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Saturday, December 5, 2009
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113 comments:
MM,
My response from your previous bit's post on two scenarios:
Others have already pointed out major flaws in your two scenarios. Your theory doesn't take into account the very important investment consideration - "Don't buy a depreciating asset". Low interest rates have been used as an argument by RE agents and home builders alike to fool the buyers.
If someone's personal situation doesn't allow them to wait for whatever reason - it's a different story. But, there are major flaws in discounting the impact of a major loss in home equity. Just look at the 25% of underwater homeowners across the country - they can't sell and they all fell for the low interest rates thesis in 2002-2004.
I'd like to ask others on this blog for some advice. I am a first time home buyer interested in a detached home in the Fairfax County area within 3 miles of the beltway. I am looking at homes less than $450K. I have a good grasp of the physical characteristics that I want as well as acceptable locations. However, I do not have a good understanding of how to assess whether a listing is reasonably priced or how to make a reasonable counteroffer for properties offered for what appears to be an inflated price.
Due to my lack of experience, I chose to work with a realtor who is acting as a buyers agent. I also plan to get a report from a qualified house inspector before making an offer on a specific property. I realize that paying for an appraisal is part of the mortgage process. I know some people will tell me that estimating the right offer is what the realtor is for, but the realtor's commission is based on a percentage of the price that I pay. I don't feel 100% confident with that unless I understand the process better.
I use the Franklymls site and similar sites to look at previous price history and current tax assessments. I also check Zillow estimates. I have noticed a fair amount of properties offered at 10% or more over 2009 tax assessments. Often, the Zillow data is blocked by the seller. What factors would I use to estimate a reasonable offering price for these type of properties? In other words, what I want to develop is a good "I'm just looking around/I want to bargain" estimation sense, if you know what I mean.
I pay close attention to the overall economic picture. I expect housing prices to drop over the next couple of years as soaring inflation kicks in, but my personal circumstances more or less require me to buy at this time. The 20% downpayment is not a problem and I can weather a 30% price drop without losing too much sleep over it. There seem to be lots of experienced buyers on this board. What advice would you give to an interested rookie?
c,
Few suggestions from what I know:
- Look at CMA for the neighborhood you are looking
- Analyze comparative inflation adjusted prices prior to 2000. Prices from 2002 to 2007 are specially useless.
- Begin with 15% below '09 assessment and add the improvements that are not included in that assessment. Only add the major changes such as new deck, kitchen upgrades etc. Repairs and regular updates needed to keep the house going should not be added.
- Expect 2010 assessment to be 10% below 2009 - which means paying anything more than 10% below '09 value means overpayment - you will be underwater even before you move in.
This will still not prevent you from losing equity in the future - but it seems you do want to buy sooner than later. The least you can do is don't overpay on top of the currently inflated prices.
Good luck!!
spider, I see you as just one more pent-up demand buyer that will keep a floor under prices in NOVA. Not sure how many more of you are out there, but it's good to know. Thank you.
Hey spider,
Could we here about your actual experience buying and selling houses?
I'd love to hear from Kevin and Jeremy too!
The Anonymous:
"I will be gone soon enough."
Hey, I enjoy your cutting commments. Without you slicing their baloney, we'd be knee deep in sausage.
"Glug, glug, glug, glug, glug, glug, glug, glug..."
The "Contrarians" are out there on the doom and gloom sites, armed, MRE's, bullion coins, they are READY.
@J@,
Did anonymous say that? What comment are you referring to?
WOW! The snow is beautiful!
Last Fall when the world was falling apart, at least we were able to joke and laugh about it with our friends and family. Hey, life is short!
The Anonymous is a funny and insightful writer. Check the 12/4/2009 thread, near the bottom.
"Yes, yes, yes. As we all know, the most comparable situation for the US govt is the kangaroo legal system that is Dubai. You know the saying, so goes Dubai, so goes the world."
Part of the humor is that the same doom-boards that claimed 40% RE crashes everywhere are focused on Dubai today.
Like you said, it's a picturesque day. I have a bowl of steaming hot soup and I can watch the snow fall outside. Does it get any better than this?
We kept our heads during the so-called housing crash. I have more money and equity than ever. I wrote a check to a local charity that provides for the homeless.
@J@,
When did we switch from Japan to Dubai?
Donno. Maybe The Anonymous will explain that one.
