Con_Alma;447474 wrote:I have zero interest in banks or appraisers reasons for making decisions. True market value exists when a transaction occurs as I stated above. Everything else is simply an estimate until such time that a transaction occurs. To guesstimate a value in a marketplace, in addition to other means, one can use past indicators that relate to the asset. They are not immediately current like the true price transaction is.

It's just my view on trying to guess what something's worth versus what value it has to two parties willing to transact.

There seems to be one MAJOR flaw in your theory and here's why:

There are certain steps taken by both the seller and the buyer in order to determine the "transaction" price you speak of. Those steps may include (and NEED to include) and analysis of similar sales in the neighborhood, a review of current listings in the neighborhood, one's own estimate or possibly a contractor's estimate of any repairs needed on the property in the transaction, a review of the school system in which the property is located, etc etc. The list of value factors can go on and one and include maybe several dozen or several hundred reasons that both buyer and seller weigh in their decision to agree on that specific price.

Simply put, what both the buyer and seller are doing is guesstimating a fair sales value by, in addition to other means, using past indicators that relate to the asset. And while they are guesstimating, the estimates they are coming up with (i.e. offers and counteroffers) are not current until the true transaction is final.

In other words, both the buyer and seller have completed, either in their heads or on notes pads or on their laptops or what have you, the process of estimating a probable value - an appraisal. They just did the exact same thing that I, as a licensed appraiser, would do.

Or, is there a difference?

What I presented isn't a "theory" but rather my own experience. It's actual. Nothing more.

I couldn't care any less about a school system. I would never buy a house based on it. I buy a house because it fits my needs and I like it. There's more than one school system in the world and people do have a choice. They are not forced to use the school system present. This practice of being concerned about the school system has always baffled me.

I have two children. I didn't when we built my house. The school system is O.K. here and I never gave it a thought when we chose our location to build. We looked at the desirability of the real estate itself to us including it's lakefront existence. It's size. It's removal from the large suburbs of the metro are. A crappy or wonderful school wasn't going to influence any of those. I now have a freshman daughter and a junior high son. They don't attend the local school here.

I have never "estimated" those things you mentioned. Others certainly may have. I don't speak for them. It's has been, however, my experience that one huge factor many times in the determination of a potential sales price is the buyers costs basis. If there's not some other influence on value to the seller that cost basis can trump all. As a buyer I really don't care what A seller's cost is/was because that has no factor in the value to me.

I do have one other potential RE transaction that I haven't exposed yet that lends to the my opinions. Me and my siblings have 30 acres of land still from the passing of my father. A developer wants it in order to continue a subdivision build out. Although the pace has slowed in regards to his sales he is now in need of this land to add an additional entrance into the development for safety and fire units.

There is great value in that land for him and he doesn't get the fact that there's greater value in it to me. It's emotional family value. My grandparents came here during the great depression and beg, borrowed and stole so they could get it to live off of. I have no reason to sell it or add it to a development. He doesn't have any estimates that are based on comps. What I have is land that has meaning that maybe I can build on one day for the benefit of my kids if they so desire. It's land that has no debt associated with it. It's land...a limited commodity that has both emotional and potential cash value. It's located in a school system that I attended as a child but should my kids have an interest in living there I will quickly remind them that it isn't then only one. There are many available privates nearby that they can choose from.

I don't disagree with the fact that there are some who may go through a process you have mention but there are also some who don't and have no reason to. Those that go through such are doing the same thing you might and are coming up with an estimate which may or may not be the true market value. It's nothing more than an estimated one.

Con_Alma;448093 wrote:What I presented isn't a "theory" but rather my own experience. It's actual. Nothing more.

I couldn't care any less about a school system. I would never buy a house based on it. I buy a house because it fits my needs and I like it. There's more than one school system in the world and people do have a choice. They are not forced to use the school system present. This practice of being concerned about the school system has always baffled me.

I have two children. I didn't when we built my house. The school system is O.K. here and I never gave it a thought when we chose our location to build. We looked at the desirability of the real estate itself to us including it's lakefront existence. It's size. It's removal from the large suburbs of the metro are. A crappy or wonderful school wasn't going to influence any of those. I now have a freshman daughter and a junior high son. They don't attend the local school here.

I have never "estimated" those things you mentioned. Others certainly may have. I don't speak for them. It's has been, however, my experience that one huge factor many times in the determination of a potential sales price is the buyers costs basis. If there's not some other influence on value to the seller that cost basis can trump all. As a buyer I really don't care what A seller's cost is/was because that has no factor in the value to me.

