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Steve Beebo
ParticipantThe property at 1861 Playa Riviera is in escrow.
It was listed at $520,000-560,000 for about a week.
It sold “as-is”, and looked like a fixer-upper on the MLS.
ParticipantMost of Spring Valley is “below average”, but there are some areas that are OK, like near Avocado Blvd., just south of Highway 94. They call this area older Rancho San Diego, but it really isn’t. But it’s a lot nicer than the La Presa area below Dictionary Hills. Not a good area. Also the newer tract that Centex built several years ago off Sweetwater Springs Blvd. is OK, too. But the name “Spring Valley” does bring up a negative connotation in most people’s minds.
ParticipantSome established areas like Del Cerro and San Carlos really haven’t seen much in the way of price declines at all, at least up to this point. (I’m talking about SFRs, not condos – some condos have declined a lot in this area).
You’re right, there isn’t that much inventory, and the reason they have declined less than some other areas is that there isn’t any new housing that has been dumped onto the market in the last several years – this area is all built out. That’s not to say that prices there won’t decline in 2007 – it will probably happen, I’m just not sure how much.
Participanthttp://mmdnewswire.com/content/view/1051/
It sounds like a ridiculous idea/gimmick. Who knows how much they would charge in fees. If someone wants to spend the equity in their house for some reason, wouldn't it be easier to set up a HELOC?
Participantpowayseller-
I would think it’s more likely that –
2) a lender lacks the ability to disccern an obvious lie about of sales price and appraisal. Don’t underestimate how dumb some appraisers and underwriters can be at times.
An example – around 1991 or 1992, I was a staff appraiser for a large bank. I was given an assignment to appraise a home in Fairbanks Ranch with a contract price of something like $2.7M. When I researched the property, I found that it was not currently listed, but had been listed about a year ago, for something like $1.7M. So I figured that unless they had done a complete remodel, and added a couple of thousand feet in the past year, it was likely a fraudulent sale. After I inspected the property, and looked at all of the sales in the area, it became apparent that it was probably worth something like $1.7M. So I told my supervisor what I found, and our bank cancelled the loan.
About 12 or 18 months later, I was doing an appraisal in the same neighborhood, and I saw this same property listed for sale as a bank REO. I don’t remember what it was listed for, it may have been $1.5 or $1.8M. When I looked at public records for this property, I found that it had sold the year before for $2.7M, and there was an 80% loan done by California Federal, which was a large S&L at that time. So they had appraised it for $2.7M the year before, and the bank probably lost $500,000+ on the loan.
They probably used an appraiser that did not know the area well, or otherwise didn’t have the experience to appraise this property. In that area then, and now, two 7000 s.f. houses on the same street can vary in price by $1,000,000 or more, depending on their overall quality and amenities. The appraiser probably used much nicer homes that really weren’t comparable to the subject property to justify the
higher sale amount.The same thing is happening now. I do appraisal reviews for one bank from time to time, and the quality of some appraisals is really bad. There are thousands of newer appraisers in California that have never been through a down market, and who obviously had very poor training. Some of these new appraisers were probably trained by new appraisers who just got their license, and they really don’t know what they’re doing. It’s common to see appraised values on a refinance to be higher than what a very similar house is listed for in the same tract.
ParticipantIf the lender knew that their 100% loan was in reality a 110% or 120% loan, due to a fraudulent transaction, they wouldn’t make the loan. If they sell the loan, and it goes bad in the first year, they are most likely going to have to buy back the loan, and they’ll have to deal with the property as an REO.
ParticipanttheBreeze – if there was an appraisal in this instance it was almost certainly fraudulent, and someone should go to jail, (appraiser / realtor / etc.), but it seems to me that this type of white collar fraud is rarely prosecuted, at least so far. Hopefully that will change.
Some lenders are doing loans using electronic appraisals, without an appraiser ever being involved, though, which is an open invitation for fraud.
lostkitty – I have seen several recent sales like this, but they are not reported as sales on the MLS, so I would have no idea who the realtor or appraiser was, if any. The only thing I would know is the purchase price, loan amount, and lender. I saw one sale last summer for a condo in University Heights where the sale price on public records was $400,000+, the true market value at that time was something like $270,000, (with other sales and a listing in the complex to prove it), and there was a 100% loan by Argent Mortgage. I did send a letter to the Chief Appraiser at Argent Mortgage, informing them of what I found, but I never heard back from them. They’ll probably be bankrupt some time in the next year or two anyway.
