Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Saturday, March 14, 2009
Subscribe to:
Post Comments (Atom)
Northern Virginia Real Estate Statistics
REAL ESTATE SEARCH
County Assessment Websites
Buy/Sell Without an Agent
Local Real Estate Agents
Housing Economics Blogs
Local Interest
Housing Bubble Links
Eastern Regional Blogs
Western Regional Blogs
- Bakersfield Bubble
- Bay Area Real Estate Blog
- BubbleInfo (N. San Diego)
- Burbed (San Francisco)
- Dr. Housing Bubble (SoCal)
- Patrick.net (San Francisco)
- Portland Housing Blog
- Professor Piggington's Econo-Almanac
- Rancid Truth (Orange County)
- Sacramento Land(ing)
- Seattle Bubble
- SoCal Real Estate Bubble Blog
- Socket Site (San Francisco)
Real Estate Blogs
REAL ESTATE AUCTIONS
54 comments:
HouseHeads "selling" to the FHA. FHA says, "hey, what are you pulling?"
"The decision comes at a time when defaults are rising in the FHA's flagship home-loan-insurance program, especially among borrowers who failed to make more than a single payment. The Washington Post reported Sunday that these instant defaults nearly tripled in the past year alone and more than quadrupled among refinanced loans. "
I don't get it. The bank still verifies income and everything. It seems like you would stop making payments on credit cards and stuff instead of the home loan that you just spend THOUSANDS on at closing just a few days before (we are talking about only making 1 (or no) payment right?!).
Interesting article. Wonder if the people had any intention of paying back the loan. It's pretty obvious the lenders didn't perform their due diligence. Again.
Anyone know if they have fraud investigators looking into this?
Jeff-- Cash out refinance means they got cash back at closing. This is their 'equity', but with prices tanking, why would they care? They need the cash, the bank gives them the loan, they walk. I'm just surprised anyone is still doing cash out refinancing. But then, I've been shaking my head over the craziness for the last 5 years... 10 if you count the stock market bubble.
By the way, looked at a few more properties in Gaithersburg-- a townhouse for under $100,000, an apt. in Old Town and a couple of really cheap ones (under $70,000) a ways from the center. The townhouse was in pretty bad shape, but other than that they looked to be in surprisingly good condition. Much better than I was expecting.
I'm going back to Europe in a few weeks, so I probably won't buy anything this time-- will wait for summer.
Jeff, Ralph, this is a friend-of-a-friend story but I have heard of someone who tried to sell last year, could not, and is doing a re-fi.
I'm not saying that they are planning to do this but if they borrow out enough to reduce their equity, it might tempt them to pull a jingle-mail.
if anyone needs an example of realtor hi-jinks to make themselves look good, here we have the classic, changing the list price when it goes under contract so that you can claim that the difference between list and contract was smaller (or zero)
http://franklymls.com/FX7000703
(contingency and price change notification on the same day, previous list price $349k, probable sold price $300k, not a terrrible deal depending on which type of Japonica TH it was)
Possibly this is also just how the bank rolls in terms of "accepting offers". Given that it's a short, they may be changing the price to reflect the current bid in hopes of getting 10k or more out of someone else.
Sneaky sneaky, but fair enough.
my apologies for continuing to do play-by-play, but got an email this morning saying "$570K and we have a deal." for context, here's a recap:
last january:
$850K listed price
$715,500 2007 assessed value
last may:
$750K listed price
$647,000 2008 assessed value
this january:
$550K our offer
don't know 2009 assessed value yet
$587K our appraisal
$670K his appraisal
*our appraiser used "comps" that were still for sale, his appraiser used properties with similar acreage, but with houses two and three times as big from "luxury estate" developments that sold for a million dollars a couple years ago. i lost all faith in appraisals.
right now:
our offer: ?
2009 assessed value: $513,300
this morning:
"$570K seals the deal"
oh, and pwc 2009 assessments are FINALLY online. maybe i scared the daylights out of their office yesterday.
i have just started checking various houses, and they seem to be aligned with 2004 assessed values, or 2003-range prices, a 20+% drop from last year, but not the 32% drop quoted in the paper. i read recently in the paper they are projecting an additional 15% drop for the 2010 assessments.
confused? 570 seals the deal was from you or from Mr. D?
sorry, cara: from Mr. D!
Tabitha
Can't help but make this comment, which is my 1st ever post.
I'd stick with $550K. 570K is too much for a house assessed at $515k at this down market, unless you're absolutely crazy about the property. You'd throw yourself into the Potomac if someone else takes it at 570k or higher.
adrian, I am honored to be the subject of your first post ;)
important detail in case you don't know the background: this house is not on the market right now.