I do have one other potential RE transaction that I haven't exposed yet that lends to the my opinions. Me and my siblings have 30 acres of land still from the passing of my father. A developer wants it in order to continue a subdivision build out. Although the pace has slowed in regards to his sales he is now in need of this land to add an additional entrance into the development for safety and fire units.

There is great value in that land for him and he doesn't get the fact that there's greater value in it to me. It's emotional family value. My grandparents came here during the great depression and beg, borrowed and stole so they could get it to live off of. I have no reason to sell it or add it to a development. He doesn't have any estimates that are based on comps. What I have is land that has meaning that maybe I can build on one day for the benefit of my kids if they so desire. It's land that has no debt associated with it. It's land...a limited commodity that has both emotional and potential cash value. It's located in a school system that I attended as a child but should my kids have an interest in living there I will quickly remind them that it isn't then only one. There are many available privates nearby that they can choose from.

I don't disagree with the fact that there are some who may go through a process you have mention but there are also some who don't and have no reason to. Those that go through such are doing the same thing you might and are coming up with an estimate which may or may not be the true market value. It's nothing more than an estimated one.

The more and more I read, the more I'm convinced that you don't have any idea about real estate market value.

Instead, I see someone that acts in the exact OPPOSITE of what defines market value; shopping to your individual needs regardless of how the rest of the market perceives value, bucking general market trends and value drivers such as school system when buying a house; using emotional reasoning when purchasing rather than rational thought, acting strictly on your own personal individual need with no concern for how the market reacts to that property amenity. That method of thinking is in direct conflict with the generally accepted definition of market value:


The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1) The buyer and seller are typically motivated;

2) Both parties are well informed or well advised, and acting in what they consider their best interests;

3) A reasonable time is allowed for exposure in the open market;

4) Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto;

5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.


In contrast to your behavior, the real estate market acts as I've described above in post #27. It reacts to value drivers such as school district performance, nearby crime, traffic, and obviously many others. Just because you personally don't care about all or one of these items does not mean the market doesn't react to these local factors and amenities. The market is the majority and buyers who behave like you are the minority. In statistics, you would be considered an outlier and discarded as irrelevant, much like the man in my example above who paid a premium for his childhood home and the emotional feelings attached to it. The market doesn't care about his emotional ties to that property and accordingly the market won't react as such.

Furthermore, I've thought about your definition of the only market value being the final transaction and I've decided that it's the biggest load of BULL CRAP I've ever heard and also a COPOUT.

Your claim that the final and actual transaction price being the best indicator of true market value is as worthless as saying that a meteorologist's forecast isn't nearly as accurate as standing outside on the forecasted day and looking up in the sky to see the weather as it happens. It's as worthless as saying that a Vegas bookmaker's score prediction isn't nearly as accurate as looking at the scoreboard after the game. It's as worthless as saying that a prediction on who our next president will be isn't nearly as accurate as the actual election results.

But, that's exactly what market value is - a prediction of the most probable price. Probability implies estimate a future outcome. What you are saying is not a prediction...it's waiting for the final outcome and saying "look there it is".


(from above)

The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby...


Of course you're not comparing your knowledge to mine or any one else - there is no knowledge involved on your part. You simply observed an outcome. I can't believe I didn't see sooner just how meaningless your original statement was....geez how embarrassing.

Yes Con Alma is a real idiot, should I post your private messages to me (assumedly while you were intoxicated)? If you are trying to sell your services, the yellow pages are a better resource for customers.

Manhattan Buckeye;448277 wrote:Yes Con Alma is a real idiot, should I post your private messages to me (assumedly while you were intoxicated)? If you are trying to sell your services, the yellow pages are a better resource for customers.

Yes please post them. Better yet I'll post them.

If you can't see that Con Alma's approach to owning his home is that his own personal tastes must be met regardless of market reaction to his spending then you might not be as bright as I thought you were.

If you can't see that his statement about actual market value being the final transaction price (is not true) then you're the idiot - a term I did not use, btw.

Manhattan Buckeye;448277 wrote:Yes Con Alma is a real idiot, should I post your private messages to me (assumedly while you were intoxicated)? If you are trying to sell your services, the yellow pages are a better resource for customers.

I must've deleted my sent items. Post anything you wish to post. While you're at it, fuck off you little know-it-all homo dick sucker. You were smarter staying out of this in the first place, you little crybaby bitch.

Wow, this escalated quickly. I mean, it really got out of hand fast.

Brick killed a guy! With a trident.

I unapproved the last two posts. Let's keep this thread on track.

