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Monday, August 25, 2008
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25 comments:
When Cutting the Price, Take a Big Bite, Not a Bunch of Nibbles
By Elizabeth Razzi
Sunday, August 24, 2008; Page F05
WaPo article on how to cut the price on your home so that it will sell:
http://tinyurl.com/3sls3r
Elizabeth Razzi, actually giving good advice. How uncommon, usually she sounds more like a schill.
But yes, price drops need to at least go to the next search engine layer. One property that looks exactly like a townhouse without neighbors, started at 299k went to 274k then 249k, then back up to 295k and now is under contract. One presumes that the price drops got the interest, and then the price hike indicated to buyers that no, there won't be another drop, at which point they could still step in and "win" it starting from the $249k price for negotiations.
I think $249k is way overpriced for what it was, but you can decide for yourselves:
FX6783476 Lavender Lane
Note the lack of a finishing edge on their countertops, I don't understand why it's so hard to actually finish a job...
more WaPo:
Down Payments on the Rise
The interesting part to me came in page 2:
Government-sponsored programs can also provide help. The programs vary by locality -- some offer grants, others loans -- and are often restricted to low- to moderate-income borrowers.
A single person in the District making $33,000 a year could be eligible for a $70,000 deferred loan for a down payment. That drops to $22,850 if the home buyer makes $53,200. The District's employees can also apply for a $1,500 matching grant program. Maryland's Department of Housing and Community Development offers several down payment assistance programs, including one providing a $2,500 grant for qualified applicants.
In Virginia, one program encourages homeowners to save by matching every dollar they put away with $2 from the state, for up to $4,000. "It usually takes a while to save up," said Shea Hollifield, deputy director of housing at the Virginia Department of Housing and Community Development.
With another Virginia program, low- and moderate-income buyers can also receive up to 10 percent of the purchase price of a home to cover the down payment, 20 percent in higher-cost areas. But the program is feeling a budget crunch, and there are some limitations.
Statewide, the amount of money available for the down payment assistance program fell from $3.2 million last year to $2.3 million this year. The Fredericksburg-based Central Virginia Housing Coalition, which has witnessed an increase in demand, is limiting home buyers to a 10 percent grant. "We could run out of money, but we're trying to avoid that," said MaryAnne Bryant, deputy director of the nonprofit group.
Is a 70,000 downpayment for a 33,000 person really a good idea? I mean, that should be their total house price not their downpayment...
Could the comparitive lack of free 10% purchase grants in MD be contributing to the disparities this spring and summer in the housing markets in VA versus Montgomery County?
Does anyone really think giving people 10-20% downpayments for free is a good idea? I mean, if it's reserved for policemen, firefighters, teachers and other under-paid but highly valuable community members maybe, but for the general low-middle income public?? Seems pretty distortionary to me. Matching plans for savings, maybe okay, similar to matching retirement savings, but some of this seems to be going way too far towards supporting/(creating an environment favorable for the growth of) the unaffordable house prices in the area.
Downpayment assistance is stupid. Downpayments are done for 2 reasons:
(1) Since the loan isn't for the whole amount, this provides some insurance for the lender if the place is liquidated for less than the price it was bought for. Downpayment assistance does fulfill this need (but see below).
(2) The ability to make a downpayment is a measure of the financial character of the individual taking out the loan. FICO may be appropriate for small purchases, like credit cards, but 20% downpayments tell the lender that the potential borrower is financially secure/responsible enough to take out something as large as a mortgage. Downpayment assistance short-circuits this.
Also, downpayment assistance distorts the market, causing prices to increase. If the distortion is ever removed from the system, prices will fall farther from the distorted level to the new equilibrium, partially negating the insurance benefit of a downpayment (point #1).
novawatcher
yup. my feeling exactly. Here's hoping that "we could run out of money" happens soon. Then prices can come down making that 3% downpayment people have saved up and magically turning it into a 6% downpayment on the same house, and by the time they reach the 8-10% requirement through more savings that downpayment will go even further.
The problem comes between the disconnect of "free money for me" is good!! and not connecting the fact that it's free money for everyone and hence it's not good for anyone (except the REIC in the short term).
Quick question for all you experts out there!
I've used the Fairfax Co assesment link that Harriet has listed on the side. (to get owners info)
How can I find out if a Seller has any second Mortgages or Helocs, Alt-A's etc.
I'm eyeing a house in Fairfax that they want 3X's the original price they paid in '96
Thanks for all info :)
spunky: I don't know of anyway to check that, at least online.
Busted condo development du jour - the Monarch in Alexandria.
http://www.monarchapt.com/
I didn't notice when these went from condo to apartment. The upside is that they are legitimately close to the Braddock metro. The downside is that the building borders Route 1 - so not much in the way of Old Town charm in that area.
If you go into "availability" - you can see what they're asking for certain floorplans and sizes.
Spunky:
You can go down to the Fairfax Judicial Center, 4110 Chain Bridge Road, Fairfax, VA 22030, third-floor (Land Records Department) and review any recorded documents on a particular property. There are computer terminals available where you can access copies of these documents by property address. All mortgages/deeds of trust should be recorded.
You can access the same information online, but you must, unfortunately, subscribe to that service which I believe costs $50.00 per month.
If you go to the Judicial Center, there are written instructions on using the system, and one of the clerks will help you get started.
spunky,
I don't know if you can get that info online. I can tell you that for PWC, you can access all that information at the county courthouse in Manassas. Perhaps Fairfax County has a similar office? I think it is called "Land Assessor" or "Property Assessor" down here.
