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More real estate doom and gloom

junkyard

You might feel a little prick.
Sep 1, 2015
1,707
1,225
San Diego
One would assume that a mtge company, which employs actuaries, who would possibly understand risk, when saying "this house is not worth what we're willing to loan against", might make people say "wait a second..." But NOPE! Indentured servitude here we come!
what do they know!!

not much has changed for a long time. What’s the difference if the king takes 20% of your crops or you pay property tax. If you don’t pay they take it, or jail you. Sure we got fancy tv’s now and a bit more freedom. But it’s still kings and peasants.
 

6thElement

Schrodinger's Immigrant
Jul 29, 2008
9,122
5,971
Golden is right, damn

Pfft. They priced it cheap, asking $855k with zestimate $905k.
 

Adventurous

Starshine Bro
Mar 19, 2014
7,141
4,343
Crawlorado
I live in Golden (you can see my place in the aerial pic. see it?)

I rode past that place last ride and thought ... "$600? $650??"

stoney is right in that (a) it's walking distance to the gold course and $1M homes. I ride down that street often between home and Apex Park. I looked at a house a few years back in that 'hood, nicer than that but no garage. Balked at the $450k asking price. I'm not a smart man.

Problem with the small homes here is everything is walking distance to the School of Mines. Anything that's safe to occupy can be rented to Mines students from TX for $1,000 per room, indefinitely.
As if the majority of golfers would walk to the course. :rofl:

Whenever I golf, people look at me like I'm mushroom stamping them with a 6 headed dick when I insist on walking. Lazy cart driving bastards.
 
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Toshi

Harbinger of Doom
Oct 23, 2001
31,672
3,860
One would assume that a mtge company, which employs actuaries, who would possibly understand risk, when saying "this house is not worth what we're willing to loan against", might make people say "wait a second..." But NOPE! Indentured servitude here we come!
Mortgage companies still make buyers come up with extra cash if the house somehow appraises under the negotiated price.
 

Brian HCM#1

MMMMMMMMM BEER!!!!!!!!!!
Sep 7, 2001
31,862
199
Bay Area, California
Mortgage companies still make buyers come up with extra cash if the house somehow appraises under the negotiated price.
That's if its written in the purchase contract. The last listing I had, the buyers came in with their offer with no contingencies including the appraisal. Meaning if the home did not appraise for the purchase price amount, they were on the hook for the difference out of pocket in which could not be part of their purchase loan amount. Seeing it more & more in this crazy market.
 

Toshi

Harbinger of Doom
Oct 23, 2001
31,672
3,860
Isn't that what I said? The buyer has to come up with the extra cash for the appraisal gap.
 

OGRipper

back alley ripper
Feb 3, 2004
10,238
682
NORCAL is the hizzle
We're dealing with the appraisal issue right now on some places we're looking at. When prices go crazy there aren't many current "comps" around for the appraisers to reference. As a result the appraisals come in below the offered price (which at this point pretty much must be at least a little, if not a lot, over the asking price.) But lenders will only loan 80% of the appraised value. The buyer is required to make up the delta in cash, so the deposit is often more than 20%.

In competitive markets like this, sellers can refuse an appraisal contingency. A buyer who insists on one will most likely not be the winning offer. Even a financing contingency can be a tough sell, particularly when some people are paying all cash.
 

Westy

the teste
Nov 22, 2002
44,912
10,563
Sleazattle
We're dealing with the appraisal issue right now on some places we're looking at. When prices go crazy there aren't many current "comps" around for the appraisers to reference. As a result the appraisals come in below the offered price (which at this point pretty much must be at least a little, if not a lot, over the asking price.) But lenders will only loan 80% of the appraised value. The buyer is required to make up the delta in cash, so the deposit is often more than 20%.

In competitive markets like this, sellers can refuse an appraisal contingency. A buyer who insists on one will most likely not be the winning offer. Even a financing contingency can be a tough sell, particularly when some people are paying all cash.
But in a market where every house sees multiple offers, don't the offers set the value?
 

OGRipper

back alley ripper
Feb 3, 2004
10,238
682
NORCAL is the hizzle
Westy, offers (by themselves) are not usually made public so appraisers have no way to reliably reference them. They need to look at actual sales data. As I understand it, that's typically amounts reported for property tax purposes. And those numbers take a bit to go public, so again, when a market really heats up, the appraisers don't have current comps.

Really though, the banks should figure out some way to protect themselves. Not sure why they haven't thought of it yet, but one thought is to not lend any more than 80% of the appraised value, and make the buyer pick up the difference.

:banana::lighten:
 

mandown

Poopdeck Repost
Jun 1, 2004
16,840
3,858
Transylvania 90210
what if someone cashed out their retirement fund to fund it?
Fundamentally, that makes sense. But I wouldn’t do it unless the appraisal was below the sales price.

One of the thoughts I’ve had recently is that investing in real estate, even your primary residence, has a safety/security element to it. Setting aside the volatility and risk considerations, I would think that in an era of cyber crimes that funds invested in real estate would be harder to steal than hacking into an investment account. I’m sure it’s happened but I don’t hear much about people stealing titles. It seems more likely that someone would hack into a brokerage account and drain the funds, leaving an individual with little recourse.
 

Full Trucker

Frikkin newb!!!
Feb 26, 2003
8,393
4,069
Exit, CO
I think not, with the increase in home values over the past year; most home owners unable to pay their monthly mortgage payments will at least be able sell and get back their money even if after they pay off their mortgages.
For sure, they'll be able to sell their houses to investors who'll turn them into STRs.