ParticipantSD Realtor said: “I think we all lose… This now becomes a comp that will be used by others.”
That is not usually true. For example, let’s say I’m doing an appraisal of a house for a refinance, and I have four recent closed sales nearby, one pending sale, and three listings, that all make me think the subject property is worth around $800,000, and lets say I see a record of one sale on the same street that sold for $975,000. I might see it on the MLS, but it’s more likely that it wasn’t reported as a sale on the MLS, and I noticed the sale while researching sales on public records. After I investigate this higher sale, I find that it was listed on the MLS for $825,000 a couple of months ago, then the listing was cancelled. At that point I’m 99% sure that it was not a fair market sale, and there is no way that I will use it as a comparable sale in my appraisal. I see these kinds of situations frequently, and the high sales almost always have an 80% first and a 20% second, so you know that it’s just a matter of time until it becomes a bank REO.
Participanthttp://www.tbo.com/news/metro/MGBQ3F0MBWE.html
"Tampa police said this month that they arrested two men who they said were trying to inflate the sales price of a home in Apollo Beach from $690,000 to $910,000.
At closing, $210,000 was to go to one of the men's Nevada companies. Police say the men planned to default on the loan and leave with the cash.
Local authorities set up a sting at a title company and arrested the men at the closing table."
Participantlostkitty –
Appraisal values generally are lower this year than last year – some areas by a little, and some by a lot. Unless an appraiser is just plain dishonest, you can’t argue with market data, both recent sales and active listings. I’ve done quite a few appraisals in the last 6 months, where the current value is lower than the outstanding loan amount.
Some appraisers will try to push the value up, but most banks will have a private fee appraiser or on-staff review appraiser look at the appraisals they receive. (At least I hope most do.) It’s very common for the review appraiser to cut the appraised value.
ParticipantMexico Resident:
I have seen many areas that are off in price by 10%. I’ve seen individual properties that have lost 20%. But I am also seeing a lot of established areas in SD County that have had very little to no declines in price over the last year. Prices WILL continue to decline, I’m just not sure how much. You may not feel that the median price is an accurate gauge of the market, but the bottom line is that the median resale price is down by 5% in the last year, not 10%.
ParticipantMexico Resident –
I’m not completely agreeing with his statement. It is a fact that median resale homes are off by 5% in the past 12 months in SD County. I was just correcting his 10% figure. And I don’t mind if people yank my chain. I just like to sometimes point out that things aren’t quite as bad as some believe.
lostkitty – you have a good point. A lot of people will be refinancing into other loans. The problem is, that an incredible number of people have gotten loans of up to 100% of their homes’ value in the last couple of years, (either as purchases, or as cash-out refis), and if prices even go down 5%, they may not be able to refinance at all.
ParticipantPencilneck –
“a 10% drop in the price of median homes and a 30% drop in sales, year over year, is a huge and fast drop in a market that is perceived to be so stable.”
If we ever get a 10% y.o.y. drop in median resale prices, that would be huge. That hasn’t happened yet, though. To this point prices are off 5% from 12 months ago. The 30% drop in sales is huge, but that appears to be almost completely the lack of investor buyers in the market.
jg –
Home building has slowed to a crawl, but that’s actually healthy for the market. The more new homes that are built right now, the more downward pressure there will be on prices, since there isn’t a lot of market demand for new houses in SD now.
If builders keep building new condos Downtown, that market will take a long time to recover, though. I don’t know what bank would want to make a construction loan on a new project downtown at this time.
ParticipantThese kinds of fraudulent transactions are becoming very common all across the country. The lender is left holding the bag.
I have recently seen a couple of properties in San Diego that were listed, had their listings cancelled or expired, and the properties then sold for 10-15% higher a few months later, at prices that could not be supported by the market, without being reported on the MLS.
Except in very rare/strange instances, an appraiser cannot legitimately appraise a property for 10% over the list price, especially when the property has been adequately exposed to the market. On the appraisal form, there is a section that asks if the subject property has been listed for sale in the past 12 months, and if so, the appraiser must give the details of the current or recent listings.
The only way a lender can get an appraised value of 10-15% over the list price is if:
A.) The appraiser is dishonest, plus an adequate appraisal review is not done by the lender, or
B.) The lender does not require an appraisal. There are a number of loans that are done without an appraisal. The lender does an “automated valuation”, with technology similar to Zillow or Cyberhomes.
I really don’t feel sorry for any lender that gets taken in a scam like this. If they’re that careless with their money, they deserve to lose it.
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