Tabitha
Not on the market yet? So what are you worrying about? You may well be the only person in the world who's shown consistent interest in this property. I'd wait, and stick with the 550 number. One thing is clear to us that no one has made $570k or better offer yet. The seller(s), per the listing histroy, started getting more realistic. They're asking for >20% above the assessed value last January. Now they've lowered it to just over 10% above the assessed value. They're more desperate than you are. Just hold on for a few days.
Tabitha, I find your saga really engrossing for some reason.
Adrian, I don't know if you read about it on the previous thread, but it's a little complicated because she's under a time crunch ... needs to either vacate or purchase the house she's currently renting by April 30. I would still say that in this market she's in a stronger position than the seller but she probably has a stronger interest in a quick deal.
Tabitha, given that each of the 2 houses you're currently considering have complicating factors, to me I would think "option c" -- buying something other than either of those -- would be the best way to go. I'm sure you've been looking around -- has it been really hard to find other places you've liked as much?
Tabitha--
If it's within your budget and you can close the gap between probable loan size and price, your husband's work is very secure (he IS out of the service now, isn't he?) and you love it as much as you seem to, I'd say go for it!
If you're really going to be there the rest of your life and leave it to your great-grandchildren to enjoy, the additional money will probably seem pretty negligible in a few decades. And with that much land, & seven kids you should be able to cut w-a-a-y back on food prices! ;-)
Tabitha,
Look at what's currently for sale and what's under contract.
We were discussing this place with no basement which is only on 5 acres, and it's under contract in 14 days.
I would be sorely tempted to take the 570K offer. If you were happy with 550K, you have 8K now from Uncle Sam to play with that you didn't have three months ago, and interest rates are still fine. (Much better than last fall, in fact). If you can close before April 15th, you can claim it right away.
Best thing to do is to show it to your husband, though, and see what he thinks. I'm glad the D guy is at least willing to talk.
Tabitha,
It sounds to be that the place assessed at $513K is your ideal place and now you are just trying to figure out a price. It also sounds like the place you currently live in would be a shorter term place and would be somewhat of a disappointment at this point.
If Mr. D has now come around and is saying $570K, it sounds like he has some concern about his house price falling further. Are you still willing to pay $550K? If so, I would make an offer of $550K (your prior offer) and say something along the lines that you appreciate them coming down in price, but that the new assessments have you very concerned about the future value of the home and that you are seeing a lot more available options. Further, based on the lower assessments, you would lower your original offer, but since you thought it was worth that much before the assessments, you're willing to pay that amount.
My bet is that he comes down to at least $560K. (I doubt he comes down to $550K because he sounds like he likes a negotiation) First, if this is a settlement with his wife, the $20K difference turns into $10K anyway since they are splitting it. Second, by not listing it don't they save themselves 3% realtor's fees? Lastly, if they are still in the midst of a divorce, negotiations and discussions over the house might cost them a few thousand or more in lawyers fees anyway.
One other thing I would consider is whether there are other items that can help close this deal. For instance, since it so much acreage does he have a tractor or riding mower that you can ask to have thrown in? Is there anything else of substantial value at the house that you could negotiate?
Keep at it Tabitha. It sounds like your diligence and patience is going to pay off for you and your family.
I'm new here -- just discovered this blog and have been learning a lot from it.
Got an urgent question -- could you guys tell me what you think of this deal?
http://franklymls.com/FX6979445
for $350K.
We have to make a final decision in just a few hours and are conflicted on whether to go for it or wait things out a little more.
i would actually lower my offer if i knew that assessment came so low.
the person you are negotiating with is constantly out of sync with the market (i do not have any bad feelings at him, his modus operandi is pretty standard). very likely that you'll get a better deal two weeks later.
if you really want the place, give him a counter of 530k and then agree to 550k later.
By the way, to add to what I posted a little while ago:
We got a contract accepted at that price and today is the deadline to get out of the contract. We were originally highly motivated to move, but the time-sensitive reason for moving right now has disappeared since we made the offer. However, we still need to move within the next few years for space reasons. We have a townhouse that we will rent out until prices rise, and then we'll sell it.
So any thoughts on the deal a post or two back would be much appreciated. Hubby is thinking that now that we don't have the immediate need to move, we might find a better deal (or a better house for same price) in a few months, but I'm not so sure.
It is not a bad house, it is kind of small, ~1700above ground (Bigger than your TH?). The one car will hurt resale, although it is oversized, which is good. The lot is small, but on the positive is does have 3 full baths and the construction quality is “Good”.
