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Friday, March 13, 2009
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79 comments:
proposed Mortgage Modification Bill
"... bankruptcy judges could reduce the principal on a homeowner's mortgage as well as cut the interest rate and extend the terms -- provisions known as cramdowns. "
If mortgage lenders know mortgage contracts can be broken by bankruptcy judges, they will have to take that risk into account when writing mortgages. That will mean higher interest rates or larger required down payments or a combination of both. These added costs would fall disproportionately on lower-middle-income and first-time homebuyers who have no existing home whose equity might be used — when and if conditions return to "normal" — as a down payment.
Reducing the principal on mortgages through judicial intervention would also further undermine the value of mortgage-backed securities. The decline in these values was one of the contributing factors to the current financial crisis. Degrading that market further would hardly contribute to recovery.
http://tinyurl.com/bjh4bk
So, we've been talking about how banks would like to unload their foreclosures one by one?
Dude, check this out:
Frankly mls Kelsey Point
~1 week ago one bank listed a non-garage REO at $329k, went to contingency/contract in under a week (because it's a great neighborhood and 75k under any previous price and I'm sure there are others out there watching it like hawks). Today? One of the garage ones (with an inferior interior location) just went up for $350k. This will be gone in a week too, I can't imagine otherwise. The question is, how many more are there??? Could be zero, could be ten, I guess this is what one has a real estate agent for... Oh wait, I can get this from FFX county too, there's one more at 6564. 3 different banks.
You wouldn't be implying collusion, would you? That's illegal in the U.S. -- I hope the banks know that.
Who is John Galt?
novawatcher,
nah, other than the fact that the first one has been owned since August! there's nothing really fishy here. I think it's more that when one sold within 1 week, the other bank felt the time must be ripe. And the 3rd bank may either not be ready yet, or keeps seeing the other two pull the trigger faster and is waiting.
In other words, I think that if there are very few REOs in a nieghborhood one can see self-organizing, self-interest-preserving naturally arising collusion. Which isn't actionable. (to my knowledge)
But whoever bids on 6562 should mention the neighbor's foreclosure as a justification for their bid, but given the location I would expect multiple bids and the winner will be either whoever is least informed or most deep-pocketed.
If any of them need serious work after sitting empty, they're not a bargain.
There is no collusion if they use the same broker or company.
I don't want to talk about principal reductions because my blood pressure cannot handle it. But are there signs that the banks are starting to release their assets onto the MLS at a faster pace?
kevin,
If "none" in the past few months to "a handful" in the past few weeks constitutes picking up the pace, then yes, in the general Kingstowne area at least.
(I think they're waiting for the daffodils, because crocuses are already out)
Zerodown/Tabitha - regarding yesterdays monthly foreclosure report, it was very strange.
Foreclosures in each of the NOVA counties were the by far the lowest they have been since I started tracking them.
Also, Im not so sure it was the short month or mitigation efforts that made them so low. The reason being, for the state of Virginia (as a whole), foreclosure rates were up YOY.
Other than some strange head fake, the only thing I can think of is the locus of foreclosures has changed from the NOVA bubble implosion to the broader based recession (affecting the whole state which til recently had few foreclosures).
I am firmly in the 1 month does not make a trend camp. So its not worth much in and of itself. However, I will certainly be watching next months report with much more interest than normal.
My heart is set on 22030. I want one of those townhouses near Wegmans with the two-car garages. Prices there are stubborn. Looking on realtytrac, there are several that are owned by banks, but they've just been sitting on most of them. I've been waiting years to be able to afford one of them.
For the record, foreclosure rates by county (foreclosure filings per number of homeowners). Again, the higher the number, the better the area is doing:
Arl - 1 in 1658
Alex - 1 in 1232
Ffx - 1 in 478
Lou - 1 in 317
PWC - 1 in 211
kevin
We're going to get a Wegman's in Kingstowne in 2013 (progress is being made on the permits thereto) buy now here, before it gets reflected in the prices.
:)
But seriously, they should start listing soon, and you could always consider inquiring with the banks directly.
@CRT
foreclosures are down for a number of reasons, not the least of which is that lenders and investors were holding off, waiting on the Obama plan. FNM, FRE, BAC, Chase and others wanted to see what the plan would contain.
CRT:
Perhaps the jurisdictions closer to DC have a higher percentage of note holders participating in the moratoria than jurisdictions in other areas of Virginia.
John - im certain thats true, but my point was foreclosures are down in Nova whereas the are up in VA. To my knowledge, this is the first time this has happened. I dont think you suggesting that "lenders and investors were holding off, waiting on the Obama plan" primarily in the NOVA area.
Zerodown - thats a possibility. My own limited knowledge with foreclosures are that many foreclosures are due to borrowers who stick their heads in the sand, dont even read the notices & just wait for the trustees to come. These types really cant be helped.