Thank you Cara for suggesting the Sawbuck site yesterday, I was unaware of it and now that I have found it I like it a lot.
Spider, I appreciate your suggestions but I am a bit too new at this to fully follow through. I apologize if I am irritating anyone with newbie questions but I really want to come up to speed fast.
So take for example listing FX7194085. I am using this as a hypothetical, actually it doesn't meet my criteria and I have no personal interest in that property. Active at 559, its 2009 tax assessment was 442 which is (barely) in my price range at a stretch. If I could get it for 15% under the assessment, that would put it around 376, which I could afford. But I suspect if I offered 376 they would probably not even take the time to laugh in my face.
I searched the listing on Franklymls, Virginiamls and Zillow. Nothing too helpful on Frankly and Virginia but Zillow tells me that their estimate is 554,500 and it sold in 2001 for 229,900. So how would I go about finding what improvements have been made to the property since 2001? If I find somewhere that lists improvements, how would I value them? There's nothing in the Zillow published facts nor has clicking around or googling the address or the MLS number turned up anything else.
Prediction: Today will be a bad day for open houses. ;) Of course most open houses seem to be Sunday and it sounds like it will be sunny tomorrow so people will probably venture out.
---
I just wanted to respond to Robert's comments from yesterday. As always I think he is missing the point. :) I've always believed this is a vibrant, exciting, great area. I've never denied the DC area has a strong economy.
My point has just been that this area has had a strong economy for decades now. Similarly speaking Northern Virginia has had a well educated population (and great schools) for decades.
I'm not disputing that 2000-06 was a period of strong economic growth in the region. I'm just saying so were the 1990s. And yet we saw flat or even negative home values during those years.
Regarding CRE...
I'm actually pretty bullish on this -- at least for downtown DC -- anything within a mile or so of Pennsylvania Ave NW from Foggy Bottom down to the US Capitol.
Barring something dramatic happening (a few companies going bankrupt within a 1-3 month period which seems unlikely) I don't think we are going to see much correction in the DC CRE market. I suspect current leases are cheaper than they were in 2006 but I don't see 40% drops coming.
I think two things will probably save DC CRE: (1) height limitation on buildings and (2) the overall lack of building on spec. Probably but for the height limitation we would have seen more Arlington-Tysons office skyscrapers. Instead we have limited supply in DC. Also, I pretty much always see a sign saying "future home of Company A, B, and C" whenever they are building places.
I do think some other CRE areas though might be screwed or slightly screwed. Those areas had way too many spec buildings. I'm thinking a lot of the newer areas -- Rt 28 corridor, area around Nationals Ballpark, etc. Luckily for some of those areas the spec buildings were meant to start in 2010 or later and so have been completely stopped.
Robert -- do not say I never say anything positive about this area.
c, that property has been mentioned here before and is grossly overvalued at this price.
To find out the improvements, you have to see the home yourself.
TBW
I would suspect that the actions of local govt would strongly affect the commercial market. If the DC govt follows the action of certain other cities and upped taxes until they bleed the owners to death, there would be a mass exodus. There are other metro locations on the East Coast within a one day turn around travel time to fed agencies in the DC area.
Six more U.S. banks closed
Spider -
How would I be able to tell via inspection if an upgrade has been recently done? I am not that versed in the building trade. Though I admit that if I see appliances in Avocado and Harvest Gold, I can tell that's from the 70's!
Interesting. From Restonian:
Oracle is proposing to build a 203,000-square-foot office complex on its property in Reston.
[3. Oracle USA, Belmont, Calif. Site plan for a 203,000-square-foot office development on 17.24 acres zoned PRC (planned residential community), at 1900 Oracle Way. (SP-09523-003-2)]
I wonder if Oracle will be majorly expanding its presence or taking advantage of land that is now much more valuable (it is practically on top of the second Reston Silver Line stop.)
spider,
Apparently one of the six was Reston based:
Greater Atlantic Bank is the first Virginia bank to be closed this year, with the last local failure occurring in 1993.
I recall a while back @J@ was promoting the safety of using these local banks rather than larger banks paying higher rates. Seems to me they are not safer.
Although I really think it's all VERY safe as long as you keep your deposits in a bank below the FDIC caps. If this crisis has shown as anything it is that the FDIC does a great job of keeping everything calm and orderly.
