Once listed for $1 billion. Sold for $100,000. What just happened?
Excerpt: A heated court battle, a last-second offer and a sparsely attended auction behind a fountain in Pomona — this chapter of the famed Mountain of Beverly Hills ends not with a princely sum but a sale price more like that of a sports car.
Touted as the city’s finest undeveloped piece of land, the 157-acre property redefined the luxury market when it listed for a record $1 billion last year. On Tuesday, it sold for a mere $100,000 at a foreclosure auction, a fraction of the $200-million loan outstanding on the property.
A markdown of 99.99%, of course, comes with some fine print. Any other buyer would have been on the hook to repay that loan — and this buyer has to eat that loss
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My comment: Quite a story!! Only in LA, of course!! FYI, I am in Northern CA… very different here. We think we are superior to LA ;>
Are McMansions Making Everyone Unhappy?
Excerpt: American homes are a lot bigger than they used to be. In 1973, when the Census Bureau started tracking home sizes, the median size of a newly built house was just over 1,500 square feet; that figure reached nearly 2,500 square feet in 2015.
This rise, combined with a drop in the average number of people per household, has translated to a whole lot more room for homeowners and their families: By one estimate, each newly built house had an average of 507 square feet per resident in 1973, and nearly twice that—971 square feet—four decades later.
But according to a recent paper, Americans aren’t getting any happier with their ever bigger homes. “Despite a major upscaling of single-family houses since 1980,” writes Clément Bellet, a postdoctoral fellow at the European business school INSEAD, “house satisfaction has remained steady in American suburbs.”
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My comment: Very interesting, well written, data analysis and history. Worth reading
The world’s most curious bathrooms
Just For Fun and Escape for a Few Minutes (or more)
Scenic views, very odd interiors, etc. Great fotos plus some interesting comments.
I need to get some appraiser observed weird or beautiful or fixers, etc ;>
To read more, click here
Why You Should Qualify Comps
Excerpt: The comparable selection process is more than just picking the three highest sales in the neighborhood and then taking their average. I’ve heard that 90% of doing an appraisal is picking the right comps and I tend to agree. I think it’s important for those in the real estate business to know how appraisers qualify comps so they too can utilize the same methods in order to develop a more accurate list price.
The old saying about garbage in garbage out is very pertinent to the appraisal process. If you don’t qualify your comps you’ll end up using sales that are not even similar to your subject property. This is one of the main reasons I have a problem with services like Zillow with their Zestimate because they have no way to qualify sales being used in their Zestimate valuations.
To read more, click here
My comments: written for real estate agents, but good for appraisers. FYI, appraiser blogs should be for marketing purposes primarily, but sometimes the posts are good for appraisers also.
Maybe reading this blog post will help agents in selecting appropriate comps to give to the appraiser. I have seldom seen agent comps that were very useful, but I always ask for them. It is easy to miss off market sales, find out why a sale was too low or too high, etc. FYI, some appraisers include estimates from Zillow, and other services, in their appraisals with a few comments. I have never done this as almost all my values are retrospective but it seems like a good idea.
New in the August 2019 issue of Appraisal Today!!
• Most appraisers focus on completing appraisals, not the business side of their companies, and make less money. How to make more money.
• Who’s on your Approved Client list and why? Don’t work for low fees with lots of hassles!!
• Client Rating Grid Page Appraisers are busy now. Dump your most hated AMCs!!
• Appraisal report corrections & responses – suggested protocol by Dave Towne Practical tops for lender appraisals.
• The Valuation of Condominiums, Cooperatives and PUDs – Book
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Automated Appraisals and their Risk
Interview with Moody’s analyst
Excerpt: Buzz Q: Is the RMBS world aware of the risks associated with the gap, if any, between value and price? You alluded to this in your paper but very subtly.
Moody’s Answer: What I can tell you is that we have been working hard to raise awareness about the potential for elevated credit risks of hybrid appraisals and AVMs. We’ve published two articles, I have spoken at a number of conferences, and we have had a lot of conversations with RMBS market participants about those risks and potential mitigants. In all these interactions, our key points have been:
1.) Any systemic error in an AVM can have far-reaching effects, undermining the valuations of all loans calculated using that model, while an underperforming appraiser would skew only a small share of loans in a securitization…
For more info, click here
Link to Moody’s Report, “Use of Appraisal Alternatives is Likely to Grow, Posing New Risks.” click here
My comment: short interview and worth reading. The full report is very readable. Nothing new for appraisers, but you can see what the investors are reading.
The Ugly Truth About Amazon’s Gorgeous $105K House
Amazon sells just about everything, even homes. The online giant has boasted several listings for tiny houses recently, with some going viral.
Now, Amazon is upping its house-selling game with a new three-bedroom, two-bathroom, 774-square-foot house for $105,000. The home features an open kitchen, dining room, and even a sauna. It comes fully furnished, and its exterior is nearly all windows—so if you love lots of light (and aren’t a stickler for privacy), this place seems like a dream come true!
To read more, click here
Interesting article from CityLab: How Amazon Could Transform the Tiny House Movement
To read it click here
My comment: Interesting articles. To see more tiny houses, go to amazon and search for tiny house, then sort by price. Of course, there are issues, such as permits, zoning, utilities, etc.
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Mortgage applications decreased 6.2 percent from one week earlier
WASHINGTON, D.C. (August 28, 2019) – Mortgage applications decreased 6.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 23, 2019.
The Market Composite Index, a measure of mortgage loan application volume, decreased 6.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 167 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 2 percent higher than the same week one year ago.
“U.S. Treasury yields were volatile over the course of the week, as the ongoing trade dispute between the U.S. and China continued to generate uncertainty among investors. Rates increased for the first time since the week of July 12, but were still 80 basis points lower than the beginning of the year,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With rates edging higher, refinances and purchase applications fell, at 8 percent and 6 percent, respectively.”
Added Kan, “Purchase applications were still up around 2 percent year-over-year, but the drop in rates this summer have not yet led to a significant boost in activity. Uncertainty over the near-term economic outlook and low supply continue to be the predominant headwinds for prospective homebuyers.”
The refinance share of mortgage activity decreased to 62.4 percent of total applications from 62.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1 percent of total applications.
The FHA share of total applications increased to 10.5 percent from 9.7 percent the week prior. The VA share of total applications decreased to 9.9 percent from 11.6 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.94 percent from 3.90 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 3.89 percent from 3.88 percent, with points increasing to 0.26 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.80 percent from 3.87 percent, with points increasing to 0.33 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.31 percent from 3.30 percent, with points remaining unchanged at 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs increased to 3.42 percent from 3.35 percent, with points decreasing to 0.39 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.Ann O’Rourke, MAI, SRA, MBA
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