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gmarc

Beach Fanatic
Jan 19, 2009
506
65
Lol my neighbors will not like me no doubt. Its funny my neighbor paid 1.3 mil cash in 2005 and he could care less as it was stock options that paid for it and he said it would have been lost in stocks anyway.Mine was a short sale and the bank took a brutal hit. My question is will my new comps push the whole neighborhoods assessed values down? Will my new taxes be based on what i paid? somehow i doubt that as they'll be much higher i assume. I paid almost 40% less than my last assessed tax value.
 
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Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
Ray, if you bought short sale, it was a distressed sale and should not be used as a true comp for appraisal purposes, nor assessment purposes, as it was not an Arm's Length transaction. The tough twist is that often, there are no sales other than the distressed properties, so comps are difficult at best to come by for appraisals.

drivingtheview said:
The March 2009 inventory is represented by 2 types of owners; those who have to sell or those who have equity as a result of purchasing prior to the run-up.
I think if that were true, those people "having to sell" would be listing their property at pricing that could sell. That is far from the case in most listings currently on the market. Sure, they may "need to sell," but if they "have to sell," and their property is listed for more than double the adjacent and similar property, they certainly don't appear to be in a situation that they must sell.
 

30ashopper

SoWal Insider
Apr 30, 2008
6,853
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Right here!
Ray, if you bought short sale, it was a distressed sale and should not be used as a true comp for appraisal purposes, nor assessment purposes, as it was not an Arm's Length transaction. The tough twist is that often, there are no sales other than the distressed properties, so comps are difficult at best to come by for appraisals.


I think if that were true, those people "having to sell" would be listing their property at pricing that could sell. That is far from the case in most listings currently on the market. Sure, they may "need to sell," but if they "have to sell," and their property is listed for more than double the adjacent and similar property, they certainly don't appear to be in a situation that they must sell.

Maybe they do need to sell but can't because they don't have the difference between the loan amount and what people are willing to pay? These are the folks that will ultimately just accept a masssive credit rating hit and walk away when their interest only, negative amortization, "I really can't afford this house but the bank was crazy enough to lend me money anyway" loans balloon. :lol:
 

fisher

Beach Fanatic
Sep 19, 2005
822
76
Maybe they do need to sell but can't because they don't have the difference between the loan amount and what people are willing to pay? These are the folks that will ultimately just accept a masssive credit rating hit and walk away when their interest only, negative amortization, "I really can't afford this house but the bank was crazy enough to lend me money anyway" loans balloon. :lol:

Exactly--
 

fisher

Beach Fanatic
Sep 19, 2005
822
76
Ray, if you bought short sale, it was a distressed sale and should not be used as a true comp for appraisal purposes, nor assessment purposes, as it was not an Arm's Length transaction.

Why were the short transactions not arms length transactions--

Were the buyers and sellers related to each other in all these transactions?

Did the sellers have to sell?

No is the answer to both of these questions. Sellers are not being coerced to sell. They could hold on if they wanted to or simply go into foreclosure. After foreclosure, the banks are not being forced to sell either. They are selling at prices that the buyers are willing to pay, not a penny more or a penny less.

The market for a home is the price it sells at
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
I'm not an attorney, so I'll let you argue whether the seller of a short sale property is under duress. If he or she is, the transaction is not an Arm's Length Transaction. In my non-legal opinion, the seller is in duress (hardship), and the buyer has an upper hand in the transaction.
 

fisher

Beach Fanatic
Sep 19, 2005
822
76
I'm not an attorney, so I'll let you argue whether the seller of a short sale property is under duress. If he or she is, the transaction is not an Arm's Length Transaction. In my non-legal opinion, the seller is in duress (hardship), and the buyer has an upper hand in the transaction.

So, back in the days of the lotteries and bidding wars when the seller had the upper hand, were those transactions not arms length either? ;-)

Just because someone has a better negotiating position does not mean the transaction is non arms length in nature. The sellers in short sale situations can always walk away from the transaction if the price is too low. Same is true with foreclosures.

Market is what the buyer and the seller agree to. And, as you noted previously, most of the transactions occurring in the market are shorts and foreclosures. The market resides where those transactions are occurring. The only way to show that those transactions aren't in fact market, is to point to a similar property nearby that sold for a materially higher price in the recent past.
 
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Bob

SoWal Insider
Nov 16, 2004
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So, back in the days of the lotteries and bidding wars when the seller had the upper hand, were those transactions not arms length either? ;-)

Just because someone has a better negotiating position does not mean the transaction is non arms length in nature. The sellers in short sale situations can always walk away from the transaction if the price is too low. Same is true with foreclosures.

Market is what the buyer and the seller agree to. And, as you noted previously, most of the transactions occurring in the market are shorts and foreclosures. The market resides where those transactions are occurring. The only way to show that those transactions aren't in fact market, is to point to a similar property nearby that sold for a materially higher price in the recent past.
arms length goes to the realtionship of the buyer/seller.
 

Babyblue

Beach Fanatic
Mar 1, 2006
528
6
Seagrove Beach
I wish I was a bank. Write of the bad loan. Sell the asset, book it as income, and have Uncle Sugar reimburse me for the total loan amount and book that as income. It is a win win for the banks and the country!
 

fisher

Beach Fanatic
Sep 19, 2005
822
76
arms length goes to the realtionship of the buyer/seller.


I agree. The relationship of buyers and sellers in short sales, foreclosure sales, etc are almost always unrelated making them arms length transactions.

However, SJ seemed to be relating arms length to the fact that a seller might be under duress to sell ,alomg it not an arms length transaction and therefore not a market value transaction. My point is that if a buyer and seller agree on a sales price, then by definition, market value was thereby established.

A non arms length transaction would be likened to some recent transactions in Alys whereby Ebsco bought back several properties at the original purchase price (so it seems per county records).
 
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