Property Value/Appraisals RANT

[Pops15]

In my area housing prices are down on average over 30%. In some instances values are down much more.

I'm a remodeling contractor. One of my clients bought a very nice house at the top of the market. Last year they refinanced which required a new appraisal. They laughed (probably wanted to cry) when the appraisal came back $120K less than they had paid for the house (which I think was in the $400K range). That doesn't include the $130K+ they paid me for remodeling.

My in-laws moved back to the area from another state. I was amazed at the number of foreclosures. There was at least one on every block of every street in each of the 3 towns we looked at. They looked at 29 houses. 25 were foreclosures. That's about all that's even on the market here.

Bankers are privately saying values will drop even more before they go up. They say there's another big round of foreclosures coming.

It sucks for people in a situation like the OP, but that's the reality of today's housing market.

 

[dmccarty]

I feel your pain.

Last summer the mortgage rates were really low so we decided to refi. We have huge amount of equity in the house and figured that even a reasonable drop in prices would not be a problem....

The appraisal was horrible. Both in the numbers and the comparables. The house used to compare with ours were not even close to us in location, land size, construction, materials, etc. The values they used to equalize the homes were laughable.

We have had similar problems with appraisers when we were building and we were able to work around these fools. An appraiser is a fool if he is valuing a parcel by over 50% compared to the price of a parcel in the same neighborhood that just sold. The fool further compared the parcel with property in a different location outside a subdivision. Moron. When we did the job the appraiser was paid to do, showed the results to the bank, the bank got a new appraiser.

We had gone to the CU for a refi instead of the bank which holds our loans. The CU is just horrible to work with but I figured we would try again and they had slightly better numbers.... As a results of the appraisal we were out the fees. We called our bank loan officer and she said that SHE was not trying to refi because comparables were all over the place due to low sales. She did not want to loose her equity line of credit or have to pay PMI.

In the mean time, we have been getting a couple of HARP refi letters each week which I have ignored. This week the bank called me up trying to get me to refi. :shocked: I had a couple of conversations with them and it looks like they can give us a lower rate and do some other things that the CU would not do. We will go back and talk to the loan officer we work with and see what she says.

Right now, comparables are all over the place in our rural area. A coworker was able to refi and his house has not lost value but he is in the city. You need to shop around as well. The problem with that is the cost of the appraisal. We lost a heck of lot more than you did so I really feel your pain.

Later,
Dan

 

[Larry Caldwell]

Concerning the housing market......... this whole situation was created by the lenders and now the public suffers the consequences... com'on fellas, read the papers.

I didn't suffer any consequences. I bought property I could afford on a 15 year mortgage and paid it off three years early. Done deal.

Banks aren't the only lenders. Check with a mortgage broker and roll the construction costs into a refi. I tried dealing with a bank and they wanted all sorts of expensive corrections and inspections. The mortgage broker just arranged the loan based on my credit and equity. Then one of the banks I was trying to get a loan out of bought my mortgage!

 

[MossflowerWoods]

Possible silver lining - Use the lower than expected appraisal to dispute your tax assessment and maybe you can reclaim some of that $550 cost in reduced property taxes. Depending on your local tax rate, it may not take long to recoup $550. For my local property tax rate ($0.7415 tax on each $100 assessed value), it would take one year for a $75k assessment drop to produce a $550 tax savings.

Keith

Keith,

The taxes are low, no help there. With 50.77 acres and a small house, NOBODY wants my business because the property will not "conform" for Fannie/Freddie... I am currently mortgaged ia a small local bank, and they were willing to do 85% LTV... I will try Farm Credit but they will max at 75% LTV...

David

 

[sdkubota]

Concerning the housing market......... this whole situation was created by the lenders and now the public suffers the consequences... com'on fellas, read the papers.

I hope your statement is a sarcastic one and not your true beliefs.

 

[MossflowerWoods]

There's only one answer then, Mossflower. Build it yourself! Or instead of a new second story, add onto the first with an addition.

I see a lot of properties around here that are listed for well below what it would cost to recreate/build them new today. It's a great time to buy existing properties...

David: Maybe you could look into putting an addition on your house? Add two bedrooms and a bath?

Finishing the Attic is the only REAL option right now... The house is a modular, 3 sides are wrapped in a insane 10.5' wide wraparound concrete and steel porch (not to code, quoted at over $30k to demo and haul away ), the Basement also is exposed on 2 sides due to slope.