That's why unless it's obvious a bank is teetering on collapse I will use it if it's paying competitive rates.
c, you can ask seller's agent about the upgrade related details. Recent upgrades are normally mentioned in the listing.
tbw - It would be good to know that bank's % local portfolio and CRE/RRE breakdown.
This region isn't immune after all...I am sure Robert will have something to add!!
TBW, all interesting posts.
My point has just been that this area has had a strong economy for decades now.
Sure, just your average strong economy. Stronger than the national economy EVERY year for the last 14 years and probably 90% of the years in the last century.
Sorry, WDC is not average. You know the difference between 3% compounding and 4% compounding over a decade or two.
Too many office buildings in the exurbs. Can't find the article but Arlington doing very well with vacancy rates and rents as well as the CBD downtown.
If commercial developers had been smart they would have been building these things instead. Lots of these under construction as I've posted.
spider -
CRE: Not saying there aren't problems, but it's different here:
Link
Link
Link
C, franklymls, enter dunn loring as the search, check the sold box and on the listbox change to close date high. This will show you what has sold/closed in Dunn Loring. Your buyers agent will do comps and guide you on making an approriate offer. I just sold/closed on my home and an offer of 15% below assessed value my agent would not have presented but I was in Manassas. It doesn't appear to me that this is an over priced listing to what has sold. It has almost 1/2 acre. I have serious doubts that you will get anything 15% off list price much less 15% under assessed value. The foreclosures and SS aren't even priced with that much discount.
"@J@ was promoting the safety of using these local banks rather than larger banks paying higher rates"
Not exactly. I probably didn't explain it well. I have some cash and parked it in 2 local small banks. Their rates are "lower" but only if you ignore the terms, immediate access vice 6 month or 1 year.
My concern was that a "deal" would come up that would require immediate cash. If you believe in a housing crash, then here and there, there might be an "opportunity".
The two Warwick places under $300K might qualify. There was one under $230K. I'm still slack-jawed over VA_Investor passing on 6 Warwick TH's for $60K each back in the 1990s'. The "right price" then was $120K.
If you're Joe Retail saver, then sure do whatever you want. All banks are the same.
FDIC locks down your bank, when they're busted, which seems to be close, then maybe it'll take a week or two to unlock your money.
No big deal. Unless you need the money right then. Unless you're looking at a Warwick TH for $230K.
@J@-
I missed most of the bank discussion, but if you want a safe bank where you can get your money quickly and still earn a well above market rate I would look into something like Capital One. Right now I am getting 1.75%, in my online savings account that has no restrictions. It is also one of the best capitalized banks in the country.
1.75% is a lot better than what I'm getting.
BTW, I've pretty much given up on stumbling across a screaming deal.
By the time I find out about it, there'll be a line of Dentists and Anesthesiologists with serious money.
Which is why prices are holding up.
Ya know. Warwick at, say, $375K isn't interesting. Frankly shows 2 at $445K and $439K. Not interested.
Similarly a 1/1 condo at $237K, please.
Just double checked, the Warwick TH closed at $214K on 09/04/2009. I would love to know the back story on that one.
If I got wind of a deal like that, I'd be body slamming the dentists and anesthesiologists out of the way. It'd be like people grabbing robot hamsters.
"Arkey said: It doesn't appear to me that this is an over priced listing to what has sold. "
FX7194085: This was sold for $299,900 in 2001 - List price 559k 126% of 09' assessment.
Wake up Arkey!!!!
Spider, I just sold and bought 3 days later. 1991,2001, doesn't matter what it cost in the past, its what they are currently selling for. They might be less next year, they might not be. I just looked at what is listed and the list/assessment ratio and it is line with what is selling/closing for in Dunn Loring in Nov. 09. This isn't a market for you, I understand that. For those that it is a market for them, they have to deal with what it is; not what it was or what it might be.
for those who don't think reality will come to DC area real estate?
https://www.taxpayerservicecenter.com/RP_Detail.jsp?ssl=0550%20%20%20%200005
Sold in 2007 for 456K, the owners put about 80K into the place
now it's UC at http://franklymls.com/DC7157647 $269K. About 50% down.
I'm sure Robert will use this as proof that Virginia prices will increase because Dc is devaluing
and buyers will not want to get into DC.
Pat, its also a foreclosure and older than Marion Barry..1900..lord only knows what the buyer bought
Why we are seeing fewer reo's in the mls:
The pro's are buying these places at the Courthouse. Banks are bidding in much lower than the debt.
