VA Flood of Tidewaters

[KenAZ]

I agree. To me, pendings are an indicator of future value, not current values. If a few of these pendings actually close, then I will use them as comps.

I will not use pendings to support a $50,000 one month time adjustment based on pendings. We did that in 2008, because FNMA said we could, then they blamed us when the market crashed, because these pending were crashing, and not closing. Builders were offering $100,000 discounts, because 50% of their sales backed out and they were stuck with 50% of extra inventory. The other 50% of buyers that went ahead with their purchases, got high appraisals based on pendings and after closing, they saw the exact same model get a $100,000 builder discount 1 month later.

If I was doing a review of an apprqaisal after the crash, I would not agree with an appraial based the value on based pendings, especially if they never closed due to falling market.

 

[Carnivore]

I found out some interesting things about the Current Market from a Realtor Lady Friend. I ask her flat out why were buyers willing to pay over the listing price?

She explained it like this: Her Buyers are willing to pay more just to get in the home because many have moved here from outside the State and are renting. Rents are going up(at lease renewal). The buyers are doing the math. They are ready to buy! Many have a monthly cost of furniture Storage. While they rent they are losing the interest deduction Federal Tax Advantage. They know Prices will Continue to Rise while they rent. Thus they are out of that SFR Market value Appreciation. They know Interest rates have only one way to go and that is up, meaning it can cost more possibly. Others are local and have already sold their house and living in an apartment or with family. Another reason is many people are moving here from Higher Cost areas and they have lots of Cash.

That's the Jist of it! Makes our job Harder since we are using historical data.

 

[KenAZ]

We "Knew" values were going to go up in 2008, until the market crashed. That is what tends to make it difficult, because all we have is the history. The pendings are not accurate until they actually closed. They are useful in determining the highest price someone will pay for a home, and can predict a lower value. I used to think that pendings are the predictors of an increasing market, until 2008 when all the pendings were getting backed out and prices dropped by 75%.

I do not trust this market

 

[Tim Hicks (Texas)]

We heard all these same things in 2007-2008. Appraiser beware. They will need to blame somebody when the market crashes and it will not be the agents.

 

[Alsie35]

I found out some interesting things about the Current Market from a Realtor Lady Friend. I ask her flat out why were buyers willing to pay over the listing price?

She explained it like this: Her Buyers are willing to pay more just to get in the home because many have moved here from outside the State and are renting. Rents are going up(at lease renewal). The buyers are doing the math. They are ready to buy! Many have a monthly cost of furniture Storage. While they rent they are losing the interest deduction Federal Tax Advantage. They know Prices will Continue to Rise while they rent. Thus they are out of that SFR Market value Appreciation. They know Interest rates have only one way to go and that is up, meaning it can cost more possibly. Others are local and have already sold their house and living in an apartment or with family. Another reason is many people are moving here from Higher Cost areas and they have lots of Cash.

That's the Jist of it! Makes our job Harder since we are using historical data.

You're damned right. I have already told my wife that we need to be prepared to make a bid above list price in TX and offer to pay any difference in cash if the home doesn't appraise. I'm not renting. Ideally we will close on a home before we sell the one out here in CA and have a family member stay there til we arrive. You have got to do what you have got to do.

Frankly I am not as concerned with property values going down as I am with locking in a super-low rate. Once I'm in TX I can deal with values dipping if need be - I don't plan on going anywhere after that.

 

[ZZGAMAZZ]

The entire thread is based upon a random comment about VA appraisals, which requires a major EA. Also, the vets who correctly vett the market realize that a significant potential benefit exists based upon $0 DP and interest rates < 3%.

 

[Terrel L. Shields]

Those pending's are the best data you have.

Those pendings are worse than worthless if they are not disclosed in the MLS and one MLS I know doesn't disclose the sale price until it is closed. So if a $200,000 "pending" finally closes at only $180k then you've screwed the pooch. I don't do secondary market. But I have been getting several sales via community banks with an ordinary in house 10-15 year loan. Considering the dates on the contracts, I suspect they failed the smell test already and the addenda is a lower price. I've not had any that were not supported, in fact, a few were quite low based on the available sales data. I have one to look at that has 3 sales nearby. 1 sold for the same as the subject asking price and 3 are about $15k over it. Lakeview lots in older subdivisions. 1500-2000 SF.

 

[djd09]

i had some scum bag mortgage brokers call me 'conservative' back in the hay days of the early 2000's. a couple of them went to jail.

 

[alebrewer]

pendings are an indicator of future value, not current values.

Technically, 'pendings' are an indication of current value that hasn't been proven yet. They ARE, IOW, what is going on right now - not in the future. They just haven't 'closed', which means the price hasn't been consummated. It's a bit of a travesty that F/F and FHA (and VA) require the appraiser to place their weight on 'closed' sales. By definition, any closed sale is a historical sale, and is not what is reflected in the 'current' market...

 

[A K]

12% annual increase reflected as 1% per month is not reflecting reality. Prices do not change 1% per month.

What is different this year from typical years is that normally demand and market activity level off into the winter season but this year demand is staying strong with supply continuing to decline month to month. Normally you see the big increase in prices in the spring and summer and then see prices level off into the end of the year but this year prices are taking a second leg higher in the winter season. It could be a pull forward of gains from the coming spring or prices could take another leg higher in the spring. We will have to see what happens at that time.