Manhattan Buckeye;448317 wrote:Wow, this escalated quickly. I mean, it really got out of hand fast.

Brick killed a guy! With a trident.

I took up a lot of real estate in your mom last night. She made me a counteroffer I couldn't refuse.

Steel Valley Football;448266 wrote:...

Your claim that the final and actual transaction price being the best indicator of true market value ......

I did not say the actual price is an indicator. I said it is the true and actual market value.

Unfortunately you feel name-calling benefits the thread and your position I thought more of your rational arguments than that. Sigh.

I tried to share with you when you asked me to engage in the topic. I will continue if you wish. What outcome did you believe would come from it?

Steel Valley Football;448266 wrote:...
Of course you're not comparing your knowledge to mine or any one else - there is no knowledge involved on your part. You simply observed an outcome. I can't believe I didn't see sooner just how meaningless your original statement was....geez how embarrassing.

Don't be embarrassed. Embarrassment comes from within. You have control over that.

Steel Valley Football;448264 wrote:The more and more I read, the more I'm convinced that you don't have any idea about real estate market value.

Instead, I see someone that acts in the exact OPPOSITE of what defines market value; shopping to your individual needs regardless of how the rest of the market perceives value, bucking general market trends and value drivers such as school system when buying a house; using emotional reasoning when purchasing rather than rational thought, acting strictly on your own personal individual need with no concern for how the market reacts to that property amenity.


...

The idea I have regarding real estate market value has served my interest and my purchases very well. Shouldn't I be convicted to them as they relate to my transactions?

Is there any other motivation to shop for other than my individual needs??

If I am seeking the fairest price for my benefit on a purchase why should I accept your stated increased market drivers if they are not of value to me as a buyer?

I have never purchased a single piece of real estate based on emotion. I did, however, add an in-law suite in our house that was probably based a little on emotion.

I do agree that in my transactions I have acted strictly on my own personal, individual need with no concern for how the market reacts to that property amenity. When spending such a significant amount of money should I have done anything other than that?

Steel Valley Football;448292 wrote:...
If you can't see that his statement about actual market value being the final transaction price (is not true) then you're the idiot - a term I did not use, btw.

If actual market value isn't the transaction price would the transaction price be removed for usage as an indicator for future market appraisals?

I think the answer might be it depends if it's in-line with other transaction prices or not....but if those other transaction prices aren't actual market values shouldn't all transaction prices be removed from the appraisal process?

ernest_t_bass;448590 wrote:Well, we're not going to pay that much over price b/c the bank will only give us 80% of the appraisal or purchase price, whichever is lower. ...

From another thread.....Why would the bank loan 80% to market value even if the agreed upon sales price was lower? If the market value is steelvalley's definition shouldn't the bank be plenty protected loaning 80% to the appraised value even if it's higher than the agreed purchase price which is lower?

I truly don't know the answer to this and am hoping to better understand.

Con_Alma;448627 wrote:From another thread.....Why would the bank loan 80% to market value even if the agreed upon sales price was lower? If the market value is steelvalley's definition shouldn't the bank be plenty protected loaning 80% to the appraised value even if it's higher than the agreed purchase price which is lower?

I truly don't know the answer to this and am hoping to better understand.

That is a VERY good question! I used FHA financing on my home purchase and we had to put down 3.5%. Once the appraisal came back, it appraised for 4% more than what the purchase price was. I didn't really want to, but I called the bank and said, well we either want an equity line on that 4% or want to finance the 96.5% of the appraised value and get cash back.

Unfortunately, it doesn't work that way.

Con_Alma;448584 wrote:I did not say the actual price is an indicator. I said it is the true and actual market value.

Unfortunately you feel name-calling benefits the thread and your position I thought more of your rational arguments than that. Sigh.

I tried to share with you when you asked me to engage in the topic. I will continue if you wish. What outcome did you believe would come from it?

Both you and Manahttan Buckeye have said this - what name did I call you? I said your definition was bull crap, worthless, and meaningless....was that the name calling or did I miss something?

Con_Alma;448596 wrote:The idea I have regarding real estate market value has served my interest and my purchases very well. Shouldn't I be convicted to them as they relate to my transactions?

Is there any other motivation to shop for other than my individual needs??

If I am seeking the fairest price for my benefit on a purchase why should I accept your stated increased market drivers if they are not of value to me as a buyer?

I have never purchased a single piece of real estate based on emotion. I did, however, add an in-law suite in our house that was probably based a little on emotion.

