3.6 Crunch Time

[glenn walker]

There are still people out there that are willing to massively over pay mostly due to ignorance. I had two of those in the last month. One was going to pay 80,000 more for the land than what it was worth and build a house on it. That got nixed. Then had another one where the people were going to massively over pay on a house and then put 70,000 into it. That came up about 50,000 short. They were essentially going to pay 180,000 for a piece of junk. The realtor called me up and asked me what I thought the house was worth. I said well you should be able to figure that one out. It sold for 100,000 2 or 3 years ago. What has been the appreciation on the property based upon the market? That house started back on the market at 150,000. It has now dropped to 125,000. Still hasn't sold. What I am trying to say is we can prevent someone from making a huge mistake. If the bank just rubber stamps a loan, that never comes out.

Yes on land and rural especially but in large suburban areas with cookie cutters not so much the data is good and list and sales prices fairly tight. But i can attest to buying so called over priced property in up markets that ended up being steals 12 months later. Lol )

 

[Airstream]

Yes on land and rural especially but in large suburban areas with cookie cutters not so much the data is good and list and sales prices fairly tight. But i can attest to buying so called over priced property in up markets that ended up being steals 12 months later. Lol )

Nothing better than dumb luck My wife and I did that with our last build. We spent 630,000 land and improvements on our house. I told her 5 years ago, we are now underwater on this house by about 150,000. 5 years later 2 houses sold on our road that aren't as nice with less improvements, and I now tell her we are at least even.

 

[chad hampton]

Most of the folks that overpaid got waivers. Then the markets officially juiced. Let the good times roll.

 

[J Grant]

Post 587 and 589 are from people who work on the lender's side of the aisle to give perspective on their views that who needs appraisals since they do not prevent borrower default

They leave out the part that an appraisal was not designed to prevent borrower default. The appraisal gives information and a MV value opinion about the collateral property so the lender can make a lending decision. Its main value is on the front end.


This deceptive switch of measuring appraisals by borrower default to then conclude the appraisal is worthless is like saying my lawn mower does not drive as fast as a car, so ditch my lawn mower.. They serve different purposes. A car can not mow a lawn . A lawnmower was not designed to drive like a car. So judging either one as a failure compared to the other makes no sense.

The UW vets the borrower to minimize default. The appraisal vets the collateral property to convey information and analysis and an MV opinion about it - to assist a lender in making an informed decision: is it a good decision to loan on this property and for what amount, are any repairs needed, is it marketable, an overimprovement, etc.

An appraisal has some element of overlap with borrower default in that a borrower overpaying in a purchase or overleveraging in a refinance can lose equity and be underwater on their loan.

High sales prices that are greenlighted by waivers since a waiver always hits the sale price once approved - all it takes is one high sale a month to enter the comp database in appraisals, AVM's or other to skew valuations and prices in an area.

 

[glenn walker]

Nothing better than dumb luck My wife and I did that with our last build. We spent 630,000 land and improvements on our house. I told her 5 years ago, we are now underwater on this house by about 150,000. 5 years later 2 houses sold on our road that aren't as nice with less improvements, and I now tell her we are at Build

Custom Builds are inherently money losers and only make sense for the wealthy.

 

[Airstream]

Custom Builds are inherently money losers and only make sense for the wealthy.

And we knew that when we built it. But we had the money to pay cash, and we wanted the house for all kinds of reasons. We decided to build because trying to find a house during the pandemic we actually wanted was just not working.

 

[Sandra Koutsopoulos]

Sounds like you just built your neighbors into an upscale neighborhood.

 

[Airstream]

Sounds like you just built your neighbors into an upscale neighborhood.

Actually the house is fairly modest. I do have a very big garage though. But building during the pandemic was interesting.

 

[Sandra Koutsopoulos]

Boyz Toyz Garage?

 

[Airstream]

Boyz Toyz Garage?

Not exactly. One of the problems we found with garages on typical homes is how small they are. Our previous house had a 36x36 attached garage and I had a big pole barn. I have a fairly good size pickup with towing mirrors, and we have a 28’ Airstream camper. I built an attached garage with extra wide and high doors (two 9x10) so I could get my pickup in without pulling the mirrors in, higher ceilings for 3/4 ton pickup height, and one side is an RV garage to put the Airstream in. That has a 12x12 door. It has a dump station, 50 AMP service, and is insulated and heated. It has extra depth as well so that I can put all the storage in and still have plenty of room for the length of my pickup. My son said I have an attached house to my garage