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How did I just make money on my house?

Brutus

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This will probably show how much I don't understand the current economic situation but I'm just your average American so this is what I know. I signed the papers to refinanced my townhome last week and as part of the transaction I had to get an updated appraisal (obviously). To my surprise my place actually went UP in value from 6 months ago when I purchased the place new. Six months ago the appraisal came in $15k over what I agreed to pay and two weeks ago it came in $5k above that. Same person did both appraisals. I live in a new townhome community in the greater Seattle area with about 4 or so units (out of ~50) left to sell. Six months ago there were ~25 units up for sale. What do you think happened?
 

zissou

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You sto;e it! get me in on that sucka! It'as all ablout ti stimulatn'
 

DNW

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You should send a Thank You note to President Obama.
 

Brutus

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My appraisal was done before any of that $800B tax burden was officially placed on our country.
 

dtmt

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The appraised amounts are meaningless. The only real value is what someone is actually willing to pay.

Put your home up for sale, and see if you get the current appraised value. You won't. You won't even get the amount you paid 6 months ago.

If I had to wager a guess, I would say that the increasing appraisals were a way to increase the likelihood that the bank would approve the refinance.
 

Brutus

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^That would make sense if I was crossing my fingers and hoping for the value of my home to be high enough to refinance and I had a shady mortgage broker to do just that but I don't. A huge part of what appraisals are built off of are the values of recent purchases in the area. I saw all the details on the first appraisal and that's definitely how the person arrived at the original value.
 

dtmt

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The Case-Shiller data for the entire country is down significantly since 6 months ago; Seattle is likely suffering worse declines than average since it's crash happend so recently so it didn't have a strong economy to soften the fall as was the case for California.

If none of the evidence will convince you, try listing your house for sale and see how many offers you get. Anything is possible, but the odds are exceedingly low that you're going to get even what you paid for it.
 

tiecollector

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Someone won't pay that much probably. Appraisers are one of the other reasons this whole subprime fiasco happened. If you dust your furniture, the price will go up $10k.
 

JayJay

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Originally Posted by tiecollector
Someone won't pay that much probably. Appraisers are one of the other reasons this whole subprime fiasco happened. If you dust your furniture, the price will go up $10k.
QFT
 

Dmax

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The appraisals do not have to be wrong. If 21 units out of 50 units were sold within the last 6 months this may be an indicator that the builder underpriced them compared to the rest of the local market.
 

Nepsa

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If the properties are selling easily and quickly as you said they are that proves they are valuable because of demand. I don't think you should have to expect a loss in value because of the economy if you made a wise investment. Seattle is a difficult market but I don't think it's impossible to be profitable here.

That reminds me, I need to get my paperwork complete to be ready to refinance. I still need to see the numbers as to whether it would be worth refinancing for me if I can get a 4something percent rate. :p Just another thing on my to do list.
 

Dakota rube

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Originally Posted by Brutus
...A huge part of what appraisals are built off of are the values of recent purchases in the area...

Residential appraisals are based entirely on recent sale prices in your area.
 

Brutus

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FTR, I never said anything about selling my home. I was just comparing apples to apples and was interested in my findings.
 

freshcutgrass

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Well, first of all, a six month appraisal fluctuation on a piece of real estate within $5k isn't enough to be considered anything...increase or decrease.

Secondly, if you bought pre-construction from a builder (or at the beginning of sales), then the value of your unit once the project is fully built and occupied will generally make it more valuable, especially if they were well priced to begin with (which I suspect is the case). Under "normal" circumstances, your property should have appreciated by more than that, so I'd say this "abnormal" climate is responsible for your flat appreciation.

Thirdly, the national or local real estate climate on average is really of no concern, as micro markets, rather than macro markets are what really matter. Perhaps this particular development is just more appealing than average...is part of a more desirable neighbourhood, or has made the neighbourhood more desirable by being built. There are many small nuances in this area that affect value and demand.

I am curious as to why you are refinancing though....you only took out a 6 month mortgage? None of this really matters though if you bought the place for the long term.
 

Nepsa

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Originally Posted by freshcutgrass
I am curious as to why you are refinancing though....you only took out a 6 month mortgage? None of this really matters though if you bought the place for the long term.

Six months ago rates were much higher than what you can get now. Wouldn't you rather save money by having a 4.5% rate rather than a 6.75% rate? The general rule of thumb is that refinancing is a good option if you can get a rate that is at least 1% lower than you current one and you are going to be there for a year minimum. That could save you enough money to where you could buy a new car!
 

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