It could be NOVA has worked through the hordes of "helpless" and now the remaining noteholders are more willing to negotiate.
Either way, its interesting. Til now, every report I have seen NOVA went very much in line with VA - to my knowledge this is the first time NOVA has bucked the VA trend.
crt--
thanks for the numbers. i am puzzled, too. i see that moratoriums may have had a profound impact, but as you said, crt, it is the distribution that puzzles me. manassas improved the most ever, but gainesville and bristow are worse than ever. wierd.
i am actually about to descend on the pwc assessments office in person, all seven kids in tow, because they were not online as promised, again. i called, and now they are saying monday, but i am just going to go and demand to see the hard records. they don't know what's about to hit them.
Not to be a self-serving doom-and-gloomer but:
CR: FICO president says worst is yet to come for mortgages
"Before we do the credit cards, we are actually not done with the mortgage [crisis] - the worst of that is yet to come in fact. The thing about mortgages is you can predict when they are going to reset and you can sort of see what is coming. We easily have another 12 to 18 months of pretty ugly times in terms of mortgage resetting. ... Credit cards are next."
FICO (formerly Fair Isaac) CEO and Michael Porter, CNBC
I know, NoVa had lower concentrations of these low-doc loans, but still there's so many buyers in 2007 and 2008 who paid way too much for their homes who are a year or more away from truly feeling the pinch...
best of luck Tabitha!!
Hi all,
Here's an interesting one for you.
An analysis of the current economic crisis we are all unfortunately facing but looked at from a slightly different perspective.
This analysis looks at past banking crises and how they have effected various aspects of the economy.
It is titled The Banking Crisis - Where are we now? (follow the link should you be interested) and has particularly interesting points about how the previous banking crises has effected assets including property prices.
you guys remember this Treasury owned TH on Lee Hwy in Arlington with an amazing story that Ace dug out? Well, auction is today at 12!
Put your bids in right here on this virtual auction, and I'll reveal the 'real-world' winning bid later this afternoon.
Good luck bidders! (Wish me luck too)
I'm buying in PWC. Let me tell you, the houses I've seen that are cheap are garbage. The houses that are in good shape are having a lot of activity. I've actually been outbid...I thought it was a "buyer's market". Lets face it, when a single income can buy a SFH, you're going to see more interest. People from the inner counties are looking at PWC and people that were not in the market at all can now afford a home. This is driving up interest in PWC and I have a feeling that we are bottoming in the county.
A lot of the theories I see seem to be about continued foreclosure but when you understand that people that could previously not afford to buy a home are moving into the market, you will understand why prices are starting to stabilize in the county.
When you look at the closer in suburbs, the prices there will obviously be higher as it's a more desirable location but prices will continue to fall as people look at the outer suburbs for bargains. I mean, PWC is only a little more expensive than buying way out in Winchester, Hagerstown, or Martinsburg at this point.
Jeff,
You're right, in a sense. There are sufficient numbers of new buyers, or at least potential buyers, who were priced out before, who are not now.
Unfortunately, that doesn't inherently imply a bottom. It does generate a lot of activity (as you're seeing) and that's a good thing. On the whole the more active the market is, the more likely true price discovery is in there.
The bottom will come from having more buyers, but there's still not enough to overcome the overwhelming pressure of bank-sellers. Sure, the cheap ones are garbage, and the more expensive ones are engaged in bidding wars, but there's more still sitting on the books. That's why I'm looking very closely at this spring selling season. The inventory being lower is a good sign for a market bottom, but we're still early. If someone gets anxious the market could flood fast.
Xpovos, I admit that part of what I'm saying is because I am buying and am hoping for a bottom because that would mean that I was lucky enough to buy at the bottom. Obviously anyone would want to buy at the bottom but I'm pretty confident that even if we aren't there yet, prices won't likely continue these 20 - 40% year over year price declines. If prices fall between now and this time 2010, we'll probably see some kind of smallish price decline (no more than 10% maybe?).
Granted, a flood of foreclosures could hit the market as you mentioned and that would cause a huge dip in home prices but the number of homes hitting the market would have to be greater than the current pressure being placed on the market by the number of buyers looking to purchase right now. Basically, the homes in good shape would have to stop having multiple offers made on them for prices to have another (rapid) decline. I'm not saying it's impossible but from what I've seen "on the ground", it seems unlikely. By the way, you should see some of those cheap houses in PWC. Horrible black mold, terrible damage to the house, etc.
"Tabitha Said...
manassas improved the most ever, but gainesville and bristow are worse than ever. wierd."
Tabitha - how are you getting local (smaller than county level) data. Did you subscribe to realtytrac?
