[lbo-talk] origins of the housing boom

[shag carpet bomb]

At 06:31 PM 8/29/2011, Jordan Hayes wrote:
>shag writes:
>
>>>On 8/29/2011 3:14 PM, Jordan Hayes wrote:
>>>
>>>This is actually a very good example of ...
>
>Actually, SA wrote that.
>
>>recently, I learned that the appraisal for the house was
>>more than the purchase offer. The mortgage broker wrote to
>>say, "Woohoo! Now you have instant equity!"
>>[...]
>>what amazed me was how, in the midst of clear and obvious
>>evidence that a house is only worth what a buyer is going to
>>pay for it, i was still told I had "instant equity"!
>
>I guess. In the same way that a house is only "worth what a buyer will 
>pay" equity is only "worth what a lender will lend" ...
>
>What do you think "equity" should mean?
>
>Should it include, for instance, the ordinary 8% haircut you'd take if you 
>sold it?

well, they can appraise all they want for what they did. but if something 
happened to the market and i had to sell tomorrow, i'd probably have to 
take the hair cut and unload it for whatever a buyer wants to offer on it.

if that buyer says, here, let me give you 20k less than you paid for it, 
how is there any equity in that house?

or am i using equity incorrectly.

by the way ravi, appraising is what the bank does to decide if the loan 
they are giving you for the house makes sense based on the appraiser's 
estimate of what it is worth. (it was fun reading the appriaser's 
commentary! talk about making rilly rilly clear that there's no such thing 
as an objective value for anything....)

assessing is what the city does to determine your takes.

in this case, the house is assessed at a 2009 value, which is more than I'm 
paying for the house because it reflects the higher prices houses were 
going for back then.

personally, i'm not going to get in a tizzy if i have to pay 1.2% of a 
lousy 10 or 20k. what is that 120$ or $240? for better roads and 
schools...? no problem.