-King
Keep the advice coming, please! Such great minds at work will surely prevail in the end ;)
I am tinkering with the data I've accumulated, getting it ready for our last stand, and wanted to share this interesting tidbit:
PWC February MOI
2.56 <$100K
5.14 $100K-$200K
4.36 $200K-$300K
7.73 $300K-$400K
10.32 $400K-$500K
12.60 $500K-$600K
26.33 $600K-$700K
39.00 $700K-$800K
48.00 $800K-$900K
HeadingtoFX,
I think for $350K, your property is a fair deal, assuming that the as-is condition doesn't cause you to spend more $$ later.
I can't say whether you will get a much better deal by waiting, but if you think don't fully like the house, or if significant $$ is needed to update it, you can make a decision to let this go without worrying that you may not find similar deals later. You should still be able to find comparable deals, if not better ones, in the future.
But if you like the property much, I don't think buying now will cause you much harm as the price is a fair one. So just make a decision based on what your heart and mind tell you, and be at peace with it.
King and Ted,
Thanks for your comments. Ted, it needs some work but it's in good shape for a foreclosure. Needs paint, needs carpets cleaned, a couple new windows, a couple appliances (will get those from craigslist). Roof is pretty old but can hold out a little longer. We plan to put a bathroom in the basement. But it's in great shape compared to other foreclosures we saw.
Ugh, as the deadline gets close, I am starting to panic. I love the house, but it's a big decision.
heading to FX!
I had to go through a lot to post now and DON'T BUY IT as a handyman I must say it looks tired and not sharp. The garage is an add on and it just is way to close to the airport and Chantilly (P.U) is not a great place to spend any time. Hold off and find something a bit closer to DC if that is where you work. I saw one in Sterling with a big pool and OK. Not ideal but better in some ways for $139K
HeadingtoFX,
The prior owner paid 582K three years ago (cough!)
I'm thinking you couldn't rent a SFH there for less than a mortgage payment on 350K.
Maybe because you are now comfortable where you are, you are asking yourselves if you really like it at any price. The price is fine, I think. (Discounting the Second Great Depression and/or Armageddon . . . one always has to have a caveat).
Tabitha - the one thing I would do - sit down with your husband and come up with the maximum price you would be willing to go. The idea being, if your absolute maximum is 550K, and he wont go lower than 551K, you can walk away, no sale, and still be happy with it. This is your "Reserve Price".
And seriously, go through this mental exercise. You say 550K, he says 551, will you really walk away happy, or will you go to 551? If you say 551K he says 552K, will you walk away, or will you go to 552K? If he says 553K...
Its tough to figure out, but come up with your reserve price right now before you negotiate. If your answer is 490K, then obviously we have some work to do. If its 575K, then congrats its yours, now lets try to get you an even better deal.
Again my point is, its far too easy to be negotiating and keep thinking "hey whats another thousand"...Set your reserve price right now and stick to it win lose or draw.
If you want, let me know your Reserve Price and I will give you some thoughts based on how close you are.
NEWS FLASH!
We now have SOLD alerts.
Ever wondered what those homes featured on NVHBF end up closing for? Now save them to your favorites and you will get an email when they are changed to "SOLD" on the MLS.
Including seller subsidy!
Months before tax records and Zillow.
Frank
Broker FranklyRealty.com
Tabitha,
Only consider offers that are fully in writing on a full contract.
None of this email "$570k we have a deal" stuff.
Harriet,
On this I must say you are off your rock. Mort on 350, assuming 5% down + taxes + ins is >2700. That rents you almost anything in the area including 5000k sqft Mcmansions.
-King
I agree with King,
I have yet to see a place that is cheaper to buy than to rent. Even after the tax breaks. (assuming 10-20% down)
The following post is in response to a series of posts earlier this week regarding the impacts of inflation and deflation on the housing market. A poster named Adam provided a good explanation in the following thread: (https://www.blogger.com/comment.g?blogID=4787878578920468587&postID=7197531437121013636)
My follow up question (for Adam or anybody else) has to do with extent to which housing prices decrease during an inflationary period when interest rates increase. I completely understand that buying a home is a great hedge against inflation, however, how do housing prices react to higher interest rates and to what extent do they go down? And how fast?
KingMer, Frank,
I'm not sure if 5% down is possible -- I was assuming 20%.
But let's say 5%.
Loan Balance: $332,500
P&I = $1,784.93 (5% 30-year)
Taxes = $325-- that place assesses in 2009 for 425K, at .92 per 100)
HOA Fee = $45
Insurance = $60
I get $2,215/month.
