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It's not "emotionally attached", it's that it's been impossible to buy a house for a while if you're not willing to pay more than it will appraise for. You'll r

It's not "emotionally attached", it's that it's been impossible to buy a house for a while if you're not willing to pay more than it will appraise for. You'll repeatedly lose to buyers who will do that, with cash offers to boot. This has been true even in many cities that aren't trendy, and have been building housing like crazy for a decade.

s1artibartfast 4y ago
In what market? In the SF bay area 99% of houses appraise, even if they go 50% or $0.5m over asking
- corrral 4y ago
  Boring Midwestern City that's not even a 3rd-tier tech hub. Other boring Southern city that's also not even a 3rd-tier tech hub. Buyers are having to take on the risk of having to cover any extra over appraisal in cash, consistently, while that used to be rare (and, yes, usually for "I am super invested, emotionally, in getting this particular house" reasons). My unremarkable suburban house in a boring city that's been building housing constantly and extensively for the last 10 years, is up like 25% in value over the last 2 years. We thought, based on extensive experience in this market, that we were already paying a bubble-induced premium of 15-20% when we bought it (possibly no longer true—thanks inflation). WTF.
  - s1artibartfast 4y ago
    I think Inflation scares are a big part of it - at least it was for me. If inflation is 8.5% and a mortgage is 3%, the bank is paying me to buy a more expensive house. At the same time, If I hold and wait to buy, my savings are evaporating while the price goes higher.
  - otterley 4y ago
    I think the appraiser is doing you a favor by not appraising it for the contract price in this case. Why would you want to overpay for a house and have to cover the financing shortfall yourself? Especially in a market that traditionally has slow RE price appreciation. Let the cash buyers suffer the losses. You'll thank yourself later.
    - s1artibartfast 4y ago
      You're assuming that the deal doesn't go through if it doesn't appraise. In my market nearly all winning offers have waived the appraisal contingency
      - otterley 4y ago
        Not assuming that at all. I'm saying that if the appraisal doesn't go through, then the lender won't cover the remainder of the purchase price, and then the buyer will have to make up the difference out of his/her own pocket. At that point, I'd bail, because the appraiser is raising a red flag. But since you mention it, in the slower market being discussed here, I would definitely not waive an appraisal contingency.
        s1artibartfast 4y ago
        sure, the appraiser is always providing the buyer a service by giving them an accurate appraisal (more information is better). If the buyer chooses to proceed, this can be a financial disadvantage reducing access to a highly leveraged loan.
        corrral 4y ago
        > At that point, I'd bail, because the appraiser is raising a red flag. The point is, in a lot of markets, if you bailed on offers over this in the last couple years, you wouldn't be winning any bids in the first place, and wouldn't have been able to buy a house at all. The winning bids include guarantees that the buyer will cover the difference. If you won't do that, you'll lose to an all-cash offer from someone who will. If you're lucky, you won't be competing against superior offers that also waive all contingencies. I have no idea where all these people are coming from with hundreds of thousands in cash and the ability to cover several thousand more on top of the appraisal value, but they seem to be involved in damn near every sale the last 2ish years. Given how many are OK waiving inspections and such, I have to assume they're institutional buyers who can spread that risk around, not individuals who could be ruined by that kind of thing.
hackerfromthefu 4y ago
Maybe you could think of it like a PE on a growth stock - people expect the house to go up due to inflation of cost of goods as well as all the money that was printed - they are willing to take a punt on the house value in the future, similar to many stocks. There's also sunk cost in the effort of finding a house you want and reluctance to keep looking.

s1artibartfast 4y ago

In what market? In the SF bay area 99% of houses appraise, even if they go 50% or $0.5m over asking

corrral 4y ago
Boring Midwestern City that's not even a 3rd-tier tech hub. Other boring Southern city that's also not even a 3rd-tier tech hub. Buyers are having to take on the risk of having to cover any extra over appraisal in cash, consistently, while that used to be rare (and, yes, usually for "I am super invested, emotionally, in getting this particular house" reasons). My unremarkable suburban house in a boring city that's been building housing constantly and extensively for the last 10 years, is up like 25% in value over the last 2 years. We thought, based on extensive experience in this market, that we were already paying a bubble-induced premium of 15-20% when we bought it (possibly no longer true—thanks inflation). WTF.
- s1artibartfast 4y ago
  I think Inflation scares are a big part of it - at least it was for me. If inflation is 8.5% and a mortgage is 3%, the bank is paying me to buy a more expensive house. At the same time, If I hold and wait to buy, my savings are evaporating while the price goes higher.
- otterley 4y ago
  I think the appraiser is doing you a favor by not appraising it for the contract price in this case. Why would you want to overpay for a house and have to cover the financing shortfall yourself? Especially in a market that traditionally has slow RE price appreciation. Let the cash buyers suffer the losses. You'll thank yourself later.
  - s1artibartfast 4y ago
    You're assuming that the deal doesn't go through if it doesn't appraise. In my market nearly all winning offers have waived the appraisal contingency
    - otterley 4y ago
      Not assuming that at all. I'm saying that if the appraisal doesn't go through, then the lender won't cover the remainder of the purchase price, and then the buyer will have to make up the difference out of his/her own pocket. At that point, I'd bail, because the appraiser is raising a red flag. But since you mention it, in the slower market being discussed here, I would definitely not waive an appraisal contingency.
      - s1artibartfast 4y ago
        sure, the appraiser is always providing the buyer a service by giving them an accurate appraisal (more information is better). If the buyer chooses to proceed, this can be a financial disadvantage reducing access to a highly leveraged loan.
      - corrral 4y ago
        > At that point, I'd bail, because the appraiser is raising a red flag. The point is, in a lot of markets, if you bailed on offers over this in the last couple years, you wouldn't be winning any bids in the first place, and wouldn't have been able to buy a house at all. The winning bids include guarantees that the buyer will cover the difference. If you won't do that, you'll lose to an all-cash offer from someone who will. If you're lucky, you won't be competing against superior offers that also waive all contingencies. I have no idea where all these people are coming from with hundreds of thousands in cash and the ability to cover several thousand more on top of the appraisal value, but they seem to be involved in damn near every sale the last 2ish years. Given how many are OK waiving inspections and such, I have to assume they're institutional buyers who can spread that risk around, not individuals who could be ruined by that kind of thing.

hackerfromthefu 4y ago

Maybe you could think of it like a PE on a growth stock - people expect the house to go up due to inflation of cost of goods as well as all the money that was printed - they are willing to take a punt on the house value in the future, similar to many stocks. There's also sunk cost in the effort of finding a house you want and reluctance to keep looking.