I do agree that in my transactions I have acted strictly on my own personal, individual need with no concern for how the market reacts to that property amenity. When spending such a significant amount of money should I have done anything other than that?

You shouldn't accept the stated market drivers (as dictated by the market, not me...I was just trying to show some examples). Just know that you may pay more than market value if you (and when I say "you" I mean a buyer) ignore market drivers. By your definition, ANY price paid by you (any buyer) is the market value and that's simply not true. Think of the guy who paid a (pretty large) premium for his childhood home. Both the seller and the buyer met at a pricing point they both considered fair....but was that transaction the true market value?.

As for your other points here, again, this isn't about you specifically or anything specific transaction you have been involved in. I painted you as that type of buyer above because that's what you were describing; one who ignores accepted market drivers.

Con_Alma;448607 wrote:If actual market value isn't the transaction price would the transaction price be removed for usage as an indicator for future market appraisals?

I think the answer might be it depends if it's in-line with other transaction prices or not....but if those other transaction prices aren't actual market values shouldn't all transaction prices be removed from the appraisal process?

How are you missing the big giant bolded definition of market value above???

AGAIN, market value is something to be predicted. It's the PROBABLE price to be determined by the actions stated in the definition. The transaction price has not happened yet.

When the process of determining that price is happening, the transaction price is not yet available so it would be impossible to state that the transaction price is the market value.

Regarding the other transaction prices. They were the market values at the point of sale but not before the points of sale. They then become historic market values and less and less relevant as time progresses.

Con_Alma;448627 wrote:From another thread.....Why would the bank loan 80% to market value even if the agreed upon sales price was lower? If the market value is steelvalley's definition shouldn't the bank be plenty protected loaning 80% to the appraised value even if it's higher than the agreed purchase price which is lower?

I truly don't know the answer to this and am hoping to better understand.

Banks have certain risk levels. 80% LTV is apparently that bank's stated risk level based on his credit. Some banks do 125% LTV - that's their accepted risk level.

I'm not privy to anything a bank does before or after they order and receive my appraisal as I'm not an employee of the bank...so I can't speak for any bank.

Mind you, this is in theory and not in practice. Banks obviously have not been following sound lending practices for some time, which is a totally separate discussion (hopefully).

thedynasty1998;448637 wrote:That is a VERY good question! I used FHA financing on my home purchase and we had to put down 3.5%. Once the appraisal came back, it appraised for 4% more than what the purchase price was. I didn't really want to, but I called the bank and said, well we either want an equity line on that 4% or want to finance the 96.5% of the appraised value and get cash back.

Unfortunately, it doesn't work that way.

Yeah, most banks (or HUD) would require you to apply for another loan for that 4% equity that the appraiser said you have in your home....which means more fees for them. Fucking banks...LOL. Seriously tho I do hate em.

Con_Alma;448587 wrote:Don't be embarrassed. Embarrassment comes from within. You have control over that.

Yeah, that was sarcasm. It's sometimes hard to catch when typing to someone...so that's why wrote "geez", but it's not your fault you didn't catch it.

Steel Valley Football;448642 wrote:Both you and Manahttan Buckeye have said this - what name did I call you? I said your definition was bull crap, worthless, and meaningless....was that the name calling or did I miss something?

Yes, you missed something. You didn't call me a name nor did I ever say you did. You did called another poster an* idiot.

Steel Valley Football;448700 wrote:Yeah, that was sarcasm. It's sometimes hard to catch when typing to someone...so that's why wrote "geez", but it's not your fault you didn't catch it.

Yes, I understood that. If you reread my post you'll find it too was sarcastic...kind of an acknowledgment of your sarcasm by an offering of my own.

Steel Valley Football;448679 wrote:Banks have certain risk levels. 80% LTV is apparently that bank's stated risk level based on his credit. Some banks do 125% LTV - that's their accepted risk level.

I'm not privy to anything a bank does before or after they order and receive my appraisal as I'm not an employee of the bank...so I can't speak for any bank.

Mind you, this is in theory and not in practice. Banks obviously have not been following sound lending practices for some time, which is a totally separate discussion (hopefully).

I appreciate your not being in the banking business so this isn'y necessarily directed for you to answer.

Would the requirement for the buyer to put down 20% increase the banks risk if the agreed upon sales price came in lower than Steelvalley's definition of market value??

If a bank has an 80% loan to value policy and the bank received an appraised market value of say $100K but the seller and buyer agree to a price of $90K hasn't the bank increased their risk, albeit by a small amount in this example?

This practice seems to lend to the fact that the bank is accepting the market price as the agreed upon selling price.