn, the biggest loss was 6% year over year in 1992 (LA’s biggest loss in the last downturn was 7% in one year). Since Dataquick kept records in 1988, we’ve never had anything greater than a 7% loss in one entire year in LA, and that was during the bottom of the last downturn during high unemployment and high foreclosures. So how can anyone expect their home to lose 20% of its value in just a few months in this current economy? Something’s not right.
December 14, 2006 at 5:41 PM #41741LookoutBelowParticipantUnfortunately, when the SHTF all kinds of silly lawsuits will start flying….imagine the sense of "entitlement" these greedy buyers are displaying….ridiculous
December 14, 2006 at 6:21 PM #417462Buy-or-Not2BuyParticipantExactly. 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.
December 14, 2006 at 10:45 PM #41770anParticipantIt doesn’t matter what they know or expect, all I’m saying is it won’t hold up in a court of law. Buying a house is like buying everything else. Just because a house over a long term always go up doesn’t mean that over a short term, it never fall. All lawyers have to say is, over past history, it fell, so the rate of depreciation now is just dramatize by the rate of increase. Common knowledge from people who know the cycle of the market, any kind of market will tell you that there are cycles.
If you don’t like my car buying analogy, then how about buying stocks. Over the long term, stock has always out performed housing, so stock will always go up too. Does that mean I get to sue my brokerage when I lose $ on one of my purchase? It’s just as crazy as people who lost their $ from the .com suing brokerage and analysts.
December 15, 2006 at 9:58 AM #41792PerryChaseParticipantIt 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.
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