Any home appraiser mustachians in the house?

[jamesbond007]

We recently put in an offer for a 1370 sq. ft. /4560 sq. ft. lot single family home in the SF Bay Area for 1.16 million. There is an identical house in the same community not getting sold for about 20 days. Both listed for 1.05 million. This one's prettier. I got pre-approved and all and within my budget. But I am not sure how to guess the potential appraisal. I will not get the house if I place an appraisal contingency so what is the best course of action for me? I got a counter offer as us to come up with the strongest possible offer. I am not sure what's going on. I can't fathom spending more than what I originally bid on this house.


FWIW, 10 days ago a SFH got sold for 1.2million and that is 1,160 sq.ft on a 6000 ft lot and is literally on the street next to the current house I am looking for. Also, the current house is a zero lot line SFH (I didn't know those things existed until recently)


I am having 2nd thoughts on buying a house in this crazy rat race of a market. How do I convey this to my agent. They've been absolute rockstars and I feel bad for wasting their time :(

[Uturn]

The housing market is just crazy all over the nation.  I am currently looking also, and my realtor keeps wanting me to put in weird contingencies like that also.  However, I keep telling her that I am not going to over bid or do something stupid just so I can buy a house in a never before seen market. For instance, last week she said I should waive inspections on a offer, and I laughed.  I actually lost to a lower offer, but inspection waived.

As much as I want a house, and as much as I liked that one, I did not get in a good financial situation by making stupid purchases.  If I don't get to buy a house this year, then I don't get to buy a house this year.  This craziness cannot be sustainable.

[affordablehousing]

That sounds like a reasonable deal, just up your offer. If something sold for $1.2 nearby, the house you're looking at will probably appraise similarly if slightly below. It's a seller's market and there isn't a reason for sellers to tolerate an appraisal contingency. Perhaps keep looking elsewhere for a different property?

[robartsd]

Contingencies are simply excuses to renegotiate the price as your due diligence information comes in. If the seller doesn't want to entertain that possibility, they'll prefer offers without contingencies. You could always walk away without completing the deal if inspections or appraisals come back with negative indicators. If you have contingencies for them in your offer, you also have the opportunity to submit a modified offer. I believe that we waived appraisal contingencies on all the offers we made when buying our house. If you and your agent are doing a decent job following the market, you should have a good enough feel for the valuation of properties. The appraisal is simply a formal process to have a disinterested third party assure the lender that the valuation is in line with the market. I didn't have any serious concerns about waiving appraisal contingencies when I was house shopping 5 years ago. I'm not sure if I'd submit an offer without inspection contingencies.

If you offered what you thought was a fair price but the seller doesn't agree, you don't get it. It's a seller's market, so they have a pretty good chance of finding someone else interested quickly if they are being at all reasonable. Nothing to say to your agent other than that you're not finding anything that you're comfortable buying right now.

FWIW, 10 days ago a SFH got sold for 1.2million and that is 1,160 sq.ft on a 6000 ft lot and is literally on the street next to the current house I am looking for. Also, the current house is a zero lot line SFH (I didn't know those things existed until recently)

My sister has a SFH with a zero lot line side. These are built with the same spacing as other SFH neighborhoods, but instead of having half the space on each side of the lot line, the lot line is right up against a wall making the side yard much more usable. The obvious downside is that your structure is right up against your neighbor's yard potentially causing issues for inspection and maintenance.

[yachi]

You California guys are crazy, I don't think I could stomach spending that kind of money on a house.  Specially this year when lots of companies have experienced how much work can be done remotely.  ​I just refinanced my 1600+ sq. ft. SFH on an 8,400 sq. ft. lot.  It's in a great school district, and we've been here 11 years.  We took a bit of money out and the payment hardly changed because the interest rate is lower.  It appraised for 29% more than we bought it for, which is nice.  Even so, its value is less than 2.5 times my salary.  We can go more expensive in the area to new construction, or very large expensive houses but I'm glad there are lots of reasonable options available.

[jeromedawg]

I'm down in SoCal (South OC to be exact) and people are bidding upwards of $50k-100k MINIMUM over list on homes that are in excellent turnkey condition (these are homes ranging anywhere from $800-950k *list* so not that far off). For those homes that are average or below average people are spending anywhere from $25-50k minimum over list. One home I spotted that looked like it needed quite a bit of work and renovations was listed at $650k and in a less desirable area and I believe went for over $700k cash IIRC.

Not sure how the market is up there as far as competition but generally there has always been one offer that comes in far above all others and often all cash w/o any contingencies or just with the inspection contingency (but shortened to 10 days or less often, to be more aggressive), so the sellers don't even bother wasting time with counteroffers.

Do you know how many other offers are on this property? And how long has it been on the market? It doesn't sound like the frenzy is as crazy in your area as it is in mine if they're countering. You know it's off the rails when the realtor is bombarded with multiple offers but doesn't counteroffer and just accepts the highest bidder. These people must be reinvesting their wins from GME and Bitcoin into RE lol.

Robartsd is right though. The contingencies are more a 'formality' - the seller is not obligated to meet any of the 'demands' brought up especially right now in a hot seller's market. If you are taking a loan, then the loan contingency would be your last resort for an "out" IF there is no property inspection waiver (my realtor says that for homes under $1mm there's a higher chance that can get a PIW - this is pretty risky but makes the offer stronger if you really want the house you're looking at) and the appraisal comes back lower AND OR if you still have an inspection done (you still can even if you waive the inspection contingency) and the report comes back with major issues where you can justify backing out due to the cost of repairs impacting your down payment amount (and thus your loan amount qualification).

It's absolutely nuts right now. There are a couple more homes we're planning to look at this weekend but I fear the same thing is going to happen where someone is going to come in with all cash at $50k minimum over list and no contingencies (well, maybe just a shortened inspection contingency)

[jamesbond007]

Thanks for the perspective. The seller's agent mentioned that they got 4 other offers. The original offer deadline is this Sunday. But we did a preemptive and they got 4 other preemptive. All within 10K so they did a counter for all of them. They did not say how much they are expecting. They are basically looking for how much the highest bidder would bid. Usually there are 15+ offers and someone with +100K over the 2nd highest bid and mostly all cash and contingencies waived. I've never seen a market like this. Maybe I should just keep quiet and dump more money in VTSAX after all.

[jeromedawg]

Thanks for the perspective. The seller's agent mentioned that they got 4 other offers. The original offer deadline is this Sunday. But we did a preemptive and they got 4 other preemptive. All within 10K so they did a counter for all of them. They did not say how much they are expecting. They are basically looking for how much the highest bidder would bid. Usually there are 15+ offers and someone with +100K over the 2nd highest bid and mostly all cash and contingencies waived. I've never seen a market like this. Maybe I should just keep quiet and dump more money in VTSAX after all.

I'm thinking the same thing unless I can find some kind of "deal" - but you know that everyone else is thinking the exact same thing and all the "deals" will just end up selling for well over list price anyway LOL. That said, I suppose "deals" are a relative term in today's market right? I wonder what the story is with the unit you have a bid on that only has 4 offers - is it not as desirable for some other reason to where there aren't 15+ offers as well?