The Home Ownership Thread

[jbarwick]

It is now a comp and you can't do much about it. Not all homes go up in value and in some cases people may sell their home for less in the case of a divorce or an urgent need to move. Real estate is a weird purchase where others actions affect yours.

 

[flvinny521]

It is now a comp and you can't do much about it. Not all homes go up in value and in some cases people may sell their home for less in the case of a divorce or an urgent need to move. Real estate is a weird purchase where others actions affect yours.

That's understandable, but the circumstances immediately before and after lead me to the conclusion that there was something else at work here. For example, both my wife and I recall seeing the vehicles of the current owner parking at the home overnight for the couple of weeks prior to the sale, among other things.

I'm sure in the long run we'll be perfectly happy in our current home for the long haul, but it would be really nice to have the "extras" that we could afford by selling and moving. This is our second home (first with kids) and I think we finally have a better grip on our needs and wants, as well as a bit more income. Oh well, somebody once said "you can't always get what you want."

 

[texas_jack]



That's understandable, but the circumstances immediately before and after lead me to the conclusion that there was something else at work here. For example, both my wife and I recall seeing the vehicles of the current owner parking at the home overnight for the couple of weeks prior to the sale, among other things.

I'm sure in the long run we'll be perfectly happy in our current home for the long haul, but it would be really nice to have the "extras" that we could afford by selling and moving. This is our second home (first with kids) and I think we finally have a better grip on our needs and wants, as well as a bit more income. Oh well, somebody once said "you can't always get what you want."

Could be worse. The neighbor at our other place is letting it go into foreclosure.

 

[MrG]

Yeah, the comps are going up give you trouble. When we bought our house, the dearth of comps actually worked in our favor. The appraiser had to go pretty far back to find enough to do the appraisal, which, in our market, meant missing a fair bit of value growth. It was great for us because it put the seller in a bind, but it certainly wasn't what they wanted (which is where you are now).

That said, you can appeal an appraisal, so you could always make your case regarding the house that sold cheap, but you'd still have to be able to identify enough comparable sales to justify whatever price you think is fair market. That last bit might be the insurmountable part for you, since you said there are very few sales in your area.

 

[Piobaire]

You have to remind the appraiser that the value of residential real estate is whatever price a willing seller and a willing buyer come together at. There's no DCF of rents, etc. with residential real estate. It truly is whatever two parties are willing to do business at.

 

[flvinny521]

Would an appraiser rule out a comp if he didn't feel it was a fair market value transaction, assuming the following definition of FMV?

the most probable price that a particular parcel of property should sell for in both a competitive and open market with all conditions for that market being met by the property itself, such as the buyer and seller acting on their own and the price not being affected by any undue outside stimulus

I'd say that the price was affected by an outside stimulus if my suspicions are correct.


Edit: There have also been some neighbors who've refinanced or taken out an equity line after the sale, and their appraisal was more in line what I think the "true" value should be, but I know that an appraisal for a sale vs. owner financing their own property can be very different.

 

[RedLantern]

If you want to sell, what's the downside of listing it? Just afraid that it wont appraise for what you might get offered for it and the deal will fall through?

 

[flvinny521]

If you want to sell, what's the downside of listing it? Just afraid that it wont appraise for what you might get offered for it and the deal will fall through?

I'd prefer not to waste my time. We have two young children and the experience of selling our first home when they were babies has scarred both of us. It's near impossible to keep a home in showing-ready condition with three year old twins running around, so getting a call for a showing later the same day that sends you scrambling to clean up is not something I want to deal with. If a deal did fall through when I knew the risks up front, I'd be quite aggravated.

Last time, we requested one day notice for all showings, but the bottom line is still that you're at the mercy of the buyers.

 

[ChrisGold]



My wife and I are weighing the pros and cons of selling our current home vs. staying and investing in some upgrades. We live in a small neighborhood of only 80-something homes. It's in an area that had been mainly agricultural in the past, but is very near to a desirable residential area, and is currently undergoing a lot of construction. We feel that eventually, our area will be like an "extension" of the other, more established town, but it's not there yet. The point of the backstory is that we had our home built by the developer of this community, and there aren't tons of comps at this time other than our own neighborhood. There are two other communities directly north and south of ours, but it seems unlikely that an appraiser would choose homes there as a comp over those in more direct competition.

A few months ago, a neighbor in a larger home than mine sold his property for considerably (20-25%) less than what we would have considered market value. His sales price was around the price of the home we built. We suspect that he sold to a family member or close friend and maybe took some cash on the side, or worked out some sort of "alternative" arrangement with them. As a result, it's possible (maybe likely) that our home would end up appraising for less than a fair price based on the south Florida market. Is there anything we could do proactively to reduce the impact this sale will have on us, other than just waiting it out? Our neighborhood doesn't have much activity, so we're concerned that we could be waiting a while.

It's an issue but not nearly as big as you might think. I live in a similar sized neighborhood and we've dealt with two homes that were sold VERY low, one in foreclosure and one in a divorce. Both homes sold for more than $100K under where they would be expected. All the homes that sold since then sold right where they should be, including homes within a few hundred feet that sold for $200K above the low prices, as they were larger models.

The fact of the matter is that if it was an insider deal, that means that there aren't other comparable homes currently on the market near that price, and so if someone wants to get into your neighborhood they have to pay the CURRENT market price, and any good agent should recognize that.

What is worse for a neighborhood is for that house to sit empty, fall into disrepair, be rented to bad tenants, etc... that is worse because buyers see that as an eyesore or as neighbors that they will have to live with... much better for a home in distress to sell quickly to someone who will maintain it, or repair it.

 

[ChrisGold]



I'd prefer not to waste my time. We have two young children and the experience of selling our first home when they were babies has scarred both of us. It's near impossible to keep a home in showing-ready condition with three year old twins running around, so getting a call for a showing later the same day that sends you scrambling to clean up is not something I want to deal with. If a deal did fall through when I knew the risks up front, I'd be quite aggravated.

Last time, we requested one day notice for all showings, but the bottom line is still that you're at the mercy of the buyers.

I've been in that exact position, a 6 year old and three year old twins. It was a month of hell.

 

[Piobaire]

Pretty sure foreclosures and bank owned properties are not counted for comps.

 

[texas_jack]



Pretty sure foreclosures and bank owned properties are not counted for comps.

Good to know. Thanks

 

[Piobaire]

It makes sense as the "willing seller" is not present in that equation.

 

[brokencycle]

I went through trying to appraise my house for refinancing. What I've learned is that when you're buying (or selling) the appraiser sees the house sale price. This means that they are doing everything they can to justify that price.

REO and short-sales don't count toward comps.

 

[SkinnyGoomba]



It's an issue but not nearly as big as you might think. I live in a similar sized neighborhood and we've dealt with two homes that were sold VERY low, one in foreclosure and one in a divorce. Both homes sold for more than $100K under where they would be expected. All the homes that sold since then sold right where they should be, including homes within a few hundred feet that sold for $200K above the low prices, as they were larger models.

The fact of the matter is that if it was an insider deal, that means that there aren't other comparable homes currently on the market near that price, and so if someone wants to get into your neighborhood they have to pay the CURRENT market price, and any good agent should recognize that.

What is worse for a neighborhood is for that house to sit empty, fall into disrepair, be rented to bad tenants, etc... that is worse because buyers see that as an eyesore or as neighbors that they will have to live with... much better for a home in distress to sell quickly to someone who will maintain it, or repair it.

I'm right near by and we had the same experience, there is one house that no one seems to want to touch and everything else goes in a week over asking price.