I am not including the repairs -- so I grant that you are much closer to the truth by budgeting the extra $500. And the tax deduction might help with the repairs on refund day.
HeadingToFX said...
Ugh, as the deadline gets close, I am starting to panic. I love the house, but it's a big decision.
Hoooold up there HTF….relax. What’s the hurry? This is not height of the bubble circa 2005. We’re coming off one of the biggest housing bubbles and folks still act as if people are camping out hoping to get their bid in?
Tons of inventory out there. Take your time. NEGOTIATE.
The hurry was that we had already gotten the contract accepted (back when we thought we had to move quickly for a time-sensitive reason that is now gone). Yesterday was the deadline to get out and get our escrow back. We went with the house, but I still feel sick, wondering if we did the right thing. (Because of the TH we have to rent out, because we just chose more space over more money and a shorter drive, and because we just chose where to raise our kids!)
Tabitha-
One more thought - no, two!
First, Frank is right - emails are BS - start writing Contracts to nail Mr. D down.
Next, I would tell him you can't get a loan for anymore than 550K.
And then, I'd remind him that your "deal" is saving him TONS of $$, as no Realtors are involved.
Or he can put it out on the Market, pay a Realtor, sit on the Market for a while and have someone else try to really chew him down on the price next Month (probably under 500K with those recent assesments)
Just my thoughts...
Jaime: Interest rates are raised with the intent of bringing down inflation.
NoVaWatcher said: "Jaime: Interest rates are raised with the intent of bringing down inflation."
I understand that interest rates are used to combat inflation. My question is how do housing prices react to the increase in interest rates during an inflationary period?
For example:
Let's assume that you make $100k in income and you can secure a standard 30 fixed loan at a 5% interest rate. You could afford a house somewhere in the neighborhood of $328k not including your down payment.
My questions is how would housing prices respond if interest rates were to increase to say 15%? Under this circumstance, everything else being equal, buyers would only be able to afford a home in the neighborhood of $160k.
So, would housing prices come down to meet the economic capacity of buyers to service a loan? If so, how "sticky" are prices in meeting this new equilibrium?
Tabitha,
I second Konstantin. Drop your offer to $530,000 and be prepared to walk away.
Remember:
- Do not fall in love with a house.
- You are making money when you are buying.
- You are a buyer, you have a choice. The seller does not.
- The housing may continue spiraling down for a long time, still.
- You don't really know that you will live in this place for the rest of your life.
- Any tax breaks and first-time credit are for you, not for the seller or agent.
Best of luck.
KFZF
Tabitha,
The "rest of your life" house is all well and good if that's how things work out, but I'm worried that you're making a big mistake. If it takes getting money from relatives, and being tighter with money in general... that's one thing if you do stay in it for 30 years. But what if life happens? What if your husband has to move for a job, or one of your kids needs unexpected uncovered special care? Yes, one cannot plan for all contingencies and emergencies, but one can hedge against them.
So, in your consideration of your reserve price, I think you need to factor in the what if, of what if in 2-3 years there has been no inflation, but interest rates are 8% and the house is only worth $300k and you have to move? How large of a financial hit can you reasonably recover from? Assume they've changed the laws to make all mortgages recourse, such that you have to take on un-collateralized debt for the balance.
Unless you set your price such that this will not be too onerous, then you're not ready to buy at that price. I know, I'm crazy and the most risk-adverse person on the planet, but someone's got to bring it up. Yes you buy houses when you have no reason to expect you'll need to move for at least 5 years, but that doesn't mean you escape the "what if" clause.
HeadingtoFX
If it gives you a sick feeling, then don't do it. That's what those sickening feelings are for. They are to tell you that somethings wrong when your mind can't explain it yet. Sometimes it takes months before you can step back and see why, but, seriously trust your gut. If this was the perfect place to raise your kids and the right time for you to buy a house you wouldn't have that feeling. Sure butterflies but not the level of anxiety you've expressed. Heck, see if you can get a prescription for an anti-anxiety medication and see if the feelings still there. If this is the wrong decision, no medication will take that feeling away.
Cara,
There's also the possibility of something 'buyers remorse.' Buying a home is a (almost) life-long commitment so I think it's OK to feel somewhat 'sick' about the decision. Actually I'd argue most people do. I did. And possibly you will, too, when you buy.
HeadingtoFFX,
It's hard to know how to react to your "sick" feeling, especially now that the deal is in contract. However, I assume that you have an inspection contingency, and maybe other contingencies. If you are still feeling very uneasy about this deal, maybe it would be best for you to end the contract if the contract legally permits you to do so within the context of these contingencies.