Jeff, if you are already buying or about to, I wouldn't worry about the bottom. I think too much focus is made on that and the fact is, if you do believe prices "may" decline but no more than 10% next year, now is a great time to lock something up with the rates that are available.
And you are right about foreclosures. I admit, there are nice looking foreclosures out there, but I continue to believe that (in general): You get what you pay for. Those foreclosures that are dirt cheap are priced that way for a reason. Either they are located in a bad neighborhood, a bad school district, they have "hidden" problems that you cannot see (I witnessed a terrible black mold coverup job by a bank with my own 2 eyes), or they have significant problems that are visible.
The amount of time and effort spent looking for the "deal of the century" evaporates when you realize how much you could make if you did something to get paid with the time you are investing.
Sure, maybe 1 in 20 foreclosures is actually a "steal" and does not have any problems and is in a great neighborhood with great schools. But in order to find that out, you have to go check out each house in person, in great detail, and perhaps have a home inspection (your own dollar) to uncover any problems.
I just want to drop this out there again: if you are buying a house that has a sump pump and has been vacant during the fall or winter months, you may want to get someone in there to test for mold. As I found out myself, these banks will do whatever it takes to get these homes off their books, which includes terrible "coverup" jobs of serious health problems. I pity anyone who gets sucked in to something like that...
I'm not saying buying a foreclosure is terrible, I am saying you better do all your homework, have large amounts of patience and time, be prepared to go out of pocket for an inspection and possible mold testing, and then have cash on hand after downpayment/closing costs to fix anything that needs fixed.
Jeff said: "A lot of the theories I see seem to be about continued foreclosure but when you understand that people that could previously not afford to buy a home are moving into the market, you will understand why prices are starting to stabilize in the county."
So what you are saying is that price to income ratios are back in line with historical norms?
Jaime,
I'm sure not saying prices are back in line with price-to-income ratios, but I'm probably biased by my low income. There's certainly more affordability there then in a LONG time in PWC.
Jeff,
Absolutely, don't worry about the bottom as a purchase time. It'll work out OK because as was mentioned, you'll get better rates, and if you can afford it, it is a good time to buy for you. The one guy who buys at the bottom can crow about it for a few years, but for everyone else it is just a matter degrees.
Besides, it'll be good to have sensible neighbors.
Re: cram downs
From Mr. Mortgage --
But there are also other serious unintended consequences to this plan not many know about. Not every mortgage backed security deal is the same - language varies greatly. But most of them have language that say in the event of a bankruptcy the principal loss is taken from bottom up in the cap structure -- Not rated, BBB, BB, B, AA, AAA. The same with a foreclosure, jingle mail etc.
But with BK Cram-Downs where principal loss occurs, the loss can be spread across the cap structure evenly. The language that allows this is more prevalent in non-Agency deals such as Alt-A and Jumbo Prime.
As soon as a hit occurs across all tranches, the ratings agencies terminology will assign a ‘D’ rating to that Bond. When that happens, the capital requirements will go from 25% to as much as 100%.
Insurance companies, mutual bond funds, pension and hedgefunds are the largest owners of this stuff. Due to the downgrade, they would have to sell bond at massive loss and put pressure on market or raise capital.
Seems like, if banks (and anyone else) doesn't want to hold their properties until NEXT year, potentially, then they should get their properties into the sale inventory by April 1 or so. This would mean a very large jump in inventory very soon.
My rules of thumb:
In a hot market, buy in the middle of winter (which I did, in early 2002), for the desperate sellers. Sell in the middle of the buying season (which I did, in 2007, even though it meant I had to SCRAMBLE to get my place ready once I decided in mid-March to sell it.)
In a SLOW market, buy in the middle of the buying season, to take advantage of the inventory, and sell in the off-season, to avoid the price competition.
I'm going to be watching this spring market very carefully from the sidelines; if April to September is a bad enough inventory/price wise, but with enough throughput to clear the market somewhat, then MAYBE I will set myself up to buy again next winter or spring.
(The reason I sold in 2007 and might buy back in 2010, is not because I'm a flipper/trader/investor but is a "relationship story" I won't bore you with here. It just happened to work out well in the timing.)
And in more edge of the cliff news:
NY times China expresses worry about US treasuries
it could be nothing, it could be just a reminder that inflation is not a good outcome for our creditors, or it could be the start of something really bad.
crt--
i just clicked on the "trends" tab, and put in "prince william county, va" or "manassas, va," and then when you move the cursor over the different areas of the county, you get the local zip code numbers.
all--
big things happening with the house hunt...will tell you soon!
35% off peak in Great Falls, DOM 288, and yet still no buyer in sight:
http://franklymls.com/FX6972176
OK I guess no one here is really interested in the TH auction.
So here goes, the market has spoken....
