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I have family out there. Over the summer, they said that a fairly large % of houses were not appraising for selling price, requiring buyers to make up the diffe
by ssharp 8y ago
I have family out there. Over the summer, they said that a fairly large % of houses were not appraising for selling price, requiring buyers to make up the difference between what the bank would lend and what the selling price was in cash.
To me, that was a pretty clear indicator of where that housing market was heading.
- zip1234 8y agoIf the houses on a large scale are not appraising for selling price, it could mean that the appraisers are wrong.
- linuxftw 8y agoI would say it means exactly this. If a surplus of people are willing to pay cash on top of appraised value, the appraised value is low.
- georgeburdell 8y agoAppraisers can only go by comparable sales (“comps”). In a rapidly rising market, comps always trail market value. I experienced this with my own Bay Area home purchase and had to shell out $40k to cover the difference between my offer and appraisal. Home prices at the time were going up 2% per month. Redfin et al now value my house at $90k over my offer
- taurath 8y agoFun idea if you have a lot of money - buy 20 houses in a relatively small area. Sell 3 to your Uncle Larry for 40% more than you bought them for, then sell the next 17, ratcheting each up about 5% for every 4-5 houses sold. Boom, you've now created a housing bubble and get to walk away with all the profits. If you do this over 2-3 years you might be able to get a 40% annual return, unless of course the market crashes before you can get out. I would not be surprised if this was what was happening just on a spread out and wide scale. All home sellers want the price to go up, so if the only way to make them go up is to sell at a higher price, you can prime the pump.
- kaybe 8y agoWhy would anyone pay significantly more than appraising price?
- srfilipek 8y agoLittle to no availability of homes. It's happening in the Boston area now. Too many people, not enough space.
- hnrodey 8y agoHas been happening all over Denver, CO for the past few years.
- jrs235 8y agoA) they really like/want the house (maybe supply is tight) B) they didn't put an appraisal contingency in the offer Or C) they think prices are going up and think they can make a quick dollar riding the wave