Seems the deals (other than bulk) are going on the courthouse steps.
Heard this from a very reliable source.
Jeremy, Kevin, spider:
Still waiting to hear all your "war stories".
@J@,
re: Warwick. This was early '90's and my first foreclosure foray. I only had 2 days (or less) to view these places and get my $$$ lined-up. I ended up going to the sale at the courthouse. I had walked around some of them. The tenants looked section 8 and the places pretty trashed. I saw an empty end-unit and decided to take a run at it.
When I went to the auction, I fell for a newbie mistake. Someone asked me which property I wanted and I TOLD HIM. He, then, proceded to tell me what a trashed out mess the place was (plumbing ripped out, walls bashed in, etc., etc.).
You guessed it. He bought the property!
VA_Investor said...
"Jeremy, Kevin, spider:
Still waiting to hear all your "war stories"."
Sorry to keep you waiting, but those of us with more life in front of us than behind us actually do things on the weekends other than try to pick arguments on the internet. I'll stop there if you do.
As for my "war stories", mine is more like being too smart to jump into an unwinnable war. I've had relatives and in-laws (among others) telling me to buy for the past 3-4 years, and I'm so glad I didn't. My cousin bought a townhouse in Sterling from her stepmother for well under market in June 2006. Her husband works for DHS and took a position in Colombia at the embassy so they moved. They were unable to sell because they are still underwater and are renting it out through a management company at a monthly loss.
The homes I like in Oakton are selling at a 100k discount to the prices of 2007. In the mean time I've saved enough to be able to put 20% down when I eventually buy that first home and enjoyed my 3 minute commute from the apartment I live in since we don't have kids yet. Lets not forget the free time I have on weekends while the homeowners are doing yard work, cleaning gutters, or shoveling snow. The wife and I are both saving 45% of our take home pay directly to our home down payment account, 10% plus company match into our 401k's, and we've paid off both our 2004 and 2008 vehicles since getting married - not to mention the engagement ring, wedding, and honeymoon.
So yeah I can't brag about making money in the 2000-2007 run up in prices, but I was in college until 2002 and not in a real position to buy until maybe 2006, but still enjoyed sharing a house in Clarendon with college friends for my share at $600 a month. If I had bought I'd be underwater like my cousin and so many others, and I'd be pissed off right now seeing all my new neighbors that make less than me have so much more money for vacations and such to enjoy their lives since they got their home for 100k less than I paid. Maybe that doesn't appeal to you since you've only got so many years left, but the thought of stupidly paying too much every month for the next 30 years when I could just enjoy having no commute, no maintenance worries, and saving up a storm seems illogical at best.
Arkey
i've seen that one at 205 R st NW
it's a really neat little place
it's got a roof leak but that's not fatal.
it's really small so it's footprint
got a little cut up in the renovation, my Sweetie is 6'1, so
the stairs were a bit tight.
if you are an elf, it's a great house.
Why is it that everyone who told me to buy in 2006 is willing to admit that I made the right decision, but they still can't possibly fathom that I might also be right in my belief that Spring 2011 will be just as good of a time to buy as Spring 2010? Even if prices somehow keep up with inflation over that year, I'll still be ahead on all the money I saved living below my means in an apartment another year and saving before I buy.
"I only had 2 days (or less) to view these places and get my $$$ lined-up. "
Yeah. All the chatter of plunging prices fooled me. I figured if I found a screaming deal, I could take a run at it so I'd have to some folding money close at hand.
No plunging prices inside the beltway. Except maybe for a few exceptional situations.
I don't have time to chase Will 'o the Wisps. I made some good money in the market, but then, everyone should have since March or so.
Everyone check out AMD? lets say you put your $100K down in AMD earlier this year.
Forget about trying to satisfy VA_Investor Jeremy.
If you actually go back and read her posts you will see that her claimed mountains of "experience" didn't help her one bit when it came to understanding what the market was doing during the bubble. (She was giving the same bad advice you received as fast as she could type.)
Just a quick example:
"I believe that LONG TERM it matters not when buy. As long as you can afford the payment today, that cost will diminish as the years go by and your salary increases. you are correct that the advantage (one of them) is fixing your housing costs at today's dollar.
...