The winning bid: $460K.
The back-up bid: $450K.
MM,
It's out of my range, but I was mildly curious. What's the % decline on that?
MM: Is that a good or a bad price? The Zestimate, for what it's worth, is $536k.
Here are the price history of the neighboring units.
2302 N Greenbrier:
2002: $400k
2007: $590k
2300 N Greenbrier
2002: $400k
2304 N Greenbrier
2005: $627k
So, I guess it's back to 2002-2003 prices?
"Jaime said...
So what you are saying is that price to income ratios are back in line with historical norms?"
In PWC thats not a bad conclusion:
FEB 2000
Median Home Price = 124,000
Median HH Income = 65,960
Ratio = 1.88
FEB 2009
Median Home Price = 169,500
Median HH Income = 85,838
Ratio = 1.98
Home prices are per MRIS (Feb 2000 & Feb 2009). Incomes are per Census (2000 & 2007). Given that the difference between the two ratios is a noisy 0.10, it certainly looks affordable on paper.
Now, as I noted before, theres affordable on paper and affordable in reality - and the two are not necessarily the same. Personally, I think this board is dominated by higher than median income types, and homes priced above median still likely have a ways to come down in PWC.
However, 100 years from now, if someone sorting through the data asked when did historical affordability return to PWC...If they decided the answer was Feb 2009. It would be hard to argue with that conclusion.
Xpovos, NoVAwatcher,
Last property sold in the community was a bank-owned. It went for $520,000 on 8/30/2007. That unit had a strange floor plan but otherwise comparable.
The sour grapes in me says the bidder got a 10% discount, and maybe close to 04 prices.
MM,
I'll counter the sour grapes with this vintage: an orderly descent is in the best interest for all. And for that we need knife catchers. This one gets a 10% discount. The next will get a 10% on the previous 10% until equilibrium is reached.
Without an orderly descent people would get trampled. I want affordable housing, not suicides.
If today were a normal day, I would be all abot PWC affordability/volatility and so on, but my own personal househunt took a wild turn the past 24 hours:
First, our landlord changed his mind and said he would accept our offer.
Second, I went to the PWC assessment office and arm-twisted out the 2009 assessed value for my 11-acre dream place, and it came in 22% lower than 2008. Our offer had been 15% lower than 2008.
So now I need to decide what to do, and fast.
I just went from homeless in 6 weeks to having one house in the bag and another on the table...unless Mr. Asking-Too-Much decides he will not sell to us under any circumstances, because he's so mad for not taking our earlier offer when we had the chance.
Any bargaining advice?
sorry about the many typos--baby gets in the way--
CRT: don't make the mistake of comparing median incomes to median home prices. Only a subset of households own, and owners tend to have higher incomes.
Nonetheless, those ratios look good! Because the median of community generally understates the median income of home owners, the true ratios are probably even better.
xpovos
Here, here!
The thing is that the decent part isn't happening as predictably as we would like.
For instance this Sunday I plan on going to an open house in Windsor Park.
http://franklymls.com/FX6951138
It's currently listed at $319k, which makes me baulk. But here's the thing, when you do a neighborhood comp search with the FFX Co. (just click on tax records from the frankly site and then hit neighborhood sales) what you see is that while some REO's have gone for near $200k and under, many have been at $250-290, the first "valid and verified sale" was at $290k and not that long ago. While I feel that the sheer number of REO's in this neighborhood in the past year probably means the HOA is in some dire straits and that these must start to impact real sales, that doesn't mean other buyers agree with me on that. Maybe others will pay $80-100k of borrowed money to have a move-in ready place compared to spending $30-50k of their own dollars. Maybe these sellers aren't crazy with their list price, as recently as November some buyers were paying $325k.
Just because I can't imagine these are worth more than $260k in mint condition, doesn't make it the going price.
novawatcher,
careful there. The ACS report, even as reported by the NAHB showed that first-time home buyers are actually dead-on with the median income. And since the vast majority of the housing stock is starter homes, the median home should easily fall within that.
Tabitha,
which one is Mr asking too much?
which home do you want?
Cara,
I think patience is the hardest thing here. For a couple of reasons. The first is that we all have an innate fear that we'll miss the bottom. I console myself with the fact that I won't be financially ready to buy until the bottom has passed me by, so clearly I'm going to miss the bottom. That helps the patience some.
But we're also impatient because this is such a slow process! And it has to be, because we're talking about huge sums of money here. Multi-hundred billion dollar bailouts have a tendency to cloud our mind about the value of $10,000.
So, you're probably right about the house value mint, but you're ahead of the curve. We need our classmates to catch up, and in the meantime we tap our feet and hum a tune... and keep each other company.
Unless we're all hideously wrong and this becomes a V-shaped decline, we should be OK missing the bottom anyway.