Razzi's article this weekend perfectly captures a few properties that have been for sale in Manassas for-e-ver, and one that just went on the market this summer, and is giving me fits. I've mentioned it before because it is in the neighborhood in which we live, and the seller/agent, who inherited the house, first told us that he was going to put it on the market at $499K:
9506 PARK St
MANASSAS, VA 20110
MN6797701
Listing Price History
Date Price
Jun 23, 2008 $449,990
Jul 10, 2008 $444,500
Jul 12, 2008 $439,900
Jul 22, 2008 $429,900
Aug 01, 2008 $424,900
Aug 08, 2008 $419,900
Aug 21, 2008 $414,900
Is this guy crazy or what?
I give him credit for the special-angle pictures he took, because it is a small house (2200sqft) and he makes it look snazzy...though my husband and I die laughing when we picture people hiking over here to look at it and they realize the "master bathroom" isn't even big enough for two people to stand in at the same time. It only has a carport, an old unfinished basement (where one of the bathrooms is located, next to the furnace), a tiny sloping backyard, and is right at the entrance of the development. It is surrounded by split-levels.
But when he was about to put it on the market, he told us that he "felt bad for the neighbors," who were going to be so upset that he put it on the market for such a ridiculously low price.
Since places that are actually selling in Manassas are going for about $100/sqft, I think he has a few more "nibbles" to go before getting in the range of ridiculously low...and since the other houses for sale in the neighborhood have all been on the market for one, two, and three YEARS, he may have a steep learning curve.
What are people thinking?
Thanks everyone for the info-
I just want to see if these Sellers are too far "in hock" with loans to take my lowball I may throw at them.
(ie. how much do they owe on this bad boy or are they just not gonna "give it away"!)
I can't image they are - the house is in original shape - they didn't finish the basement & not even 1 wall is painted.....
We'll have to spend 100K in it just to make it not look like the striped Builders shell of a house!
And it's 13 years old
spunky,
thanks for asking the question since i'll be using the answer myself later this year I hope.
But 3x the price? They'd need to average almost 6% appreciation every year to "merely" double in 12 years. WTF? People around here and their "prices here go up 7-8% every year!" mantra. Grrrr. The 20% YOY was bubble, but I'm sorry to break it to you, but 7-8% YOY every year is unsustainable kool-aid too.
(3x in 12 years would be 9.6%/year)
Cara-
I actually spoke wrong-
when they originally listed it ( 400 days ago!) they wanted 3X the cost
they are now a little over double what they paid
but hey-
isn't RE supposed to double every 10 years????
NOT!
Yep, you do what this guy did :
LINK
Date Price
May 08, 2008 $964,000
May 27, 2008 $899,000
Aug 13, 2008 $750,000
I've actually been in this place...am even considering it (at a lower offer, of course).
Alexa (all)
Is an 1890's original that needs lots of work to get it into "livable" condition as a single apartment rather than 1 with a downstairs rental, really worth the same as a 1998 or 2005 fake old Town TH that's already in modern living shape?
Which one is worth more? If the 1890s one were already renovated (in the cleaned up sense but not the drastic renovation sense) it would be worth more, right? but by what percentage, and how many buyers would settle for the recent vintage TH? I mean it's a nice idea to buy a true victorian house, but how much will those renovations cost you?
Alexa,
I like it. That's the way to cut the price until it sells, and it will work. The 07 tax assessment is $912,870.
Cara,
Good Question.
400 PENDLETON ST
ALEXANDRIA VA 22314
List Price: $794,500
Original Price: $899,900
07 Tax Asmnt: $940,908
Bed/Ba/Ba½: 4/3/1
There appears to be a lot for sale in 22314.
spunky said...
How can I find out if a Seller has any second Mortgages or Helocs, Alt-A's etc.
I know, it's not VA, but for informational purposes for those that might be looking in MD:
Mdlandrec.net
Password required, but it’s free…
Harriet,
Concerns about crime near Chatham Square and other issues (schools) have been discussed at:
http://parkergray.blogspot.com/
That may be a factor affecting the price of the newer townhouse you linked.
is that TH owned by James Carville?
Ace - that property linked by Harriet isn't in or near Parker Gray - although it is near the remaining 1/3 of the old "Berg" public housing (of which Chatham Square was built).
The only "problem" with this listing is that it originally was purchased for $840k, newly built, in May 2005 - probably at or approaching the high water mark in Alexandria and much of the DC area.
The one linked by Alexa is closer to Parker Gray.
MM - Carville's place is in the old Ford Factory development down at the very southestern part of Old Town on the water.
All the properties in Old Town that were new and $1 million or more always cracked me up. I grew up in old town and being on the water there? Not a benefit. The river stinks depending on which way the wind blows/rainfall levels and it floods constantly.
Honestly, I felt bad for all the out of towners buying those luxury townhouses on the river's edge.
I've been in OT for 3 years now, so I know where all the good sections are. Pendleton? Don't think so. :) Anything NEW and near the water is a waste of money. I think tops is anything on prince st east of route 1. Duke st is nice too.
Call me snooty, but I wouldn't waste money buying a place in OT that was newer than 1920. I'm looking for a home with history and style, not the boring new shit.
That place I listed is quite large, BTW and in a good part of town.
OT modern BORING :
LINK
OT historic INTERESTING :
LINK
In the end, I can't afford what I want in OT, so I'll wait for the next home. :)
Alexa - I didn't mean to diss that location or house on Columbus - I just meant to point out that it was technically closer to the Parker Gray boundaries than the Pendleton property that ace was trying to connect to Parker Gray.
As an owner of a OT townhouse built circa 1824 - let me tell you, they are a labor of love, and there are days you will wish you were in the newer vintages.
I don't hate on the newer-built stuff in Old Town, since they don't displace old stuff (since you can't tear down - or even do much to the exteriors of - historic properties. However, I do feel sorry for people who pay seven figures and don't get a yard at at all (just a porch over their two-car garage in the rear).
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