Michael Covel

Michael Covel Added:

August 17th, 2008 at 10:35 pm

Maybe we can apply this logic to stocks: “Jim Cramer told me the stock was worth a certain price. After I listened to him and bought a ton of it, it dropped. Cramer’s fault!”

Cramer has his own issues, but if you act on his advice you can only blame yourself!

Matt - Trading System Reviews Added:

August 18th, 2008 at 7:54 am

There is another side to this in that the banks lend money based on the valuation. If properties are overvalued, then the bank is effectively lending 100% LTV as the house owners have already lost their equity. Since they no longer hae any stake in the property, they become more likely to bail and hence the mortgage, which was loaned to a good credit risk family, suddenly becomes equivalent to a sub-prime.
So if this is a common occurrence, then in the same way the mortgage backed securities were over-valued by the banks, the mortgages themselves are overvalued. So it is important that appraisals should be accurate both because of the effect on the home owner, but also the banks and hence the mortgage market at large.
The main thing that strikes me in the system as wrong is why are there no regulations to force agents to declare any interest in a property in a similar way to insider trading regulations?
Yes, I agree with taking responsibility for your own decisions and that spotting that you are paying about 15% too much for a house should be easy, however the current credit crisis has shown that the system is in need of a shake-up

Rose Added:

August 22nd, 2008 at 10:24 am

Michael;
When you go to a new dentist or doctor, how much research do you do on him/her? Are you qualified even to evaluate what you find out? How about when you go to a new accountant or tax preparer? Do you do alot of research, investigate past history of all kinds, resume, CV, and even if you do all this are you qualified to make any judgement on what you find? We all have limitations and must trust providers of goods and services to the extent of our abilities to find out and understand information about these people and what our risk is.
The Petrones obviously had no insight regarding the real estate market in North Carolina possibly from just having left an apartment in NYC, or maybe a small house that they had lived in forever. These are the hard knocks we all take when we venture into an area we are inadequately prepared, where we have not a depth of knowledge. Hopefully there is some government or other type organization that will help consumers in these cases. Obviously the Petrones could have done much more, but they were not of that world, just working people all their lives who trusted the establishment and government.
Regards,
Rose

JT Added:

August 22nd, 2008 at 10:46 am

Welcome to the Nanny State

Michael Covel Added:

August 22nd, 2008 at 10:47 am

Rose, what do you mean by “working”? We all work.

Dwayne Added:

August 22nd, 2008 at 11:09 am

There should always be a review of any appraisal done by the mortgage company making the loan. Typically there are in house review appraisers that will check for value and Q&A issues. The mortgage company is utlimately responsible for the the quality of the appraisal that it relies on. If the mortgage companies did their jobs this would put and end to these crooked appraisers.

Jake Andrews Added:

August 22nd, 2008 at 3:53 pm

But Dwayne, wasn’t the mortgage company doing their job? Aside from loaning money at some interest rate, what other purpose do they serve? Are they similar to the ghost busters, who do you call if you have crooked appraisers, mortgage brokers?

Rose: You and I are not obligated to trust anyone. If there is a rule someone I would be interested in seeing it. If you want to trust others to make decision for you, and tell you what the best options are, then you should take a good read of Dan Ariely’s book “Predictably Irrational”. I otherwise do not see how your argument improves when you state: Obviously the Petrones could have done much more (in reference to their epic betrayal of the appraiser). In one case you say we should trust the people who make our options when you state…”We all have limitations and MUST trust providers of goods and services to the extent of our abilities to find out and understand information about these people and what our risk is…, then say trusting those people backfires? I am slightly confused as to how your argument can make any cogent sense? please reply.

David Stone Added:

August 24th, 2008 at 10:29 am

I agree some points on both sides of the argument. The Petrones got screwed by their real estate agent and appraiser in a time when housing valuations are a crap shoot.

I purchased one house, sold it and built another in my life and the bank has always been responsible for appraising the house. That way they know what the risk is when they cut you the mortgage. I’ve never heard of the real estate agent being responsible for appraisel, it always the bank. Maybe it’s different in NC.

If I ever buy a house again I will never get a mortgage from a lender the agent recommends. Ditto for inspection. Which is what it sounds like this couple may have done. It sounds like it was the first house they purchased and I think everyone makes mistakes on their first house.

It’s been a screwy real estate market not to mention Real Estate tends to be a very sleazy business in the first place. “Caveat Emptore”

Michael - Not sure why you keep taking people to task for the phrase “Working people”. Yes we all work but I think you understand as well as I what is implied. What would you recommend as a substitute?

Michael Covel Added:

August 24th, 2008 at 10:33 am

David what is being implied?