Tabitha-
Mr Asking Too Much is your divorced landlord guy, right? But you love the 11 acre dream house more?
MM-What's the backstory on that TH? Seized by the government...sounds very interesting!?
"Novawatcher said...
CRT: don't make the mistake of comparing median incomes to median home prices. Only a subset of households own, and owners tend to have higher incomes."
I agree Novawatcher. I only referenced it because I know so many like it, plus in an unconstrained - generally homogenous - nonrenter dominated place like PWC its not bad.
It only gets absurd when you use it in constrained - heterogenous - renter dominated areas like Adams Morgan which was at 7X income in 2000 - which is amazing given the population was still declining then. I cant imagine what it is now...
Actually in PWC a better comparison would be median "Family Income" since that is who the PWC housing stock generally appeals to.
By this metric, PWC median homes were 1.73X in 2000, and 1.82X in 2009.
cara--
Home #1 4BR/2.5BA close to Old Town Manassas, walking distance to church/friends, renting right now, landlord accepted our offer from December, which was for full December appraised value, which is now too high, most likely
Home #2 4BR/4BA off PWPkwy, closer to Manassas Park VRE stop, 11 acres, couple divorcing, wife accepted our offer, husband did not, got bogus appraisal, said he would just put house on market, but waited for assessments, assessment came in $40,000 below our offer, will be lower again next year (I talked to the assessor directly), now what do we do?
Tabitha,
11 acres! Sweet. If Mr. Asking Too Much accepts your offer now that the appraisal is in, I think, from what I know of your situation, it would be wise to keep it in place and seal the deal. It sounded like a great fit before, and with the land, you've got a lot of buffer zone. Obviously, if he sets his heart to stone on the matter for whatever reason, it's nice to have the fallback of continuing to rent where you are, even if you're overpaying the market some. Moving expenses: bleagh.
What are your thoughts on a stubborn market... ie ..
everyone smelled blood in the water in pwc. Seemes everyone i talked to looking in PWC wants a single family home. Hence the bidding wars. When inventory dries up then what?
Does everyone go back to townhome shopping... or does the market sit back and wait for the next round of price cuts?
townhouses dropping in springfield is a good thing...i would hope banks aren't colluding. But then again this is America were collusion reigns supreme.
Seriously guys n gals.. what are your personal buying prefs. and what do you think the market wants.
SFH in burbs or townhomes in the beltway?
Do you think things will/could go back to the way they were anytime soon? Considering median incomes and tight financing...
xpovos--
A couple complicating factors:
Landlord wants us to either buy or vacate the house we are renting by April 30. So we cannot stay here as renters.
We are not sure how hard to push 11-acre man. His appraisal came in $170K higher than the tax assessment, and I detailed why his appraisal was baloney here on the blog in the past, and I think he knows it was wrong, but I am sure he was stung by the news today. He likes to be right. I am sure he is not happy about his wife being right this time.
If we get the 11-acre house, I want to die an old lady in a rocker on the front porch and be buried in my own backyard. sigh
OH.. and at what point do you back away from the table and say I don't want to play this game anymore.
Considering mortgage modifications are on the table now...
Happy safe weekend to you all...
Tabitha - for starters, what about financing? Will both places appraise close enough to the offered price such that the bank will approve the loan? If so, fair enough, just be sure.
Also, was your offer on house #1 still outstanding when he accepted, or had you officially revoked it, and only now is he accepting it? If so, be careful because you may already have some sort of obligation - ask your husband about "offer and acceptance" if unsure.
Finally, If you do not have an offer outstanding with #1, and if you want house #2 more. I would go back to them, assessmet in hand, and make them a "no bullshit" offer - good for a limited period of time.
The reason I say this is because I am still skeptical of #2. I hear so many horror stories of "sales" by divorcing couples where One party just uses a buyers offer as leverage against the other in some other part of the divorce proceedings. My gut tells me they could be years away from selling. Thus, if you offer it to them (him) in a nice (but firm) take it or leave it attitude, you can determine if he is truly serious.
Also, let him know you have a "pending" accepted offer going from your current landlord - but before you tell your landlord "yes" you wanted to give the husband one last shot...
Tabitha,
i'm just curious, is one house much bigger and much more expensive than the other? i don't know if it's easier or harder to choose if they're so different???
Tabitha,
Ah, I didn't realize (missed it somehow?) that the landlord's offer was to buy or vacate (not continue to rent). That's unfortunate, and I can definitely see it making the choice harder. No further advice, but good luck!
tbw,
I'm looking at SFH's because of wife's desire for some land and space. If it were just me, I'd be looking at THs or even condos on metro lines. I think there's something to it that the bids in PWC are going for the SFHs because that's what people want there. Typically it's a family that wants that.
