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It is not very important, but I just wanted to correct your math david1. A 2.5% decrease in 2 weeks does not correspond to a 90% decrease over a year. Similarly a 4% decrease in 6 weeks does not correspond to a 40% decrease over a year. Your math:
1.025 ^ (52/2) = 1.90
1.04 ^ (52/6) = 1.40
shows yearly increases. For the yearly decrease you should do:
(1-0.025)^(52/2) ~= 0.51775 (a YOY decrease of 48.225%)
(1-0.04)^(52/6) ~= 0.70203 (a YOY decrease of 29.797%)
Your math shows how much they appreciate YOY given appreciations in 2 and 6 weeks, respectively. The first appreciates 90%, the second appreciates 40%. That can be used to approximate the depreciation (won't be exactly same) as:
(1.90-1.0)/1.90 = 47.368%
(1.40-1.0)/1.40 = 28.571%
And appreciation of 90% won't be reverted by a depreciation of 90%. Simplest case, an appreciation of 100% will revert with a depreciation of 50%.
Actually, why stop at appraisers, realtors, etc.? As an appraiser, I can tell you what the main problem is. Our wise and generous government has reduced the appraisal industry to a few newbies who are willing to tell their client anything for $200. I use to take pride when I saved the bank or the buyer a lot of money because they were too inexperienced to recognize they were getting screwed by the seller and their realtor. Now with mandatory appraiser rotation, why should the experienced and ethical appraiser try any harder than Skippy who last week was flipping burgers but now has his appraisal license?
So, now where do you go for an honest deal? I can't buy a car, hire a plumber, electrician, lawyer, etc. I can't buy anything because everything made is cheap and expensive. Can't get insurance because I don't work for the government and not on welfare (yet). I can go on, but since you are obviously the only honest (and possibly smartest) guy left, I would only bore you.
David: This is now the funniest thing I've read on Patrick.net and I'm laughing w/ya.
I'll buy the pie for both of us. Where do you want to eat it?
ps. Hope you all are doing okay back in NC. Those were some hard punches !
This is exactly the "catch a falling knife" feeling.
Don't blame the "Appraiser" because you overpaid.
If you want to feel good, buy a house when the price is raising.
Currently, the house price is still falling.
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So I just bought a house, close at the end of the month. Price is fine, mortgage payment will be less than equivalent rent by at least 20% and the PITI is less than 18% of my income (Not counting wife's at all)
Now that all of that is out of the way, I noticed something interesting on the appraisal. Granted, I consider myself to be a local market "expert" (its why I bought this particular house afterall) I was thinking we probably paid about 35K under comp value. I On the appraisal we bought it for 7k under appraised value. No big deal to me, it appraised and that was all I was looking for I guess.
But in looking at the appraisal more closely, a few things jumped out at me:
1. The report identifies 5 total comparable sold homes in the last three months with a median price of, lets say 250K. It specifically uses three comparable homes in the determination of the price; the lowest of these three is 275K. It is not possible to have a median 250K of a group of 5 numbers in which 3 of the five all exceed 250K by definition.
2. The report quotes prices declining 15% YOY in this marketplace. I would say that is ambitious because Case-Shiller pegs it at about half that, and I have been studying this market for the past six months and I would say it is flat, but again, whatever. Then she adjusts the sale prices of each comp based upon this 15% YOY decline. The only caveat is, on all of the comps, this is done incorrectly. For example, she reduced in price a comp that sold two weeks ago 2.5%, and another than sold 6 weeks ago 4%. Those are 90% and 40% annualized declines by my math.
3. All of the comps are in a similar, within one mile, neighborhood. But there is a difference and anyone who drove through these neighborhoods would see that. One neighborhood is all brick homes on wooded lots with lake or golf course views, where the comp neighborhoods are stucco/siding in new developments, where all of the trees have been cleared and one backyard backs up to another, without any lakeview. My neighborhood has homes that are on average 1000+ sq ft. larger, and sell for and are listed for 100K more or so. Again on the average.
Basically, I think with all of the garbage that happened with appraisals a few years ago, the appraiser now just goes to the house, looks around, looks at the contract purchase price, eyeballs that that is a fair price, and adds 5-10K for the appraised value. Then she massages comp numbers to back up that price.
All of that would be fine except I paid $450 for it. That is is complete ripoff, especially for an absolute forgery like it is. I really resent paying such a sum for something that really has no value at all, nor basis in fact. The bank wants it to loan me the money, and it appraised so I guess thats all good...but I just hate the fact that $450 of my hard earned money went into the pocket of this moron just because she took a night school class on real estate appraisal. I am quite certain the highest IQ in the class including the instructor didn't top 90.
#housing