Rates are good. I care more about my monthly outlay than trying to time market cycles. Long term, entry cost is irrelevant because the house is paid for."- VA_Investor 1 June 2006
At more or less the absolute top of the market what advice was our expert giving out? Buy...
Another bit of wisdom from our expert:
"I have lived in nva. for 25yrs and, absent a brief window in the late 90's, ownership has always cost significantly more than renting.
I can't comment on ghetto's because I have no data."- VA_Investor 1 June 2006
Yep, you read that correctly. Based on her 25 years of claimed experience, ownership has "always" been more expensive than renting, lol...
The bottom line on VA_Investor:
"The problem for many here is that they NEVER owned. I truly believe that real estate is a path to true wealth. I've been in it for 25yrs and plan on at least another 20."- VA_Investor 1 June 2006
She is a broken clock. She will always say it is a good time to buy regardless of what is taking place in the market.
Link for quotes:
http://tinyurl.com/ybehrry
Jermey, Kudos to you and your wife. I wasn't interested in housing in 2005 but even I, somebody totally with their head up their azz remember distinctly muttering and having numerous conversations about housing prices. I simply didn't understand who could afford these prices. I wasn't familiar with liar loans and the rampant fraud, I really thought it had to be drug money laundering through the illegals. But it took 2005 prices to penetrate and in 2007 I knew the bubble burst but it still wasn't that obvious to homeowners. It took 2008 for everything to wrap around and engulf each other in PWC.Can anyone time the market perfectly, I don't think so but I see FX in 09 like PWC was in 08 with the best deals to be had are right now. If location doesn't matter then wait or buy in MD. I think they still have the significant price drops you are concerned about.
Help me out here VA_Investor.
Are there still screaming deals at the courthouse? If so, how do I find out about them?
If that's hush-hush and you don't want another bidder in the fray, I understand.
From looking at the Solds on Frankly, I'm guessing that these are extremely rare.
My parameters are this. I figure a Warwick TH is "worth" $400K, that's to me.
$375K, $350K? I'm not interested. There's not enough room for profit. Doing a lite fixup, renting it for 5 or 10 years at a neutral cash flow, then doing an upgrade, selling it, for... oh, $700K. I'd like to find something in Warwick for $200K or under. If it can't be done, then that's life.
Better that a young couple do the owner-occupant thing, enjoy the 5 minute commute to the Pentagon, walk to Del Ray, etc. They can have the tax benefits, putter around the small yard.
Warwick is higher density and lower cost than Shirlington but both have positive aspects, compared to driving in from Front Royal.
I've pretty much given up on a housing bubble crash. Like many here I was suckered by the rhetoric that:
"It's gonna crater out, any year now."
Even Contrarian is probably sitting on a stack of Gold Eagles and Canadian Maple Leafs, chortling. Like the typical ultra-doomer, he's probably got a gold price live feed on his iPhone.
I don't see the screaming deals. There's money to be made in equities.
Remember when you first showed up on this blog kh/@J@ and you claimed to be a modest homeowner concerned about higher taxes brought on by rising real estate prices?
That was actually a more amusing act than this make pretend investor guru routine you have picked up.
c,
What Arkey said is essentially ALL real estate agents do when (A) deciding on a list price or (b) doing a CMA (comparative market analysis).
Frankly also does a CRA, comparative realtor analysis. This will tell you whether that agent usually prices to sell quickly, prices okay but accepts low-balls, accepts WTF fantasy listings to troll the open houses for buyer's to be agents for them on other houses.
Both of these can now be accomplished using franklymls.com
Let's take this random listing in Vienna/Dunn Loring Woods:
http://franklymls.com/FX7201244
2649 BOWLING GREEN DR
VIENNA, VA 22180
List Price: $485,000
Original Price: $485,000
09 Tax A: $423,760 $4,411/yr
Bed/Ba/Ba½: 3/2/0
Listing #: FX7201244 g
DOMm/p:? 26/26
Great Dunn Loring Woods updated 3 bedroom 2 bath rambler with hardwoods on main level, ceramic tile in kitchen dining room, wood deck, patio, huge rec room, walkout to large back yard with shed, replacement windows, newer hvac water heater 2 yrs young, granite counter tops, updated baths. Neat clean.