Meshell,
Ace found this when the property was first posted here.
From the article:
"Consuelo Solano will also forfeit $2.1 million cash seized in a search of her home in July 2007. Rosenstein said it was one of the largest seizures his office has ever conducted."
And Jeff B thought there could be a hidden $100K seller subsidy in one of the walls. We all had a good laugh.
(darn it I should've added that $100K in my bid and I could've won!!!)
crt--
excellent points, as always.
we have no standing offer with our landlord. he rejected our offer last December. and when we were emailing back and forth, my husband always began with a legal disclaimer that nothing in our conversations could be considered binding in any way. all our discussion has been "in principle," and as it stands, we said we would hire a settlement attorney to write a formal offer, based on what he said he would accept.
an offer on either house would have a financing contingency. we are concerned the house we are renting will appraise for below our agreed-upon price, but the 11-acre house's appraisal will not be a problem:
house #1
tax assessed value: ? (not out yet)
December appraised value: $268K
current appraised value: ? (most recent sales in neighborhood for similar homes were in low $200Ks, but were REOs)
house #2
tax assessed value: $513,300
our appraised value in January: $587K
his appraised value in January: $670K
current appraised value: ?
and crt, you described my exact concern: that we are a weapon being used both ways by the couple, and these "negotiations" are not real. we would need a legally binding, ratified contract before I would breathe.
mm--
I know it's wierd to have two such different situations and different price levels, but it is like this: we are happy in the smaller, in-town home, and would be thrilled with little mortgage payments and the ability to do everything on our own. But the 11-acre home could be a place for our kids and grandkids, a place we'd never leave, and we have family willing to help with the downpayment to make it affordable. Not as affordable as the smaller house, but definitely doable. So it's like we have a choice between two different lifestyles, and find lots to love in either one.
That's assuming 11-acre man is even willing to play ball anymore. He may not be. But he's been living elsewhere for more than a year, and until he sells to someone, he's not getting any benefit from that asset. He needs to sell.
That is so awesome! A really good journalist would have gotten a photo of what 2.1 million in cash looks like...it must have been stuffed in every crevice of that TH! In the freezer, congressional-style, even.
I wonder if they also owned the El Pollo Rico at VA Square? We used to go there all the time when it was in its old location in Clarendon. They only accepted cash, there. Hmm, wonder why?
the_Nothing said: "Seriously guys n gals.. what are your personal buying prefs. and what do you think the market wants.
SFH in burbs or townhomes in the beltway?"
Depends on what you mean by burbs, but for me the choice is clear. The closer to my place of work the better. It hasn't been so long from $5 gas that I would make the mistake of locking into a house/commute that eats away at my paycheck. I'm not moving out further to have the house of my dreams if it means losing my quality of life due to increasing variable costs and time on the road.
Tabitha-
FWIW, I like the second house better ;). Then again, I have this irrational idea that homeschooling 7 children requires some room to spread out and observe nature (been reading too much Mothering magazine, I suppose!). But its hard to find 11 acres near the VRE, and I imagine the rental house's lot is what, 1/4 acre?
Kind of a dick move of your current landlord---"buy the house at my price or get out", when moving with small children multiple times is such a hassle. It really, really makes me not want him to get any of your money.
I'm sure you will get much more coherent and logical analyses from the more intelligent posters here :).
TABITHA!
Let Mr. Divorce know you can buy where you are at (in a way, Round -Robin both of them )
Who's gonna give your family the best deal? Make THEM bid you for the best deal - play them off each other.
Make them "show you the Money!"
On another note - peeked in the windows of a custom built foreclosure (beautiful !!)this afternoon only to see water dripping/streaming onto the kitchen island below.
Yee gad - broken pipe - called the Agent to tell them.
hey! Maybe I can pick it up for a deal now - heck I know a Plumber :)
spunky--
I was wondering how to frame the information that we could buy where we are.
Our landlord swears he cannot go any lower, and will just rent to someone else if we do not stick with our price from December. I think he owns the house free and clear, but he may have other money issues, so I need to take his word for it.
And Mr. Divorce does not sound like the voice of reason. We will think long and hard about what our "no BS, straight up" offer will be, and I will back it up with the assessment (which is about the same as the 2004 assessed value, BTW) and the high inventory for higher price brackets, but I think he will do what he wants despite any info we can give him. It's tricky. He will probably blow up when we lower our offer closer to the assessed value.
We should do so, right?
Tabitha-
First off, I would have a RE Lawyer write up your offer (and be involved) to Mr. D, just so he can't back out of the deal/screw around with you and never sell you the house (and slap him with some stiff $$ loss if he screws the deal..)
