Sunday, December 4, 2011

McCrabby Rants...: SH!T from McCrabby - A flaw in the real estate mar...

McCrabby Rants...: SH!T from McCrabby - A flaw in the real estate mar...:

SH!T from McCrabby 

McCrabby has found a flaw in the real estate market...  As you may already know, McCrabby and the missus sold their home this month (McCrabby Moves On).  It was tough because they really didn't want to move.

But McCrabby, who has bought six homes over the years, but none in the past 24 years, uncovered an interesting "gotcha" in this new real estate market.

McCrabby listed his home for a "fair" price, much, much less than he would have gotten five years ago, but fair.  

Seems like this should've been
worth more - don'cha think?
Do you know what happens then?  Here is the process:

A home-seller and his realtor determine a "fair" price for their home, and list it.  Then, a home-buyer and his realtor view the home and like it.  They decide they'd like to buy, but they offer a bit less, trying to negotiate an even better price.  The seller and the buyer may counter one another 2-3 times.  And, finally, those four people (seller and his agent, buyer and his agent) arrive at a fair price, based upon what they have observed, compared, and shopped for.  Four people agree on this "fair" price, all of whom have stakes in the outcome. 

In McCrabby's case, an offer came in on the second day the home was listed (We're going to say it listed for $100 for demonstration purposes and then use appropriate percentages to illustrate the flaw we discussed).

The offer came in for $96.  In the countering process, McC and Mrs. M countered at $97, which was accepted, and the deal was done--right??  No, not right.

Now comes the appraisal, or what we have come to fondly call "the flaw."

Consider this:  the buyer, and/or the bank, orders the appraisal and pays the $300-500 appraisal fee.  In today's environment, unlike in the past, when the appraisal pretty much matched the offer, today's appraisal often becomes the selling price.  

Why?  Because every buyer writes into the offer that if the home appraisal comes back lower than the agreed-to price (that term is faulty, too), they either are allowed to buy for that appraised value, or they can walk.  Hmmm, let's think about that one a moment.  The buyer wants the lowest possible price, the bank wants the largest amount of equity possible, and the appraiser wants to get hired again by the bank.  

In the meantime, while awaiting the appraisal, McCrabby and Mrs. M are packing, selling some items that won't fit in the next house, and the current house is in disarray due to this effort, and will never show as well as it originally did (for the one day it was for sale).  And, McCrabby's realtor has taken the home off the market.  After all, we have an agreement.  Right??

Drum-roll, please...
Can you see this coming?  Guess where the appraisal came in... Come on, guess..  Think a moment..  Scroll down........


Yes, you guessed it -- the appraised price was $96.  Who could've guessed?  You did, right?

Just burning a few 
more bucks..
Yes, we burned one dollar (and, as the buyer's realtor pointed out, "it's only one per cent").  Yes, it's only one per cent, or if you extrapolate that to real housing dollars, it comes to SEVERAL THOUSAND DOLLARS...

Oh, yes, it's also within 1/10 of one per cent of the buyer's original offer (before the McCrabby counter-offer - what a waste of time that counter-offer was).  The appraiser just burned several thousand McCrabby dollars.

But it was fair, you say, based upon the market...  Maybe.  But, let's point out a couple things:
  1. The appraiser has the offer and contract BEFORE he ever sees the house - does that seem right?  Shouldn't he go appraise the house for a real price and then compare it to the offer AFTER he completes the appraisal?
  2. Our appraiser said, upon entering the house, "You got a good price for this," basically assuring us that we would not get our price, because we'll be forced to adjust our price to whatever whim (or adjustment number) he sticks on his report - the buyer thought it was worth $97, but that didn't matter.
  3. When he left, the appraiser told us we'd have the report back in two days, so while we packed, sold furniture, and waited six days, with our home off the market, we made it much less sale-able.
  4. McCrabby is told that the appraiser has to know the offer price because he's supposed to review agreements, etc. (shouldn't the lending institution do that?)
Oh, it's OK; don't worry about McCrabby and Mrs. M.  They'll be fine.  A thousand here, ten thousand there, it makes no difference any more.  As many friends have told them, it's only "stuff," it's only "money."  What they fail to realize is McCrabby liked his "stuff" and really liked his "money."

But, in the end, McCrabby likes Mrs. McCrabby best, and as long as Mrs. M goes with him, he'll be good.  

At least we don't need to appraise the next house (although, as the buyer, we might enjoy that)...

Check out more of McCrabby's Rants on


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