If you click on the
active button near Dun Loring Woods it will initiate this search:
22180 Active sub=DUNN LORING WOODS
you might want to edit that search to remove the requirement of "active"
If you click on the sold button it will show you all the comps:
22180 sub=DUNN LORING WOODS 4 years
you probably only care about 09, so check the other button
If you click on the Listing agent other actives it will show you what luck she's having with current listings:
Patrick Page Page Associates Real Estate, LLC active
again take out the active requirement
If you click on the Listing agent's other solds it will show you how close to list and how long they took to sell:
Patrick Page Page Associates Real Estate, LLC
again you probably only care about 09.
I'll go ahead and publish this comment and then work on explaining more in a new comment....
Let's start with the easy stuff. She's a pretty accurate agent at pricing.
All solds were listed 42 days or less, needed no price reductions and the two 349k ones both sold for 341k, while the 565k list sold for 536k, or less than 10% off list.
On the other hand she's got two actives that have been sitting, one's a short so that doesn't count, but one's an overpriced listing in hard to sell "greater Alexandria".
So, she's hit or miss on that price to sell strategy. You'll have to decide for yourself based on comps (next post).
Leroy,
Last time we saw the entire threads, we learned the truth. I haven't put new $$ into RE since early 2002 (at a foreclosure auction). I did buy a few building lots in the past few years at about 10K each (sewer is approved and funded; now under construction). The lots don't perc, but were "going" for 25K anyway. I bought on a lark at a Tax Sale.
Actually, I got my two best deals in 2004 and 2005 and 1031'd into both of them. Sell high, buy low.
Show me one concrete statement where I said it's time to buy! When I started to buy last Oct/Nov, I put it out here.
If you get off by cherry-picking a sentence here and there and painting some false picture of me, have at it.
@J@,
Yes, the word is definitely that the deals are back to the Courthouse. That usually means cash, no inspection and close in 15 to 30 days. There are Lenders, but you need 30% down and can only get a 5 yr note (my experience anyway). I don't think Frankly shows non-mls transactions, but I could be wrong. These transaction can be found on county web sites. by searching various neighborhoods.
Leroy and others,
You can wait until the cows come home. I really don't care. Just, please, don't slant what I say or have said.
@J@ and others,
I'd be happy to discuss the Courthouse process. It can be stomach churning for the uninitiated.
Maybe Robert is right.
The housing doom-side suckered me good, elmo. I parked folding money at 1.0%, waiting for the shoe to drop.
I'm giving up waiting.
Here's the Robert part:
In the last month, some laid off people that I personally know have found jobs. Good jobs. I guess their houses won't be in foreclosure.
Even better, I have reports of several people switching jobs for huge increases, like 50%. They had been looking for a while but something broke loose recently.
This isn't someone earning $40K getting $60K. This is $100K going to $150K.
"Hey, I thought you were topped out?"
"I guess not."
I kept expecting to hear about layoffs. Other than AOL, I don't know anyone who's lost their job recently.
Talking to business types, it was pure gloom and doom a few months ago. Suddenly several have more work than they can handle and deadlines are tightening.
That supports the Robert perspective.
I don't know why this is happening now. This is not single sector. It's across the board. Well, except for commercial RE. That seems to still have a problem.
What does that mean to you? Beats me. Did you get a 20% raise this year? Are your investments up 50%?
On the comps, I'm getting lazy, but what you'd do is look at each and every one, and decide which ones are most similar to the condition and location (convenience and prime-ness-wise) of your target home. A glance shows that well renovated places have been commanding a serious premium. Possibly as much as $100k. Which says to me that if you don't want to pay a serious premium then you should be looking for places with more modest renovations or none at all.
Once you've decided which is the set of the most relevant comps that will give you a price range within which an actual contract might happen. If you like the house, and want to actually win it, I recommend bidding something that can itself be supported by comps. Pick the bottom reasonable comp (one that's not quite as good as the one you're buying but in some non-quantifiable way). And just set your personal internal max at say 10% off the high-water mark of September or October or whenever the summer peak happened in your little neighborhood of comps.
Basically you're saying to the seller, sure I'll pay the "going rate" but that has fallen now that there's no imminent $8k deadline.
If you want to start lower, feel free, it's all about the type of bargaining you want to do, and the price you're willing to pay. If you look over the comps and your gut tells you they are all overpriced, then bid below them, and hope that you and the seller can agree on a new low for the neighborhood (in recent months).