(I think it was CRT that said he may use the sell as leverage against his ex wife)
I would offer Mr. D a contract first (and let him/his Agent know you have other homes as back-up)
I would only give them 24 hours max to respond to your offers (the old put-up-or-shut-up)
You will know it about 1 weeks time if this deal will go or not, if you keep the 24 hour rule going thru the negociations (sp!).
If the Divorce house doesn't gel, you have the house you are in as back up.
You can then begin negociations (sp!) again with your Landlord.
I would keep the Landlord deal in my "back pocket", he should be an easier "deal", especially since you like the "D" house better
These are my thoughts - others here may know better
Tabitha:
You may want to go back to the courthouse for a little more research.
It might be useful to know if Mr. Divorce is under any type of time pressure. His divorce case is probably at the Prince William County Circuit Court. You can search by name on the computer at the Circuit Court. If a trial date has been set, you will know his time frame as the couple will either reach a settlement by that date, or the judge will decide the case on that date, or shortly thereafter.
Unless the case is sealed (very unlikely) you can pull the court’s file and read the pleadings, etc. as the file is public record.
Usually, the couple must be separated for a year before they can get divorced. You can learn their date of separation and the grounds for divorce from the pleadings.
If the couple has reached a settlement, the agreement may already be in the file; the agreement will set forth how the couple intends to deal with the sale of the house.
Now, it is possible that Mr. Divorce will buy out his wife’s interest in the house and it will be his to sell, but, from what you have stated, that doesn’t sound too likely.
Good luck.
tabitha,
if i'm putting all of the pieces of the puzzle together correctly, it sounds like you offered about $550k on house #2, which was just assessed at $513k by the county(about $40k less).
if this is really your dream house and you would have happily purchased it for $550k just a couple of months ago knowing assessed values were sure to fall, then I wouldn't get too caught up on the tax assessed value being 7% or so below your offer. maybe now that the soon-to-be-ex-husband/seller sees the lower assessed value he'll jump to accept your slightly higher than assessed-value offer.
one thing to consider is that if this truly is a house you'll die in one day, it's doubtful that the $40k difference between the assessment and your previous offer will look too significant to you a few decades from now.
unless house #1 is a materially better deal than house #2 (deal being defined as the ratio of purchase price to real underlying value), i'd go with the house you really love.
do so by doing just what you said: pay a settlement attorney to draft a contract. submit to the owners. explain in an unemotional way why you think the price is fair (i like using the word fair when negotiating with others, because we all want what is fair, right?), and give them a few days to respond before your offer expires.
while another poster suggested giving them 24 hours - something i would typically agree with - this situation is unique. first of all, there are two people who need to seperately consider the offer and possibly speak to each other about it. second, if you put a rushed deadline, the big-ego'd ex-husband may take offense to that since it sounds like he doesn't like to be in a non-control position.
one last suggestion - when you write your earnest money deposit check (which you will give to the settlement attorney and NOT to the sellers) and provide a COPY to the sellers, try to make it as substantial as possible. even though the sellers won't net any more, people are influenced when they see big checks. it helps prompt them into action. (note that you don't need to write a very large check if you go with house #1 because that seller has already said he'd agree to your price).
Tabitha,
I like the the above ideas about one last negotiating try with the house/land.
I would add . . . if it were me, I would certainly consider buying the house you're in with a plan to rent it out when you are able to finally negotiate your dream house. If it's going to be very comfortable payment-wise, you can really hammer away at the mortgage so that doing a 2nd deal is feasible.
The only other thing to consider would be "Plan C", which is to house-shop for something completely different. :-)
Housing bankruptcy bill stalls in US Senate
WASHINGTON, March 13 (Reuters) - Legislation meant to help distressed U.S. homeowners by allowing bankruptcy courts to adjust the terms of mortgages on primary residences has stalled in the Senate, said congressional aides on Friday.
Democrats backing the bill -- known as "cramdown" and opposed by most of the banking industry -- have been unable to line up the 60 votes needed to clear the way procedurally for it to move ahead, the aides said.
"We're stuck in a place where we don't have 60 votes to pass the House bill as is," said an aide to a senior Democrat.
http://tinyurl.com/bktro3
I simply cannot thank everyone enough for taking the time to share your wisdom with me. One thing I have always appreciated on this blog is the way everyone has such unique insights to share, from all angles.
zero, it did not occur to me the divorce details could be viewed. I will check that out. (For now, I know they have been separated for more than a year, because when they put the house for sale last year, they were already living apart.)
jf, you got the details right--and brilliant advice! But then, maybe that's because I love the house ;) My husband wants to walk through it before we decide whether to stick with our original offer or not. Only I have seen the inside--he's just seen pictures. But what you said resonated with me. And the detail about the earnest money--that actually was heavy on my mind, so thanks for that!
