Leaving The Market Area To Get A Contract Price In Maricopa, Az

[Mark K]

....however, I do care when the buyer is only coming with a down payment of 2.5%.

I understand your frustration obvious from your post and I'm glad I do very little mortgage work but...

I have never understood statements like this.

How does the amount of down payment have anything to do with the appraised value and why would an appraiser care if its 1% or 50% down?

As far as I'm concerned, the banks should have to keep in-house any loan over 90% LTV but that's not my call and certainly not important to the appraisal.

 

[Deleted member 80407]

Please tell me that your opinion of value is not influenced by the borrower's down payment amount....

A person who cannot afford to put down more than 2.5% should not be put into a property UPSIDE DOWN. Like I said before, market data within this identified market does not support the contract price. I suppose there are appraiser's out their that think it is their job to hit contract price every time, even though it is above market value. Wondering how many out their will leave a market and go to a superior market to hit a contract price? Probably too many because they think it is easier to cheat the market rather than deal with the client because the contract price cannot be supported. Just remember, the government probably will not bail out the banks if they fail again and therefore, someone will have to pay ~ maybe appraiser's???

 

[ucbruin]

A person who cannot afford to put down more than 2.5% should not be put into a property UPSIDE DOWN. Like I said before, market data within this identified market does not support the contract price. I suppose there are appraiser's out their that think it is their job to hit contract price every time, even though it is above market value. Wondering how many out their will leave a market and go to a superior market to hit a contract price? Probably too many because they think it is easier to cheat the market rather than deal with the client because the contract price cannot be supported. Just remember, the government probably will not bail out the banks if they fail again and therefore, someone will have to pay ~ maybe appraiser's???

2 different topics....
Market area vs borrower's down payment amount....

I couldn't care less about the borrower's down payment and would never allow it to influence my appraisal...
And I'm sure that is the same for you too....

 

[Tim The Enchanter]

I couldn't care less about the borrower's down payment and would never allow it to influence my appraisal...

Yes, I don't care if they are getting money paid to take it. Negative down payment.
I'd wonder why, but is has nada to do with my OMV.

 

[Michigander]

Buyer lacks much of down payment. They find a couple of scenarios. Which do you think will sell higher? Buyer has enough money for 3% down payment but not enough to pay the 6% in closing costs. Assume identical houses.

A) Asking price of $100,000 and the seller is willing to kick back 6% closing costs to the buyer
B) Asking price of $95,000 and the seller will not give any money back for closing costs.

House A they will need $3,000 down payment, which they have, and the seller will pay the $6,000 in closing costs. House B they will need $2,850 for the down payment, which they have, but they they will also need $5,700 in closing costs which they do not have.

Now what if the buyer had $40,000 in the bank and could easily absorb the 20% down payment and closing costs, which would they buy?

A bit off topic of James post but trying to answer why down payments can matter, as well as closing costs of course.

 

[Tim The Enchanter]

Their down payment and financing or lack thereof is irrelevant to me.
Irrelevant I tells ya! What is the market value?

 

[ucbruin]

Buyer lacks much of down payment. They find a couple of scenarios. Which do you think will sell higher? Buyer has enough money for 3% down payment but not enough to pay the 6% in closing costs. Assume identical houses.

A) Asking price of $100,000 and the seller is willing to kick back 6% closing costs to the buyer
B) Asking price of $95,000 and the seller will not give any money back for closing costs.

House A they will need $3,000 down payment, which they have, and the seller will pay the $6,000 in closing costs. House B they will need $2,850 for the down payment, which they have, but they they will also need $5,700 in closing costs which they do not have.

Now what if the buyer had $40,000 in the bank and could easily absorb the 20% down payment and closing costs, which would they buy?

A bit off topic of James post but trying to answer why down payments can matter, as well as closing costs of course.

"Now what if the buyer had $40,000 in the bank and could easily absorb the 20% down payment and closing costs, which would they buy?"

Because I've read many of your posts during my 3 years as an AF member and also because you've shared with us/me a few of the articles you authored, I'd be shocked if I didn't already know your answer to my next question....

