Posted on 07/07/2022 5:31:18 PM PDT by vespa300
Timing is the key. They did bad timing all around. They built when prices for raw materials was at its peak.
The problem is they built a luxury home with a 1,200 square foot living room but only have three small bedrooms and two bathrooms.
Their reasoning is the next buyer can just remodel it to their desires.
If you’re spending $1,000,000 for a house you’d expect more beds and baths than that. Remodeling the house to make it normal for its size is a real turn off.
And most people don’t want to pay extra to have a space for a Greyhound Bus.
>We’ll see. My property taxes didn’t go down.
That’s what I meant. Neither did mine. And I appealed for a re-assessment and they flat out refused (I bought my house foreclosed after years of vacancy and they charged me for the original valuation).
Well I know it’s counter intuitive but depending on the market abs what $1000000 means to it, they may have a point.
If it’s just a high dollar market and $1M just gets you a decent home, buyers won’t want to be remodeling. But if it $1M is high high dollar, folks in that sphere often expect to spent a lot more after they buy to “make it what they want”
Counter intuitive, but it’s true. The Uber wealthy live in a different world than most everyone else
Home in our neighborhood just sold for 1.3 mil ...buyers paid cash.
And I hear they’re young folks.
It’s the haves and the have nots nowadays.
I don’t know anybody who’s buying with a mortgage. It’s all cash. But where is the cash coming from?
The reason is bank savings interest rates. Most stand around 1%. Savers are splitting the difference between their low bank savings rate and the going 6% mortgage rate and loaning it to relatives for mortgages. Meanwhile banks are losing investment money, and they don’t seem to care.
We’re closing in three weeks. Got our asking price and got our fingers crossed :)
Guy is buying with cash but it’s because he owns his house free and clear which is being sold as part of the transaction.
My girlfriend is a mortgage underwriter and typically has between 25-30 files in her pipeline. For the past couple of months it has slowed to 4-5 files.
Around 2006 there were a lot of high dollar resort subdivisions developed in the mountains of NC. The prices were insanely high and out-of-state people were buying them sight unseen with the intention of building their retirement home.
The typical plan was, ‘We are retiring in a couple of years and we can get a cheap payment on a 3 year balloon note. We’ll sell our house and use that money to payoff the note and build’.
Market crashed two years later. The $100,000 building lot dropped in value to around $30,000 and the marketability and value of their home crashed as well. The lots were not worth the loan amount anymore so they couldn’t sell them and let them go to foreclosure. There were thousands of instances of that happening here.
They've had a solution for such an eventuality for a long time. Assessed value goes down, the mill rate goes up. The tax man isn't going to be shorted when the crash comes, except in places where people just abandon their property, like in Detroit.
30 years ago, when I bought my current home here in central Illinois and a local bank financed it. The very day we moved in there was a letter in our mail box from that local bank telling us that they had sold our mortgage to a company in Iowa.
Exactly same terms, interest rate, payments etc. 15 year mortgage, paid off in 7 years.
Can anyone explain to me how either the original lender or the new one profited by the sale of my mortgage?
Every time the county does a revaluation I appeal the assessment on my home. It takes a few hours of work. I get the sales price of every home in my neighborhood for the preceding two years. I then study the value of the land and the value of the home separately. I also pull building permits for additions and modifications going back at least 10 years. My goal is to demonstrate a recent real market comparable price per square foot below the value per foot the county has put on my house.
The neighborhood is 20 years old. My home has not been remodeled or changed since being built. Many neighbors have remodeled, added additions, porches, swimming pools, outdoor kitchens, etc. It can be argued those houses deserve a higher value per square foot than mine. With knowledge of the neighborhood, and quantitative data it is easy to lay out a case for my home being worth less than most of the recent resales of improved properties.
Another thing that can help is a recent distressed sale. I recently benefited from a house nearby that sat on the market nearly two years. Two teenage sons of the owner had done significant damage to the interior and the owner refused to do repairs to make it more attractive to buyers. He moved to another city and eventually accepted a lowball offer. That sale was the most recent comparable sale to my house. I made the case that most recent sale reflected the current market comparable price per square foot for my house and won. Due to this appeal the assessed value for my home dropped 16% from what the county gave me as the new assessment. I now pay less property taxes than I did 10 years ago.
Most people don’t appeal property tax valuations on their homes so if you can make a strong case for a lower value being the market price, backed by hard data, the county assessors usually will make an adjustment. They are typically applying an across the board inflation factor to neighborhoods and houses that haven’t sold since the last revaluation. Homes for which there is a recent sale, get adjusted based on that recent sale. I always appeal and have always obtained a reduction. Note, the county never uses my adjusted valuation to reassess the entire neighborhood. The county takes the position property owners who don’t appeal are in agreement with the assessment.
In the example above I requested an 18% reduction. Given a choice between a 16% reduction, and the time and expense of going to court to appeal, I took the bird in the hand.
People who are seriously wealthy want their own Xanadu, not someone else’s. Here in southern Maryland teardowns are common.
I have a good friend in the mortgage business, 30+ years in the industry... we were talking about this coming long before it actually hit... Anyone surprised by the blood bath currently going on hasn’t been paying attention or is too young or new to the industry to know how it works.
The artificially low interest rates of the last decade or more have created an artificial boom.. 5-6% really isn’t all that high of a interest rate historically, but when you have had 3ish rates for well over a decade, if not more, prices have all been predicated on cheap money... So a 300k house for example is a little under $1250ish a month plus taxes, a 6% loan on 300,000 is 1800ish plus taxes...
nearly a 50% payment increase... downward price pressure is coming... if folks bought at the peak and need to get out, a lot of them are going to learn the hard way that what ZILLOW tells them their house is worth ain’t remotely what their house is worth.
yes, mortgages are a commodity and like a bond, the value fluctuates with the rise and fall of interest rates. If rates go up, the mortgage decreases and if rates go down the value of the mortgage increases. Mortgage bankers and banks sell loans in order to make new loans otherwise they would run out of money to lend.
Mortgage Bankers of old were in it to service the loan. Collect the payment, keep a small fee and “pass thru” the P and I to the investor.
Car loans are no different. Dealers prefer financing because they can make money on the loan due to higher rates on consumer loans.
I was a capital markets manager for mortgage companies and banks for almost 30 years. Hedging the interest rate risk then selling the loan is what i did. And it’s why I have gray hair.
The FOOLISH de industrialization of the USA is killing us. All that money we sent overseas to China is coming home to roost.
In 2008 we had a subprime mortgage crisis. We don’t have that today. We also have very low inventory and 5.7% for 30 yr fixed is not excessive. ARMs in the 4’s.
Based on what houses are selling for right now in my neighborhood and my valuation is actually pretty reasonable.
As far as contesting it would go, my daughter is a project manager for the state highway department and something of an expert in property valuations because she buys property all the time and and does the valuations. So you can bet if I feel a need I’m calling in a family favor LOL
Thanks, that had puzzled me for a long time.
Net result was a $1 million decrease, or about $40K on next year's tax.
Personally, I'm not moving, so these gyrations aren't impacting my lifestyle. My daughter, OTOH, works for a mortgage company, and they've had two rounds of layoffs. She's in management, so she thinks she's safe...for now.
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