Moh, please take the time to read what I say and do not read into it as I see you are prone to do.
Well, if you make your mind to get whatever you are theorizing in your mind and you search enough, go to long distance, jump from one neighborhood to another just to prove your theory or your mindset, you eventually can force some sales or listings to show what you are looking for.
Absolutely not. It is a fact pure and simple that from December to February in my market there was no less than an 11% decline in the MLS statistics (which I showed the data for). Values have been declining. Perhaps values only declined 8% in your area and there is no market reaction to a bank influenced short sale. I wouldn't know until I read your market data thoroughly.
I think you know one side of short sale which is the willingness of lender to let the homeowner sell the home for its market value which is usually less than the mortgage amount on that property but you don’t know why the lender is willing to let the owner to sell it at less than mortgage amount. You are a firm believer of buyer’s psychology but you ignore the lenders psychology. Lenders are willing to let owners to sell those homes at their market value, which are less than their outstanding mortgage amounts because it is in their best interest. They want to prevent more loss and liquidate the property as soon as possible. Both lenders and homeowner are anxious to sell a home with default mortgage quickly otherwise; the lender would let the home be foreclosed
No I am quite aware of the dynamics of a short sale on both sides.
No, this is what you said before on post #4. Go take a look at it You said that a typical buyer will pay 10% more for identical model match home because it is not REO or short sale. This is what I am struggling to agree and I think you are theorizing this idea with no common sense base. You use buyer’s psychology and emotional attachment but when I ask you buyer’s emotion to what, you don’t have any convincing idea. I am not saying you are wrong but I am saying you are theorizing and you need to bring some data besides the emotional attachment theory. I would like to get the forum consensus about your theory that a typical buyer will pay 10% more for identical home merely because it is non short sale. In my subject subdivision, the 10% more for an identical home would be $80,000. Will a typical pay $80,000 more for not wanting to wait may be one more moth?
And where did I say "10%". You may have inferred 10% from my numbers, i.e., $150,000 to $135,000, but I never said 10%. In fact, I have never found a percentage-based short sale adjustment. It is usually lump sum. So you easily could have said $815,000 but it benefited your rhetoric to jump on the 10%. You read into that. I have said and will continue to say because it is what I have seen, the adjustment could be $0, $5,000, $10,000, $15,000, and much higher. It all depends on what is extracted.
As I mentioned, I have one regular sale in February and one REO sale in December in the project. The regular sale in February sold 8% lower than the REO sale in December and this is a truth and I can email you the docs. This is just opposite of your theory that said regular sales should sell 10% higher than short sale when everything else is equal.
Don't need the documents, I believe you and NEVER suggested I didn't. What I said was we had an 11% drop in values in my market (and I substantiated that drop with the MLS data sheet yet somehow you said I was forcing it) from Decemember to February and so if those figures were in my market, it still might support an adjustment for the stigma. It does nothing to my "theory". The fact is the adjustment could be $0, "my" theory account for that. I would never insist that there was always an adjustment to be made.
I am sure you know that appraisal is part science and part art. When you get to the art part of the appraisal and you start to theorizing and brainstorming, you may get out of reality and common sense.
I am sure you know that we look for differences between the subject and the comps and make adjustments based on market reaction to those differences. This is not "theorizing" or "brainstorming" but Appraising 101. There is a difference between a house that sells direct from owner to seller, and one that must have direct bank involvement for contract acceptance, typically amounting in more time spent waiting with the possibility of refusal. That difference may or may not be measurable - just like a deck or a fence or backing to a golf course over a pond may not be a measurable factor - but it does not preclude you from looking for a reaction and supporting an adjustment, or lack of one.
As I said earlier, if you try hard and jump from one subdivision to another and from one neighborhood to another, eventually you will find something that shows what you have theorized and made your mind about it.
I don't have to jump from one subdivision to the next most times. I have seen it in neighborhood after neighborhood over and over again that I know there is almost always some type of a reaction for it. Here is real life examples right in my own subdivision (chosen because I know it and the houses here without making calls). My project is brand new and the houses are all very similar in condiiton and quality, except that it is split in two, a tract house side and a luxury house side. I have pulled the most recent sales activity and recent short sales available, a group from each side of the project, to demonstrate.
Tract house: ML#T2271788 bank approval short sale, a 1600sf 3/2, sold in 241 days for $155,000 (after concessions as all prices here are) on 05/12/2008. ML#T2261495, non-bank influenced sale, 1600sf 3/2 sold 02/29/2008 for $185,000 in 218 days. No difference in any amenity, condition or quality. To show time was not the issue: ML#T2300859 a non-bank influenced 1900sf 4/2 sale, equal in quality and condition, closed 05/30/2008 for $193,000 in 47 days.
Luxury house side: Bank influenced short sale listed at $299,900 and sold in 276 days for $265,500 is a 2700sf 4/3 with 3 car garage. Nearly Identical 2700sf 4/3 that was not a short sale sold 03/28/2008 for $350,000 in 158 days. To show this is not a time issue: ML # T2296144 is set to close this month at around $365,000, it is a 2900sf 4/3 with 3 car garage and sold in 121 days.
These are all from the same development and they were the first development I looked at for the data. Short sales requiring bank approval show a consistently lower sale price, longer time on market, and they are in similar condition and of similar quality and from the same project. I see this over and over from neighborhood to neighborhood.
May be we should get a poll on your theory.
Will a typical buyer pay 10% more for an identical home because it is not a short sale?
I still don't know what is the basis of your theory that says a typical buyer will pay 10% more for a non-short sale or non-REO sale when everything elese is qual. Will the buyer pay 10% more becaue he/she doesn't want to wait maybe a month longer to get the property closed or because of the emotional attachment to the seller or both? Needless to say that you have already made a name for it, "STIGMA ATTACK".
First, the questions would be, "Do you consider a privately owned, upside down sale, that requires one or more banks to approve the transaction, potentially adding a month or longer to the time required for a contract to be accepted, to be different from a sale where the private seller has immediate and direct capability to accept or reject an offer within hours? If so, and if you had to either appraise one of these upside down properties or consider them for use in a report, Do you believe looking for market reaction for the situation is appropriate?
I really love to get a consensus from the forum members on this because it is important to know, as it is a new phenomena happening in the market
I think, Moh, that says it all. For you it is a new phenomenon, for me it has been going on for between 2 and 3 years and I see them in every report I do.