If we were discussing a refi appraisal, would the borrower's financial health ever be even a twinkle of a thought for you?

 

[Michigander]

"Now what if the buyer had $40,000 in the bank and could easily absorb the 20% down payment and closing costs, which would they buy?"

Because I've read many of your posts during my 3 years as an AF member and also because you've shared with us/me a few of the articles you authored, I'd be shocked if I didn't already know your answer to my next question....

If we were discussing a refi appraisal, would the borrower's financial health ever be even a twinkle of a thought for you?

I am one of those folks who thinks that concessions almost always affect the price a buyer pays. So, concessions on the sales would affect my opinion and I would research them. I am not sure about the question though related to refinance appraisal, because I try to develop and report my opinion as if the appraisal report had life and legs and tend to be cautious. Just my nature.

My post was about how having a small down payment/no money for closing costs would likely affect the sales of the comparables, sorry if it came off as the subject. That wasn't my intention.

 

[Deleted member 130081]

Was wondering how some of these properties are selling way above anything else in the market area. I am working a property in the Senita Subdivision. Just got off the phone with a realtor who said I was bull headed for not leaving the subdivision to support a contract price. WHY SHOULD I LEAVE THE SUBDIVISION WHEN THE SUBJECT SUBDIVISION HAS 8 SALES WITHIN THE PAST 6 MONTHS OF HOUSES WITHIN 50 SQUARE FEET OF THE SUBJECT. This realtor gave me 3 SALES (not comp's) that support the selling price of his listing. All 3 were located in subdivisions with superior amenities (2 in Glennwilde & 1 in Villages of Rancho El Dorado). One of the sales located in Glennwilde was constructed 8 years after the subject. It appears to me that there are too many appraiser's out there chasing contract prices rather than market value.

FOR THE LIFE OF ME, I cannot figure out why these scum *** appraiser's are allowed to exist. They give the honest appraisers a bad name. Furthermore, realtors now think they can get away with MURDER in pricing properties well over market value and finding a sucker buyer, a dumb *** appraiser and a mortgage origination company looking the other way. Wonder what will happen when a buyer finds out that he over paid and walks from the mortgage. Just think if someone pays $10,000 above market value for a property how much extra he will pay over a period of 30 years. SOMETHING SHOULD BE DONE. Fannie Mae and HUD should be doing more reviewing and holding appraiser's accountable for the difference between market value and contract price when they cheat market value.

How do you get from the "scum" realtor to the "scum" appraiser here? I don't get that. Better to place blame where it belongs - we have enough real troubles without false accusations. After that, I hear ya'

I'm doing a purchase right now where it is not going to meet contract. Realtor sent me a bunch of comps and their picks were 1000 times better than what most realtors try to suggest. That said, all of the comps sent have remodeled kitchens, while my subject does not. Upon my own research, I discovered/concluded that this is not only significant, it might be the most significant element to value within the class of property (lol - go figure). This is a clear case of what you are talking about, where the realtor is trying to use the higher-selling properties in the market, that actually look great on paper and an AVM would miss, to sneak in a sucker buyer.

Also interesting (to me) is that the cost of a kitchen is less than the contributory value in this case. I think this makes it easy for the realtor or buyer to conclude, if they were going to play appraiser and subscribe to an adjustment method, that applying a downward adjustment equal to the cost of the kitchen to the sale price of a remodeled home, could arrive at market value. The conclusion of course lacks the consideration of other relevant information, like what buyers are paying for homes without the remodeled kitchen!!! This is what we get paid for folks, discovering and pointing out all the stuff realtors, buyers and AVMs miss. Good flip/rehab opportunity in this case - cost to construct roughly $25k give or take, contributory value roughly $50k to $100k, give or take - not bad for only fixing the kitchen instead of the whole house.

 

[glenn walker]

The "scum-Bag" Realtor told him he was bull-headed and his anger suddenly became directed at both Realtors and Appraisers. This is common with appraisers as I have stated many times on the forum many appraisers are working in isolated environments and lose the ability to communicate with others in the industry. If I was James I would start attending Realtor functions and also get to know other local appraisers because he will quickly discover there are some great Realtors and Great Appraisers.