[Bugs]

sdr,

With respect, I said I’d look at them; I distinctly noted that those would not be the only ones I’d look at – and they weren’t. I looked at the larger (and smaller) homes in the area as well as the newer homes. Those three are the ones that are the most proximate, and on paper, the most similar sales.

The “6-month” rule is indeed a relevant one to a lender, but that doesn’t mean that the (one) 6.5-month old dated sale is irrelevant, which is why I also looked at the more recent but less proximate sales and also why I looked back in time to compare what these outside areas were doing in relation to this property’s neighborhood at the beginning of this year. I didn’t make my “5% remark” without basis.

Yes, an appraisal for mortgage underwriting does rely primarily on closed sales, which by definition occurred in the past. But even you would have to agree that the actives are indicative of what’s going on only to the extent that their upper ranges will exceed what these homes will close for if they close at all. Remember, before those sales close many of them will have to get by the appraiser and the lender’s review, neither of which are as gauranteed in 2007 as in 2006.

FYI, the recent performance of the closed sales includes closing prices that are predominantly at the bottom of their respective ranges and in many cases below those ranges. I like pending sales a lot too, but I know better than to project closing prices at the upper ends of those ranges, because over the last 10 months the data in this area doesn’t support that.

Your job as a realty agent is to be an advocate for your client, and listing prices are a position to start from; not a freestanding indication of value. I would in no way be disappointed if you established a listing price well in excess of what I’d appraise a property for. In fact, I’d expect you to do it, ’cause I recognize that’s your job and I know better than to use my requirements as an appraiser to judge your actions as a realty agent. Apples and oranges.

Who knows, maybe with more research and in seeing these properties in person I’d change my mind. Come to think of it, there’s no ruling out a lower opinion of value – that happens a lot more often as the higher opinion.

FTR, I did qualify my remarks quite a bit and I did express my opinions as opinions, not fact. The thing is, if I were appraising this property and a buyer and seller had decided on $900k, the burden would be on the agents involved to make their case for that value because the trends demonstrated by the closed sales don’t appear to support that value, let alone make it obvious.

So go ahead – make your case.

[Bugs]

sdr,

With respect, I said I’d look at them; I distinctly noted that those would not be the only ones I’d look at – and they weren’t. I looked at the larger (and smaller) homes in the area as well as the newer homes. Those three are the ones that are the most proximate, and on paper, the most similar sales.

The “6-month” rule is indeed a relevant one to a lender, but that doesn’t mean that the (one) 6.5-month old dated sale is irrelevant, which is why I also looked at the more recent but less proximate sales and also why I looked back in time to compare what these outside areas were doing in relation to this property’s neighborhood at the beginning of this year. I didn’t make my “5% remark” without basis.

Yes, an appraisal for mortgage underwriting does rely primarily on closed sales, which by definition occurred in the past. But even you would have to agree that the actives are indicative of what’s going on only to the extent that their upper ranges will exceed what these homes will close for if they close at all. Remember, before those sales close many of them will have to get by the appraiser and the lender’s review, neither of which are as gauranteed in 2007 as in 2006.

FYI, the recent performance of the closed sales includes closing prices that are predominantly at the bottom of their respective ranges and in many cases below those ranges. I like pending sales a lot too, but I know better than to project closing prices at the upper ends of those ranges, because over the last 10 months the data in this area doesn’t support that.

Your job as a realty agent is to be an advocate for your client, and listing prices are a position to start from; not a freestanding indication of value. I would in no way be disappointed if you established a listing price well in excess of what I’d appraise a property for. In fact, I’d expect you to do it, ’cause I recognize that’s your job and I know better than to use my requirements as an appraiser to judge your actions as a realty agent. Apples and oranges.

Who knows, maybe with more research and in seeing these properties in person I’d change my mind. Come to think of it, there’s no ruling out a lower opinion of value – that happens a lot more often as the higher opinion.

FTR, I did qualify my remarks quite a bit and I did express my opinions as opinions, not fact. The thing is, if I were appraising this property and a buyer and seller had decided on $900k, the burden would be on the agents involved to make their case for that value because the trends demonstrated by the closed sales don’t appear to support that value, let alone make it obvious.

So go ahead – make your case.

[Bugs]

She’s not selling because she wants to, but because she has to. If they think she’s dumping it maybe one of them should step up to buy it from her, so as to protect their investment. If they’re right there’s a lot of money in a flip for them. If they’re wrong, well, that fact will become apparent the next time one of those owners has to sell.

It’s just a matter of time.

[Bugs]

She’s not selling because she wants to, but because she has to. If they think she’s dumping it maybe one of them should step up to buy it from her, so as to protect their investment. If they’re right there’s a lot of money in a flip for them. If they’re wrong, well, that fact will become apparent the next time one of those owners has to sell.

It’s just a matter of time.

[Bugs]

As an appraiser the sales I would be looking at would include:

– Montefrio Ct (2,533 4/3 w/pool @ $850,000 in late 12/2006
– Montefrio Ct (2,207 4/3 @ $820,000 in 02/2007;
– Cypress Del Mar (2649 5/3 @ $795,000 in 03/2007;

The oldest sale at the top is probably a better house all the way around – that pool might be worth about $20k, maybe more. The second house on the same street appears to be in similar condition to the first so it demonstrates the difference in living area. The 3rd sale at the bottom is a little more recent but is also apparently in inferior condition.

