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Mango

SoWal Insider
Apr 7, 2006
9,712
1,360
New York/ Santa Rosa Beach
It wasn't just Bear Stearns that made questionable loans--everyone was in on the game. Fitch just downgraded $5.3 BILLION of Residential Backed Mortgage Securities on Friday night. If you look at the list you'll see ALL the players (Citi, WaMu, JP Morgan, Wells Fargo, Fremont, Option One, etc. etc.)
http://www.housingwire.com/2007/12/21/friday-night-lights-out/

Take a look at what is inside one of these beauties: WaMu's Apr 07
http://www.sec.gov/Archives/edgar/data/1397612/000088237707001364/p07-0615_424b5.htm

Even "high quality" mortgages accepted by Fannie are going down the toilet: http://www.housingwire.com/2007/12/...o-shrink-delinquencies-continue-upward-trend/



/

They ALL did subprime and Alt -A loans INCLUDING Fannie and so did Freddie Mac. I'll see if I can find Fannie's delinquency specific loan types in delinquency. The article doesn't list, but they did stated income, stated assets and investulator hig LTV loans (ALT-A) as well as subprime.
 

Indigo Jill

Beach Fanatic
May 10, 2006
321
14
Point Washington
www.sowalscene.com
I still don't understand why you don't include these sales because they're made "under duress". :dunno:

It isn't as if Tony Soprano is holding a gun on someone, it's a sale price that reflects the current state of the real estate market and the economic situation in this country.

I certainly understand that you don't want to use an anomaly as the standard when appraising, but given how many homes are being sold at auction or "under duress" it needs to be taken into consideration.

Find it even more fishy that it shouldn't be used as a comp because it's a "builder reducing inventory", yet SJ says he knows the owner is lawyer! :angry:

TOTALLY agree - ScooterB. - it's not as if a distress sale in today's market is an exception. If that was the case, I could see the rationale of not using it as a good comparable. But this is a new market with new rules - using procedures in determining the appraised value of a property from even 5 years ago need to be adjusted to reflect the realities of the market today.
 

Bobby J

Beach Fanatic
Apr 18, 2005
4,043
599
Blue Mountain beach
www.lifeonshore.com
I still don't understand why you don't include these sales because they're made "under duress". :dunno:

It isn't as if Tony Soprano is holding a gun on someone, it's a sale price that reflects the current state of the real estate market and the economic situation in this country.

I certainly understand that you don't want to use an anomaly as the standard when appraising, but given how many homes are being sold at auction or "under duress" it needs to be taken into consideration.

Find it even more fishy that it shouldn't be used as a comp because it's a "builder reducing inventory", yet SJ says he knows the owner is lawyer! :angry:

Are you saying the appraisal process should be changed to show all sales? As it currently applies an appraisal is looking at 3 comps to the contract in hand. The buyer/agent job is to sniff out market trends.
 

elgordoboy

Beach Fanatic
Feb 9, 2007
2,524
561
I no longer stay in Dune Allen
Are you saying the appraisal process should be changed to show all sales? As it currently applies an appraisal is looking at 3 comps to the contract in hand. The buyer/agent job is to sniff out market trends.
No, simply ones that reflect what is going on in the market today. Big difference between a family member selling things at less than "market value" to other family members and builders and banks selling properties for any reason I can think of atm. The builders, banks, and private individuals selling under these circumstances ARE THE MARKET!
 

SablePoint

Beach Comber
As I mentioned, I know the seller. What if I told you that one of the sellers was an attorney, rather than a builder? Would that be new information which might change your thoughts on the sale being distressed? I'm not saying that he wasn't distressed, but I'm saying that the comments need to stick to factual info regarding the sale.

Fine SJ. You've made your point. Jeez. I don't belong to the ecar mls and I don't really care whether the agent's comments in the listing were appropriate or not.

The point of my post was that distress sales are not used as comparable sales in an appraisal. (fwiw... agents should not use them in a CMA either). Since the property under discussion seemed to be a distress sale to me, I used it as an example. I also said that an appraiser thinking about using it as a comp should interview the parties to determine and document whether it was indeed a distress sale, or not, before using it.
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
Sable, your points are very valid regarding properties which should not be used as comps for appraisals and CMAs, and I agree with them. I'm just pointing out (to the general reader) that one cannot make assumptions about the sale based solely on an agent's general statements. As you state, Realtors and Appraisers should be interviewing the selling the agent to discover the material information regarding the sale.
 

SablePoint

Beach Comber
No, simply ones that reflect what is going on in the market today. Big difference between a family member selling things at less than "market value" to other family members and builders and banks selling properties for any reason I can think of atm. The builders, banks, and private individuals selling under these circumstances ARE THE MARKET!

