Thursday, January 05, 2012

Random insanity

A few random thoughts inspired by recent events:

Are stated "living" square footage numbers in the MLS all measured the same way? Seems that measuring the perimeter and using the gross area which includes walls is as acceptable as measuring the actual "walkable" space which doesn't include walls. I don't know if condo square footage as stated in the tax record is perimeter, walkable or some of both. I do know that some sellers of condos will state a square footage in excess of the tax record claiming an error in the tax record. Just yesterday I questioned the stated size in an MLS listing and the agent immediately reduced it by over 100 square feet. When asking +-$184 per square foot, that little difference is enough to feed a small town at the Fat Snook and then give them all a biplane ride over the beach.

Is feedback from prospective buyers or their agents constructive information for sellers of property? Consider that the typical feedback request I receive when I show property asks me what I think about the condition of the property, how it showed, whether the buyer has any interest and, get this, whether I think the price is "too low", "just right" or "too high". What the...? As the agent representing a buyer do they honestly think I would ever check "too low" or even "just right"? No way. There is always the chance that I will be presenting an offer on this property either for this client or another. Do I want the seller to have received feedback from me saying I thought the price was too low? Asking me (or any other good buyer's agent) for feedback is giving us a chance to plant a seed of doubt in the seller's mind about their asking price without even writing an offer. Sellers take note.

Is an appraisal an accurate measure of a property's value? Sometimes but certainly not always. I've seen buyers walk away from a perfectly good deal because of an appraisal below their contract price and I've seen sellers refuse a good offer because they were hanging their hat on an optimistic appraisal number. Appraisers are human and because of time and distance constraints required of comps they often have to use dissimilar properties and then make arbitrary adjustments to arrive at their "estimate" of value, the appraisal number. In addition, it is probably prudent to question any appraisal ordered and paid for directly by a principal to a transaction.

Would you agree to short sale your underwater property if the bank would give you $35,000 at closing? That's exactly what is happening in short sales right now. Several banks including Chase, Citi, Bank of America and Wells are actually giving checks for as much as $35,000 to sellers for short selling their underwater property. An agent in my office completed a short sale Christmas week in which the seller received a $30,000 check from their lender. If you're underwater and receive a letter from your lender offering some sort of incentive check for doing a short sale, save that letter. Ironically, these same lenders sometimes take a year to approve a short sale. I'm not sure who dreamed us this perverse incentive or why but it seems to me that it would encourage every underwater homeowner to immediately stop making payments in hopes of getting the letter. Of course, I'm not a banker and probably not smart enough to understand the logic. Que sera sera. Happy New Year.

"No fashion error was ever made in black." Calvin Klein