From your description, you don't have to move now, and you may have to rent out a current place in order to buy the new place. How is it that you love this new house but you feel sick about buying it? Is it the financial stress?
Please bear in mind that I am someone who has been looking for a very long time for the right house at a price I can afford, so I may have missed out on good deals. But it has been my experience in my life (speaking for myself only) that, most of the time, when I did not pay sufficient attention to my (very) negative feelings about a decision, I lived to regret my decisions later.
Jamie, I'm too young to remember but maybe someone else can answer you question. Basically, look at the 70's and see what happened.
Intuitively, I'd have to say that prices would climb despite high interest rates. I believe that part of an inflationary spiral is that prices AND wages go up. You are leaving the wage part of the spiral out. In other words, things cost more and people get paid more. What you're talking about is prices going higher but wages remaining the same.
The way I see it, if prices go up 10% a year for 5 years then after those 5 years wages will have increased by about 10% a year also. So that 300k home now costs 450k (this simplified figure does not included compounded increases) but that person making 100k now makes 150k. What you're implying is that everything costs 50% more but homes remain the same price because people's wages stagnate. If this occurs, people are going to be run out of homes and start starving because food and other essentials are increasing while wages are not (this is not standard inflation).
Can anyone correct me on this?
Oh yes, something I forgot to mention:
Generally speaking, high inflation is considered bad for the lender and good for the buyer.
If you make twice as much and everything costs twice as much, then money is worth half what it used to be. In this situation you are paying for things for 50 cents on the dollar. It wipes out the bank's interest in the property. If you get a 300k loan and the property is worth 450k five years later because of inflation, you don't actually "make" 150k when you sell. What is actually happening is that the bank lost 1/3 of the value of the currency spent on the loan. You now get to pay back your 300k loan with devalued currency.
I can only assume it's best to wait to sell the home until inflation slows again because interest rates will be sky high during this inflationary period and you won't want a 14% mortgage.
Jeff's got it right: in 70s style inflation, wages and prices inflated, with wages chasing prices upwards.
But, I can't see that happening today. I could see the dollar tanking. In that case, the price of imports would shoot up (e.g. oil, some foodstuffs, ipods, etc.) and some domestic products that can be exported (e.g. if the Japanese are will to pay me more for my corn than the Americans). But houses? It's not like we can ship them overseas. They wouldn't even make good rental properties for foreigners to own, since we'd have to pay them in our worthless dollars. And it's not like they could jack-up rents, as rents are constrained by wages.
And remember what happened when interest rates were effectively super low due to funky underwriting (e.g. ninja loans): prices shot up. If interest rates are sky-high, that's going to several constrain purchasing power. And it wouldn't be like the 1970s and early 80s where incomes are inflating at fast rate.
http://franklymls.com/FX7004043
wow this house caught my eye when it was listed for 450 a year ago, and i was quite pleased when it dropped to 400. now at 300. seems like a good deal..springfield, detached, 2600 sq ft, remodeled kitchen and bath. neighborhood might be so-so?
Cara - as A former buyer myself, I can agree with MM that that sick feeling is pretty common.
The reason is simple -- its the sudden realization -- oh my god, I just signed on to a cbligation for hundreds of thousands of dollars!!!
In fact, even if you get what in hindsignt was the single best deal on the face of the planet, I think no matter what you get that sick feeling because its still A LOT of money.
Long term, I can tell you that feeling fades. If you go into the deal with thoughtful consideration and a rational head, the feeling will fade (a few days or so), and once its over you will feel you made that same rational decision you did before you even decided to make an offer -- I know I did. It took a few days of malaise but in the end I was still perfectly happy with the decision.
MM, and The Anonymous,
Well these buyers can compare and contrast with the feeling they had when they bought their TH and how pleased they were with that decision thereafter with how they're feeling now.
Everyone's different.
GT,
That's pretty!!! And yes, that's a great area. I may need to start thinking about SFHs...
tbw: well a good thing about ziprealty is when you save homes, it keeps them and their pictures in there for good. there werent many pics, 10, but from them it looked nice, updated kitchen, bath, nice deck, dated wallpaper and stair rails. something else could be hiding though.
but the lights were off in all of them so the power has been off for almost a year which cant be very good.
as for schools...is there a good site that ranks schools? clicking on, for instance, ziprealty's schools, it seems like every school is in the bottom 50% of the state. with a 6 month old, i'm finally starting to care about school districts.
EARN GLOBAL MONEY shows you different earning programs from all over the globe and help people to earn money from different earning program owned by different organizations.
visit=www.earnglobalmoney.info Click Here
Post a Comment