Timing is a little tight, though. Remember, our landlord is expecting to get a formal offer any moment now. He doesn't know about the other house. We can't keep him hanging for too long.
And since we need family assistance to handle the downpayment on the nicer house, we will need to get their input, too.
And all this musing assumes that Mr. D even wants to deal with us at all anymore. Maybe he is so irate about the situation, he'll just want to start over again. After all, spring has only just begun.
I will be sure to let you know where your advice leads. Blessings, everyone!
More Mortgages Eligible for Refinancing
By Kenneth R. Harney
Saturday, March 14, 2009; Page F01
Fannie Mae and Freddie Mac have published the rules governing their upcoming mass refinancing campaigns, and they're more favorable for borrowers than indicated at first by the White House and Treasury, especially for owners of second homes and small investment properties.
Although initial reports suggested that the refinancing would be for owner-occupied primary residences, the guidelines sent to lenders this month by Fannie and Freddie say second homes and small rental properties are eligible, provided that their mortgages already are in the companies' portfolios or securitizations and have been paid on time.
Brad German, a spokesman for Freddie Mac, said second homes and investment properties with one to four units are important because they may "help stabilize neighborhoods and housing markets." Refinancing investor-owned rental units, he added, can "help reduce renter evictions by putting landlords in a [more affordable] refi that improves their chance of success."
http://tinyurl.com/dbna7z
If we get the 11-acre house, I want to die an old lady in a rocker on the front porch and be buried in my own backyard. Sigh
That’s a tough one. I’ve always said that if you find your dream home (i.e. %100 your ideal home) buy it now. Make your best offer; you’ll be there for the rest of your life (and then some).
The other half of me says; “Tough cookies Mr. Asking too much. The assessment is lower hence my offer is lower. Take it, or continue to ride it down”
I know it's wierd to have two such different situations and different price levels, but it is like this: we are happy in the smaller, in-town home, and would be thrilled with little mortgage payments and the ability to do everything on our own. But the 11-acre home could be a place for our kids and grandkids, a place we'd never leave, and we have family willing to help with the downpayment to make it affordable. Not as affordable as the smaller house, but definitely doable. So it's like we have a choice between two different lifestyles, and find lots to love in either one.
And that’s sort of along the lines of the “substitution effect” that we’ve hit on in the past. There is a price point where you would substitute one lifestyle for another. The 11 acre compound will have a nice buffer and kids will have a place to romp and make some beautiful memories. Christmas around the tree, grandma living in a little cottage an acre over….the options and potential are almost limitless.
But be careful. Having family to help with the down payment…..is that a route you really want to go? Only you can honestly answer about how close you are with your family. I know, even in this day and age to some, “Family” actually means something and money is not even second on this list heck, maybe 6th or 7th on the list. If that’s the case sure, go for it. But if you have any doubts……..think it through.
while another poster suggested giving them 24 hours - something i would typically agree with - this situation is unique. first of all, there are two people who need to seperately consider the offer and possibly speak to each other about it. second, if you put a rushed deadline, the big-ego'd ex-husband may take offense to that since it sounds like he doesn't like to be in a non-control position.
I agree. You want the deadline to be short enough to show that you mean business. Long enough so that the current owners can hash things out, and you can get your finances in order. Maybe 6 days?? And absolutely, figure some way to let Mr. Askingtoomuch know that you have other prospects.
Either way, sounds like you might have the situation make up your mind for you. Not bad to let the path be shown to you if you truly love both homes, but that does not mean you should let the details slip through the cracks. Get a real estate attorney. And for goodness sakes, let your DH do a walkthrough.
tabitha,
everyone's given such fabulous advice!!! I think the negotiating part is mostly covered.
Here's the thing, your current landlord is intentionally trying to put you in between a rock and a hard place. Don't let him. Here's how, look into arrangements for movers that involve 1 month or more of storage. It's more expensive, but often not much more expensive than a non-storage move and the armed services is picking up that tab. Start organizing and boxing as much stuff as you can now to make it clear you are willing and able to walk now. (he's not going to believe your claim of moving to a house almost twice the price, and in fact that weakens your bargaining position). And then if push comes to shove you can stay in an extended stay america type place for the interim if need be with clothes only.
He's trying to put you over a barrel, don't let that change either the price you'd pay him or adversely affect the chances of getting the home you love.
That said, Harriet's suggestion seems like a really really good one. Having a different home that you love with tons of land will be a lot more pleasant if you also own a cash-flow positive rental.
cara--
thank you for your very good advice, as well. harriet had an excellent point, and i have already built that in: the Marine Corps would pay for our stuff to be in storage, as well as the move, and my brother in Ashburn said we could go live with him as long as need be to find a place we really, really love. so we won't be on the street...just inconvenienced.
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