The other actives inform your decision on your upper limit because they show, well, why buy this place for X, if I might stand just as good of a chance buying that place that I also like for X-$10k.
But it sounds to me, as if what you really need to do is find out what the going rate is for your target house in all the neighborhoods you might be interested in so you can target your search a bit better.
FX* 3bdr 2ba rambler active
I can't tell if that's informative or not.... But it's probably not your target house anyway.
But the bottom line is don't trust zillow or the tax assessor to tell you what the ballpark is, do it yourself, frankly gives you the tools.
Shout out to Robert on the SAIC news. They are going for an increase in density to expand their Tyson's HQ.
VA_Investor: "That usually means cash, no inspection and close in 15 to 30 days. There are Lenders, but you need 30% down and can only get a 5 yr note (my experience anyway)"
The 5 year isn't an issue. You didn't say but I'm guessing that's 30 year amortized with a balloon payment due.
I'm also guessing that you don't get primo rates, probably 6.0%.
On a $200K Warwick, if such a thing exists, it would take $60K your side plus $140K from your tame bank, very roughly.
Figure $25K to $50K to fix the place up. $1,500/month rent. Seems workable.
I googled around but could not find any foreclosures.
Oh, my advice is don't feed the troll, aka "contentless"
Everyone else adds value, the troll is only interested in trolling.
VA_Investor "Robert on the SAIC news."
Yeah, what the H is going on? It's been years since I've heard of 50% raises, companies expanding.
It's like a coiled spring just cut loose in the last month.
@J@,
Yes, I was considering deleting that response. I always seem to take the bait.
Regarding reo's. There is much to know/learn. My Lender goes 6.5% with 1/2 a point for 5 yrs, amort. over 20. He will renew; obviously the risk is rate increases.
If you don't have the cash OR don't want to pay all cash, you need to get your lender lined-up now. Go in for a sit-down. Bring your FS. My lender doesn't require anything from me anymore; just the details of the tranaction.
You lose your 10% em if you don't close for any reason. It can be a real gut check the first couple of times.
So looking at the comps:
Here's the house they based the LP on:
http://franklymls.com/FX6896411
It's way closer to the metro and nicer, so they're dreaming.
Another reason they think $485k is reasonable is sales like this one at $510k:
http://franklymls.com/FX6949685
Which has a screened in porch and many other upgrades.
The actual appropriate comps are resoundingly between $425 and $450k:
http://franklymls.com/FX7068819
http://franklymls.com/FX7083242
http://franklymls.com/FX7109963
The recent market has spoken and says the most the current house is worth is $450k. If you pay over that, you're overpaying (no offense). $425k is 15% off list already, so if you wanted to put in a bid that would be taken seriously, that's about as low as you could start. Or you could wait a while longer until the silence of the market has spoken and they realize that stumbling distance to the metro commands a premium over within a mile of the metro. (if you can even get to the metro from north of 66, I don't personally know)
Once it's been on the market a full month, given the comps, I'd say 20% off list is a fair opening bid. But they're presumably hoping that scarcity will cause someone to bid over $450k.
There's a lot of other $500k+ stuff in the neighborhoods that are emboldening the sellers, but in this area, it looks like whoever said rambler's go for less was right.
Arkey - I appreciate the advice on how to work the sold lists on Frankly. I agree with your views about discounts.
Cara, your comments are just the kind of How To that I was looking for. I am clipping and pasting your comments into an offline document to digest and play around with.
Many thanks.
TBW: "I just wanted to respond to Robert's comments from yesterday. As always I think he is missing the point. :) I've always believed this is a vibrant, exciting, great area. I've never denied the DC area has a strong economy."
Nobody has ever argued this point, which is why it perplexes me that Roberts will focus only on this. Cēterīs paribus, that is "all things being equal" is an economic term used to dither out any other influencing factors in a study. In the case of a housing bubble correction, it would be improper to do this about unemployment/jobs in, say, California. That can make the price downfall far more drastic than just a correction. But in the DC area, it's a non-issue. For him to cling to this single point over and over shows just how much he doesn't get it.
VA_Investor:
"Still waiting to hear all your "war stories"."
I've described in the past my experiences in buying/selling. As you've dutifully pointed out, I'm too young and inexperienced to know anything about the market compared to a seasoned pro such as yourself. If you're requesting that I draft up a special narrative just for you, then the answer is "no".
