Our market is not as bad as Sacremento, but the sellers can be the same :)
If I could only find an agent who sees things my way," whined a wanna-be seller. First he tried to refinance, but the mortgage broker ran the comps and couldn't justify the value. Then he considered selling, but only if he could find an agent who truly understood the value of his home.
Harry, we'll call him, bought a home in Sacramento two years ago for around $300,000. Part of his problem was the ZIP code -- that area was, and still is, depressed. Harry, blinded by the falling market in Sacramento and feeling it affected everybody else in town but him, insisted he had enough equity to either refinance or sell.
I ran a map search for him that crossed ZIP codes and encompassed more desirable areas. The results were the same. His home was worth about $200,000. I delivered the news.
Harry exploded: "I see you came up with the two miserable comps the mortgage broker found." He demanded that I use a different formula, the one that exists in Harry's head. The thing is I found a few dozen comparable sales, and they all pointed to the same hard, cold, cruel number.
In the old days -- like 5 years ago -- appraisers would throw out the foreclosure and short sale comps from an appraisal. But the truth is today those depressed sales are what comprise the market. Foreclosures affect the neighborhood. They make up the market values of nearby homes. As I explained to Harry, even if we found a buyer willing to pay Harry's inflated price, that buyer's lender would never appraise that home at the higher value.
It's not a conspiracy, Harry. The problem is you paid too much for the home when you bought it and values all around you have declined. Harry's not too happy with me right now. Oh, well.
This blog is reprinted in it's entirety with the kind permission of Elizabeth Weintraub, a Broker Associate with Lyon Real Estate in Sacremento, CA. Elizabeth is an expert in her local media and writes an awesome blog which can be found at http://activerain.com/blogs/elizabethweintraub