Because these sales are all a little more dated than I’d like to see I’d probably want to expand my search to include other nearby competing neighborhoods consisting of 1980s homes on small lots in subdivisions featuring homes no larger than 3,000 SqFt. I’d completely avoid the Cantamar project nearby – those homes are a lot bigger and nicer.

To the north of Del Mar Heights Rd, Landfair has some recent sales in the $850k – $910k ranges, but in looking back in time it appears that neighborhood has always sold for about 5% more that the homes in your friend’s neighborhood. I don’t see any differences in pricing there from late last year until now, but the data is kinda skimpy.

I don’t know what this property is worth but I have a pretty good idea of what it isn’t worth.

[Bugs]

As an appraiser the sales I would be looking at would include:

– Montefrio Ct (2,533 4/3 w/pool @ $850,000 in late 12/2006
– Montefrio Ct (2,207 4/3 @ $820,000 in 02/2007;
– Cypress Del Mar (2649 5/3 @ $795,000 in 03/2007;

The oldest sale at the top is probably a better house all the way around – that pool might be worth about $20k, maybe more. The second house on the same street appears to be in similar condition to the first so it demonstrates the difference in living area. The 3rd sale at the bottom is a little more recent but is also apparently in inferior condition.

Because these sales are all a little more dated than I’d like to see I’d probably want to expand my search to include other nearby competing neighborhoods consisting of 1980s homes on small lots in subdivisions featuring homes no larger than 3,000 SqFt. I’d completely avoid the Cantamar project nearby – those homes are a lot bigger and nicer.

To the north of Del Mar Heights Rd, Landfair has some recent sales in the $850k – $910k ranges, but in looking back in time it appears that neighborhood has always sold for about 5% more that the homes in your friend’s neighborhood. I don’t see any differences in pricing there from late last year until now, but the data is kinda skimpy.

I don’t know what this property is worth but I have a pretty good idea of what it isn’t worth.

[Bugs]

If you wanted to view this strictly in terms of dollars and cents your first step would be to get an appraisal of the property. And by “appraisal”, I mean an appraisal that includes an exhaustive analysis of the supply/demand, listing vs. sales prices, lots of really similar comparables, etc.. This would not be a good assignment to shop around for based on the amount of the fee – you would want to find the old pro and pay their price.

Just guessing, but I wouldn’t be surprised if the $1mil turned out to be a lot less, which of course would cut into your returns.

[Bugs]

If you wanted to view this strictly in terms of dollars and cents your first step would be to get an appraisal of the property. And by “appraisal”, I mean an appraisal that includes an exhaustive analysis of the supply/demand, listing vs. sales prices, lots of really similar comparables, etc.. This would not be a good assignment to shop around for based on the amount of the fee – you would want to find the old pro and pay their price.

Just guessing, but I wouldn’t be surprised if the $1mil turned out to be a lot less, which of course would cut into your returns.

[Bugs]

$50,000 plus holding costs.

FIFTY T-H-O-U-S-A-N-D DOLLARS !!!!!

We get so desensitized to real estate increases and decreases that it’s easy to lose sight of the fact that this isn’t Monopoly money we’re talking about. $50k is the equivalent of a year’s take home pay for a lot of people.

$50,000 represented a 25% loss in value for a home purchased in 1989, that being the accrued loss over probably 5 years. That $50,000 was the maximum loss during the entire downturn of the last RE bust. Now it’s just a drop in the bucket.

People had a really difficult time recovering from those losses back then because $50k was a lot of money. One can only wonder how many of our current FBs are going to be able to recover after suffering their losses by the time they start exceeding $200k.

[Bugs]

$50,000 plus holding costs.

FIFTY T-H-O-U-S-A-N-D DOLLARS !!!!!

We get so desensitized to real estate increases and decreases that it’s easy to lose sight of the fact that this isn’t Monopoly money we’re talking about. $50k is the equivalent of a year’s take home pay for a lot of people.

$50,000 represented a 25% loss in value for a home purchased in 1989, that being the accrued loss over probably 5 years. That $50,000 was the maximum loss during the entire downturn of the last RE bust. Now it’s just a drop in the bucket.

People had a really difficult time recovering from those losses back then because $50k was a lot of money. One can only wonder how many of our current FBs are going to be able to recover after suffering their losses by the time they start exceeding $200k.

[Bugs]

That’s a catastrophic loss considering the amounts involved. There must have been more to it than a simple market correction.

Geez, how would it be to buy at $78k? A mortgage payment at $490/month, not counting property taxes.

[Bugs]

That’s a catastrophic loss considering the amounts involved. There must have been more to it than a simple market correction.

Geez, how would it be to buy at $78k? A mortgage payment at $490/month, not counting property taxes.

[Bugs]

What a crackup. Now that a kid has blurted out that the Emporer has no clothes everyone is putting on their 20-20 hindsight goggles.

[Bugs]

What a crackup. Now that a kid has blurted out that the Emporer has no clothes everyone is putting on their 20-20 hindsight goggles.

[Bugs]

It depends on what terms you agree to when you place your deposit.

[Author]

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