I agree that sellers selling under the current conditions (as well as buyers buying) are the market.

But it seems that a lot of people want to take these bottom of the barrel sales and say that they represent the current market while ignoring that there are other sales at more reasonable (non-distressed) prices that may represent the market more accurately. These other sales don't get reported and discussed on this board because they are not "sensational" enough.

For example, this home just sold for $1,925,000... after selling earlier in the year for $1,700,000. It's on busy Western Lake Drive. The seller bought it in the summer, but decided he needed more room for his car collection, so he decided to sell it again. And he sold it quickly for $225,000 more than he had just paid for it.

Now pardon me while I again use the example of the property on Scrub Oak which sold recently by a builder (or attorney) or whoever... that so many hope represents current market value.

No reasonable person on this board could argue (with a straight face) that this property is representative of "the market." Everyone agrees that it probably cost a bunch of $$$ to construct this house. And if you factor in the lot cost, plus architect costs and the 6 months of interest and overhead to get your plans approved through WaterColor, plus interest for another 12 months or so while it's being built, plus interest while it sits on the market waiting to sell... this property sold for less than cost.

Obviously, this level of discount (below cost) are anomalies... and not market. Someone got one helluva deal. And buyers would be lining up in droves to buy another deal just like it. I would have bought it myself if I'd had the opportunity!

(As an aside, I would submit that if this seller could have held out for another 30 or 60 days, he could have easily sold for $100,000 or $200,000 more... and still be selling at a distress price. Perhaps there was a need to close this sale before the end of the year? For tax purposes? Or perhaps he had some other pressing reason to sell. But he could have sold for more if he could have held on).

The fact that others are saying... "find one like that for me!"... demonstrates that this sale was below market.

Anyone who believes that these distress sales represent the current market value should be able to easily locate other sellers willing to sell at this value too!

And if this is the case, then I would submit to you that you've just timed the market perfectly. We are at bottom! (Because the market doesn't work when you can buy for less than cost). Start buying because it's not going to get any better than this!
 

elgordoboy

Beach Fanatic
Feb 9, 2007
2,524
561
I no longer stay in Dune Allen
I agree that sellers selling under the current conditions (as well as buyers buying) are the market.

But it seems that a lot of people want to take these bottom of the barrel sales and say that they represent the current market while ignoring that there are other sales at more reasonable (non-distressed) prices that may represent the market more accurately. These other sales don't get reported and discussed on this board because they are not "sensational" enough.

For example, this home just sold for $1,925,000... after selling earlier in the year for $1,700,000. It's on busy Western Lake Drive. The seller bought it in the summer, but decided he needed more room for his car collection, so he decided to sell it again. And he sold it quickly for $225,000 more than he had just paid for it.

Now pardon me while I again use the example of the property on Scrub Oak which sold recently by a builder (or attorney) or whoever... that so many hope represents current market value.

No reasonable person on this board could argue (with a straight face) that this property is representative of "the market." Everyone agrees that it probably cost a bunch of $$$ to construct this house. And if you factor in the lot cost, plus architect costs and the 6 months of interest and overhead to get your plans approved through WaterColor, plus interest for another 12 months or so while it's being built, plus interest while it sits on the market waiting to sell... this property sold for less than cost.

Obviously, this level of discount (below cost) are anomalies... and not market. Someone got one helluva deal. And buyers would be lining up in droves to buy another deal just like it. I would have bought it myself if I'd had the opportunity!

(As an aside, I would submit that if this seller could have held out for another 30 or 60 days, he could have easily sold for $100,000 or $200,000 more... and still be selling at a distress price. Perhaps there was a need to close this sale before the end of the year? For tax purposes? Or perhaps he had some other pressing reason to sell. But he could have sold for more if he could have held on).

The fact that others are saying... "find one like that for me!"... demonstrates that this sale was below market.

Anyone who believes that these distress sales represent the current market value should be able to easily locate other sellers willing to sell at this value too!

And if this is the case, then I would submit to you that you've just timed the market perfectly. We are at bottom! (Because the market doesn't work when you can buy for less than cost). Start buying because it's not going to get any better than this!
We will be at the bottom when there is no supply of homes that are being sold for less than the cost to build. A builder acquaintance in Atlanta just had to give back 7 houses. Those 7 houses will be in competition with other individual sellers houses until all 7 are gone. I see why I as a seller wouldn't want the prices of those 7 to be used as comps, I also see why I as buyer am going to use those prices to browbeat an individual seller into compliance...or not..they don't have to sell to me.
 
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