The 4th side is currently the carport, long, long term I'd love to make it a garage with a master bedroom suite upstairs... But I can'tlive without the carport for now...

The basement has minimal plumbing (stubs and a working toilet) no walls and minimal value to finish, plus we are curently using it as living space now (laundry, pantry, family room, toilet and tool closet, guest room, My home office (I'm sitting it in now), my wife's Mary Kay office, the girls computer/sewing/crafts room, and storage). The Attic currently has some stuff stored there, but it is the only direction I can "add" onto right now...

I'm in a tight spot...
David

 

[sdkubota]

What about an auxillary building like a garage to have your offices, craft rooms etc. Would that open any space up in your home? You might be able to get additional money for another building as it would add overall value to the property.

 

[MossflowerWoods]

...Right now, comparables are all over the place in our rural area. A coworker was able to refi and his house has not lost value but he is in the city. You need to shop around as well. The problem with that is the cost of the appraisal. We lost a heck of lot more than you did so I really feel your pain.

Later,
Dan

Dan,

This place has cost me SO MUCH MONEY... The widow's hubby popped up this used modular (the demo unit off the lot) for cash, so it never had a loan or survey, so I had to pay $3,500 for a full on site survey to locate the foundationand corners... (Property went from 49.75 to 50.77 acres, but they never recorded the now survey). We knew the house was a mess, so when we bought we planned almost a bulldozer remodel with a builder from my Church, it would not appraise (I did not know he was a $$$$ builder yet) so in the end we HAD to buy as is, AND I had to pay him $10,000 for architectural plans I can NEVER use (long story). That bill had to settle at closing also. There are a couple piddly other ones, plus the plans for this "Dutch-Dormer" 2nd story cost me $500 in addition to the $550 appraisal fee now due...

The pain just seems unending right now...
David

 

[MossflowerWoods]

What about an auxillary building like a garage to have your offices, craft rooms etc. Would that open any space up in your home? You might be able to get additional money for another building as it would add overall value to the property.

Not sure... The only level spot is currently in the horse pasture, and I did clear a 3/4 acre spot that SOMEDAY if I can sell my other two homes and get my capital back from those deals I want to just BUILD a house just like I want, and use this place as a family sub-division for my in-laws, or one of my daughters when freshly married... Key is SOMEDAY...

I think factoring all the additional costs of ground prep, running power, water, etc... I suspect that is VERY cost prohibitive...

David

 

[MossflowerWoods]

Blasphemer!

He needs some Fels Naptha Mouthwash!!!!

I can't believe he said it!

But it is just a lil' Kioti, not a JD or Kubota, it did not coust $100,000.00 !!!!! :laughing:

Thanks to both for the humor...
David

 

[sdkubota]

CFPB releases new mortgage rules in bid to reduce risky lending - The Washington Post

 

[dave1949]

Following sdkubota's thought, how about a construction/office trailer? No foundation needed, for an office and such plumbing would not be a necessity. Run a temporary power line to it for lights and a little heat. It might allow you to have more living space use of the basement. Should be able to re-sell it when done with it. Might run afoul of zoning.

 

[MossflowerWoods]

Completely agree. Stop blaming everyone else for what has happened. If you want to blame someone then put it where it is warranted the United States Government and their lending policies through Fanny and Freddy. They caused the bubble by demanding loans be made to deadbeats. Unintended Consequences.

I am not blaming anyone. I am VERY Unhappy that either the first appraisal ~50 acres forested AG land = $225,000 or the current one where it is only $150,000 value was A LIE. Right now I am assuming it was the FIRST appraisal honestly.

I feel like the bank got a lie to cover their rear the first time, and now I am HOSED. There in NO WAY property in this county FELL that much in just over 2 years.

No way.

For the record, I am a staunch fiscal conservative, and I do NOT support most of what the Govt. has done economically for many years...

David

 

[MossflowerWoods]

Any way to start selling the timber to do the renovation?

Maybe... Not sure that is the smartest way for me to try to raise capital... Unlike all my other investments, my forest grows about 10% per year. I just thinned it in Nov of 2010, it really needs at LEAST 3 more years to grow and get healthier, bigger...

I'm still looking at my options...

David

 

[sdkubota]

I am not blaming anyone. I am VERY Unhappy that either the first appraisal ~50 acres forested AG land = $225,000 or the current one where it is only $150,000 value was A LIE. Right now I am assuming it was the FIRST appraisal honestly.

