Property Value/Appraisals RANT

[murphy1244]

I have not carried a balance on my CC ever, I paid off my first house in 7 years. I bought and sold 3 Harleys. I hope to pay off our dream house in 10 years. Small house on 16 acres. Think big live small

 

[GolfAddict]

I have not carried a balance on my CC ever, I paid off my first house in 7 years. I bought and sold 3 Harleys. I hope to pay off our dream house in 10 years. Small house on 16 acres. Think big live small

Reminds me of the old saying: "Small house, big bank account."

 

[riptides]

...Just looked into Ramsey. His advice is all very logical, and we do live without CC debt or car payments. But ****, 15 year mortgages at 25% of your monthly income or less ONLY? That one is hard to meet and still live in a comfortable house. If you make $75k/year, that limits you to about a $1000 mortgage payment. That doesn't buy squat in a 15 year mortgage.

Wow!

I don't follow these types of people offering their opinion on money. I should take a closer look at Ramsey to absorb what he has to say.

The mortgage at 25 percent of your income statement is questionable to me. Does it take into account location? location? location? The mantra of Real Estate.

Money is a tool, and timing is everything in Real Estate. Choose wisely. Live your dream. On these, I agree.

 

[riptides]

Reminds me of the old saying: "Small house, big bank account."

Champagne taste, beer budget.

 

[mjarrels]

No current plans to improve or sell, I like low apprisals... keeps my property taxes lower.

mark

 

[KTurner]

No current plans to improve or sell, I like low apprisals... keeps my property taxes lower.

mark

That only works if the 'low' is not applied across the entire locality. Our assessment values dropped pretty much across the board, so the county gov increased the tax rate to make up for it.

Keith

 

[tractchores]

One thing to be aware of is that property appraisal is a bit of a game. I do a lot with real-estate and real-estate financing. The first thing to understand is an appraisal is not really a measure of what something's worth (it's worth what someone will pay), its a way of using acceptable rules to come up with a value on something. Typically you have an appraisal amount you would 'like' to get. You then use different approaches and sets of rules to try and prove that it's "worth" whatever you're trying to get, which is why appraisals seldom come out much higher than what you want to get. While it may not work in your situation given such a large differential, I've been very successful in either getting the appraisal raised significantly by coming up with my own comps or by finding another appraiser with a different point of view. Now when I do an appraisal i will do my own before the guy comes and show him how I got to my number and share the comps etc with him. Many will then use my comps and come up with the right value. The key is to make reasonable comps and assumptions. If the comps just aren't there then the goal becomes to prove that your property is materially different and there's something else that adds value (nice view, better equipment, waterfront, mature timber, whatever). Those subjective things give acceptable leeway for an appraiser to get to the value. Keep in mind that they want it to appraise for the value too, otherwise the bank doesn't get the business.

One last thing I would suggest is working with a local bank. They often have more leeway with their methods, are willing to talk about things and the appraisers tend to more reasonable in my opinion because they want the business. You can read about appraisal methods online so you can speak their language. The most common methods are: replacement cost, comparable sales (the one they usually use - and not good if you've got foreclosures around), cash flows w/ a cap rate (commercial only).

 

[MossRoad]

This is a good thread/discussion. I'm sorry it's coming about at the expense of your finances, Dave, but it's certainly a pertinent subject for most of us.

Just looked into Ramsey. His advice is all very logical, and we do live without CC debt or car payments. But ****, 15 year mortgages at 25% of your monthly income or less ONLY? That one is hard to meet and still live in a comfortable house. If you make $75k/year, that limits you to about a $1000 mortgage payment. That doesn't buy squat in a 15 year mortgage.

I disagree. My wife and I make way less than that after taxes. We've payed off a small house in 5 years, 20 acres 4 years after that, another house double the size of the first in 3 (would have been 5 but Dad died and left us a nice gift so we put it on the house, but we had scheduled 5), put two kids through day care, Catholic grade school, Catholic high school, sending one to college with less than 5K in debt for 1st and the 2nd one will be paid for by the time she goes. We also have a nice nest egg (knock on wood) AND MOST IMPORTANTLY A TRACTOR!!! :laughing:

It really depends on where you choose to live, how much you want to make in salary, carreer choices, and the decisions you make. I do acknowledge that health catastrophies, unexpected layoffs, etc... happen to good people through no fault of their own. But if you live up to your means and then your means goes away, you have to accept that you didn't plan for the unexpected. Its never too late to step back, analyse your situation, and re-plan for your future. That's what Dave Ramsey shows you how to do.

 

[kenmac]

In my business I find that alot of people live off what they make ( some more than they make) with no emergency fund in place when ( not if ) something happens ie, A/C goes out, plumbing problems, new roof the list goes on and on.When somethins hapens they end up borrowing nore $$ going deeper intop debt. If you live the D.R. plan this may happen ,but not likely.I,ve been following the plan for yrs . I feel If I live like no one else now, I will be able to live like no one else later.Someone said money is a tool . If used correctly it is. If used incorrectly, it can get you into big trouble

 

[kenmac]

The mortgage at 25 percent of your income statement is questionable to me. Does it take into account location? location? location? The mantra of Real Estate.

No . Location doesn't mke any difference.The plan is the plan for any location.If you didn't save enough $ to get the monthly payment to within 25% of take home pay on a 15 yr fixed you don't buy the house