Home buying thread

Cleared to close, signing paper in about a week. Will be satisfactory as I got appraisal value which ended up being higher than his original listing. Seems to be he got a much higher offer than mine and attempted to tank the contract.

Signing on Monday 28MAR.

Borzak_sl said:

When I helped my parents sell their house I was over one day and someone was sitting at the gate. Far enough away and behind enough trees you can't see the house from there. I walked up there to ask what they were doing. Appraisal guy, asked if he wanted in the gate. Nope that was good enough. Umm ok. I really don't see how you appraise a house without actually setting foot on the property.

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Housing prices arent going to inflate themselves.

Corndog_sl said:

Appraisals are a racket.

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Uh no, but sadly like any industry there are good ones and bad ones. The appraisal report's purpose is to protect both you and the bank, to make sure the purchase is a sound investment.

Corndog_sl said:

I ended up having 3 when we bought our house. First one went just fine but the lender couldn't get thir crap done so we had to switch. next appraisal appraised 50k lower than the first one. Third appraisal came in right. Everyone claimed our house was unique and hard to find comps on. At one point someone literally said to us. That is why you don't buy a unique house, it's hard to qualify for... I replied this is exactly why we want to buy the house.

Our main problem was the second building on the property is a 1500 sqft building that has plumbing, cable installed, phone lines etc, even a wood burning stove. But on paper it was worth 3k. Because the "garage" plus extra storage room bullshit. It's like uh this is basically a second house.. But on paper it's a garage.

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Bad appraisers are bad for everyone, including other appraisers. I have been in the industry for 2.5 months and sadly I could probably do a better job than 30% of active Certified Appraisers out there. The guy I am training has over 30 years experience, is a former member of the state commission, has every designation known to the appraisal industry (SRA, IFA, RAA, etc) and he takes this profession VERY seriously. I am learning the correct way to sift through market data to find an "opinion of value" that is as close to correct as humanly possible. All the data is right there in MLS it just requires time and know how. Sadly many people in this industry just slam out reports and don't really do the work properly, thus they form bad/lazy habits. The worst part is if they come in at or slightly above the purchase price their work hardly gets scrutinized, thus reinforcing those bad/lazy habits.

Borzak_sl said:

When I helped my parents sell their house I was over one day and someone was sitting at the gate. Far enough away and behind enough trees you can't see the house from there. I walked up there to ask what they were doing. Appraisal guy, asked if he wanted in the gate. Nope that was good enough. Umm ok. I really don't see how you appraise a house without actually setting foot on the property.

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Did he specifically say he was the appraiser for your parents home/transaction?

If no, then he was probably using your parents home as a comparable for a different transaction. We don't just use recent sales we also use pending and active listings. We almost never get to go inside a comparable.

If yes, it is possible that the lender ordered a 2055 Exterior Only, which seems very odd for a purchase. Also, a 2055 Exterior Only really makes our job harder it replaces fact with guess work which sucks.

How do you appraise a house without going into other houses to examine the "comps"? I mean looking at a house and seeing whatever number is the listed as the sqft doesnt tell you what kind of appliances, what kind of fixtures it has or what the condition of the interior is.

Palum_sl said:

That stuff doesn't really factor in They only care about year updated, really. Viable life and all that, IE newly reno kitchen > old kitchen, new roof > old roof. But in a general sense it doesn't matter too much because your house can't be worth 300K next to condemned 15K Detroit homes.

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So what does an appraiser do that any competent buyer and home inspector wouldnt?

Well inspectors have nothing to do with establishing an opinion of value. They are not trained for anything remotely resembling that. I have only owned two homes in my life and I felt the inspector on my first purchase was such a waste of money that I did not even bother with one on my second purchase. And pretty much for the same reasons is why I bought this house without the aid of a realtor, sadly I know more than most of them too. Don't get me wrong though, there are Realtors & Inspectors that truly earn their wages and are very good for uninformed buyers.