I feel like the bank got a lie to cover their rear the first time, and now I am HOSED. There in NO WAY property in this county FELL that much in just over 2 years.

No way.

For the record, I am a staunch fiscal conservative, and I do NOT support most of what the Govt. has done economically for many years...

David

Should have used different words as I didn't mean to attack you...I apologize. Values on everything are perceived based on supply and demand. Unfortunately for you and many of us the mortgage bubble finally burst and hurt everyone. That doesn't mean what you paid was over priced just the correct value at the time. Even if you or anyone is under water doesn't change anything about living and paying for their mortgage regardless of its current market value. Unfortunately equity was hurt which is what prevents you from borrowing additional money. If you were allowed to, the amount you are upside down would only increase and hurt you eventually if things don't change around. Be creative and positive and try to find another way to meet your needs.

 

[oldnslo]

Moss,
If your kids are home schooled teach them to be carpenters and let them build the house. You can write it off as an educational expense.

I wish it was that easy. If your area is like here in northern, IL the inspectors and beurocrats will drive you crazy trying to do any work yourself. Around here housing in some areas depreciated 40 - 50% in the last two to three years.

Best of luck

Roy

 

[dmccarty]

Well you could always.. emm Ahh in a pinch .. as a last resort.. if the chips are really down emm ...sell your tractor!!! There I said it

Blasphemer!

Ban him from TBN! Ban him from TBN! <Insert video of mad TBNers carrying pitchforks and torches melting vtsnowedin over a fire.>

:laughing::laughing::laughing:

Later,
Dan

 

[dmccarty]

I am not blaming anyone. I am VERY Unhappy that either the first appraisal ~50 acres forested AG land = $225,000 or the current one where it is only $150,000 value was A LIE. Right now I am assuming it was the FIRST appraisal honestly.

I feel like the bank got a lie to cover their rear the first time, and now I am HOSED. There in NO WAY property in this county FELL that much in just over 2 years.
...

I don't think our property has fallen in value has much as the appraisal stated either. On the other hand, there just are not any decent comps. We are going to talk to our loan officer next week and see what she thinks. I drive by a company that make prefabricated walls for houses. Obviously, they have not been real busy for years. Danged few vehicles in the parking lot, meaning danged few people working to make prefab walls for houses. I noticed this week that the parking lot was full of cars which means someone is building a large number of homes somewhere. :thumbsup:

Eventually, the home sales in my area will pick up and the comps will adjust. I would expect your area will do the same. We are not in states that are loosing population so eventually the market will recover. I know many of my coworkers have not had equity losses because this area of NC was not hit very hard housing market wise.

We just have to wait a bit. I hope.

Later,
Dan

 

[dmccarty]

The remodel costs $100k for 1344 square feet, new roof, etc and then there is closing costs of $??k... 1344 square feet should add approx $140k... but the land & house are on a single deed/loan. House went up in value $115k, land went DOWN $75k...

Therefore, I am toast, plus I need to pay $550 for my wife's shattered dreams... this could cost me my marriage, we NEED the space...

Can you subdivide the land so that the house is on 5-10 acres? Having the house on a large section of land is problematic for the banks. The CU would not even look at our loan because we were buying more than 20 acres of land. We have a business loan from the bank for the land. The house is on a smaller section which made financing easier. It might be worth the expense to subdivide the land to get the house on a smaller parcel. That should make the house easier for the banks to handle. Banks don't really like messing with large Chunk O's of Land AND a house.

Check out the Farm Bureau, if there is one in VA. In NC, they seem able to work with larger land parcels and homes.

Later,
Dan

 

[dmccarty]

Following sdkubota's thought, how about a construction/office trailer? No foundation needed, for an office and such plumbing would not be a necessity. Run a temporary power line to it for lights and a little heat. It might allow you to have more living space use of the basement. Should be able to re-sell it when done with it. Might run afoul of zoning.

I was thinking the exact same thing but I could not find the danged post as to WHY Moss needed more living space. :confused3: :laughing::laughing::laughing: I THOUGHT he needed more space for the home school and if that is correct, an office trailer might work. I saw a lot FULL of modular classrooms in JAX, FLA, over the holiday. I thought they would make a good shop and storage. Certainly, there should be some office trailers on the market.

Later,
Dan