Just to give you an idea, around here the average appraisal fee is $450 and the average appraisal is about 10 hours of work. So $45 an hour, right? Not bad, but remember we have overhead like any other business, software, office space, gas etc. Obviously there are some economies there if you appraise a bunch of similar homes in the same neighborhood your time will get shorter with each appraisal because you have already done the market data research. So if you are lucky, over the course of a 3 month period you might appraise 10 or 20 houses in one neighborhood and only average 7 hours per report.

Trust me when I tell you that to be a competent appraiser it requires some work. To be eligible to become a Certified Residential Appraiser you must have a 4 Year Degree, 200 additional education hours in appraisal courses & 2500 supervised hours in the field. Again though, there will be people that just take the classes to pass the tests and not really learn the material, they will then go to work for a big firm that does shit work and slams out appraisals and as long as they come in at the needed value they seldom get challenged on how they arrived at their opinion of value.

EDIT: I should mention that the required 4 year degree just went into effect in 2015, so we should see the quality and professionalism in the industry as a whole improve in the years to come. To be clear I am not saying you have to have a college degree to be professional or provide quality work, but it was a needed mandate to improve our industry.

Well do you have a 4 year degree for starters?

Corndog_sl said:

I still maintain it is a racket. I had to have an appraisal. Well 3 of them in fact.

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Again, bad appraisers are bad for all of us.

Corndog_sl said:

So being that you're an appraisor. How is it that a 1500 sqft building that is built well is only valued at 3,000? Pics of said building. I mean a 1500 sq ft building, in addition to when you're buying a 1600sqft house. So the land/house is worth 308k of the 311k of this property and the Garage/Building of equal size is worth less than 1/100 of the purchase price?

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To be 100% transparent I will again mention I am only a Residential Real Estate Appraiser Trainee, I just started on my 2500 hours of field work and have 125 education hours left. I do agree that valuation on the garage seems rather low, from a cost approach that concrete slab is more than $3,000 not to mention that wood burning fireplace is at least $1,500. That is not even getting into the material cost of the structure, the roof etc. I am not trying to be evasive or combative when answering you the problem is unless I know about your market and see the actual report it is hard for me to give specific answers to specific questions.

I guess a fair analogy would be something like...asking you why your kid got the answer to #3 wrong on their math test without showing you their work. It is possible that the garage/shop is way over built for your market and thus the value is well below the actual cost, but that said even a single car garage if similar quality would typically be valued at more than $3,000. Once your deal is closed if you still feel this strongly, go ahead and complain to the Appraisal Commission in your state, tell them you want all appraisals reviewed because you think the work done was below USPAP Standards. And if you don't because it is a waste of your time, the deal got done and you have other priorities well...if no one holds these bad appraisers accountable then how will things change? Whether you do anything or not the industry will improve over time because of the newer requirements, but there are people that are grandfathered in. So until they retire or are held to a higher standard from lenders you will still see shit work for the next few decades.

Big Phoenix_sl said:

Well do you have a 4 year degree for starters?

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Yes sir, I am a proud graduate of the University of Washington.

Closing on the house this week. Will be interested to see how angry the seller is with it as he did everything he could to try and spook me out of the contract. But I did my due diligence and am certain that his erratic behavior can only be attributed to having a higher offer on the table and he didn't read enough to realize that I was not paying a down payment (VA loan).

In the end. He listed at 192k. I offered 198k and the appraisal ended up at 196k. Paid the minimal difference as the seller told me and I quote, "You can go fuck yourself if you think I would ever meet you in the middle." Over a measly 2k. Seems he is really really beating himself up over low listing... or something? Or the dude is just crazy. IDK.

Either way ended up pretty well for me I think!

Well backing out is what HE wants and I give a fuck about $2k. I offered same day as he listed the place and he accepted that same day. He should have waited a week to see all the offers he could get. He probably got an offer at around $210k.