Man, kevin, I had to look up that term, key-TER-us pa-ri-BUS, I have not seen that in the Money section of USA today, where I get most of my information.
Any guesstimates when a house is 10+% overpriced? Looking for a DOM.
SAIC news link?
Robert,
It depends on the market segment. In the first time home buyer market $400 and under, right now things within 10% of a reasonable contract price sell within 2 months. 45 days would be my cutoff for when a seller should consider that the market has spoken.
But it all depends on the market conditions in that area, and the segment you're talking about. Arkey sold at list price, after many many months. But the whole time she was getting offers that were near list, just that couldn't follow through.
Va_Investor said...
Why we are seeing fewer reo's in the mls:
The pro's are buying these places at the Courthouse. Banks are bidding in much lower than the debt.
Seems the deals (other than bulk) are going on the courthouse steps.
Heard this from a very reliable source.
Va_Investor, that's great news, thanks for sharing. Hope you're source is right. This really is music to my ears.
"Last time we saw the entire threads, we learned the truth."
As was the case every previous time I have quoted you I provided a link to the entire thread where those statements were made. Everyone here can of course confirm that none of those statements were taken out of context in any way.
Why do you bother trying to weasel out of your own words? Those are accurate quotes with accurate sourcing.
If you want to claim to be an "expert" based on your previous experience then you should expect people to want to know what your track record is.
You are a real-estate pumper. Even at the height of the bubble, even while you claim you weren't buying yourself, you were advising and trying to pressure others to buy.
This isn't complicated and it isn't really in question. Your previous statements are available for everyone to read.
"Show me one concrete statement where I said it's time to buy! When I started to buy last Oct/Nov, I put it out here."
Ok, here is a nice quote from you then:
"There are good, and even great, deals out there if one is willing to put in the effort.
In this vein, I do agree with Lance that there is never a "bad" time to buy - just bad deals."- VA_Investor 28 Aug 2006
Happy?
By now I would have thought that you would know better than to keep lying about your previous statements. They are all available to anyone who is interested.
As always, here is the link:
http://tinyurl.com/ye2d5r4
(And since I already went to the effort of putting in the link... here is a bonus quote from you from the same thread!)
"It is expensive to own a home in the D.C. area. Always has been, always will be. For some it will never be an option.
It is, however, no more expensive than in prior times. So that excuse should be put to rest." - VA_Investor 29 Aug 2006
LOL
Leroy,
I stand by those statements.
Your problem is that you lack the intelligence to find the deal and you were in diapers when rates were 17%.
Yep, I got the two best deals of my life in 2004 and 2005. You couldn't even start to understand what that takes...
p.s. If I was 20 something, I'd add LOLOLOLOLOLOL!
p.p.s. Bought new construction in Dunn Loring in 1988(?) for 230+ and sold (fsbo) 6 months later for 365K! Yeah me! I'd tell you about the TH on Gallows as well, but you might lose your breakfast. I owned that one 2 weeks.
Robert: "Man, kevin, I had to look up that term"
Not everybody knows the term, but that's not important. The concept of "all things being equal" is what's important here. Jobs are stable, hence we can assume that this variable is controlled and can focus on more important issues, such as overpriced real estate that will inevitably reach a price discovery.
Leroy: "It is, however, no more expensive than in prior times. So that excuse should be put to rest." - VA_Investor 29 Aug 2006"
WOW. That belongs on the David Lereah list of just freaking unbelievable quotes. I wonder how many of her friends followed such a seasoned expert's "advice" and are wiped out. Ouch.
Va_Investor: "I stand by those statements."
Heheh. I'd love for you to expand upon that thought then. Prices more than double in an eight year period and you say that it's no more expensive... I mean, wow.
You might be able to secure financing and sign your name on the dotted line, but it goes to show that profiting from house flipping (I mean investing) doesn't take half a brain. You couldn't notice any aspect of the market if you were unaware that it was a massive bubble large enough to destroy the U.S. economy. Doesn't that scare you?
Flippers will burn with RE in the next wave - they are playing with the fire now. I must agree this strategy worked really well during the bubble, and eventually it killed the economy.
Until we see them screaming/crying, I don't think it is all over. This time around, I hope the lesson will be learnt for good.
Hey Kev!
ZZZZZZZZZZZZZZZZZZZZZZZZZZ
Another flipper trying to make 50% profit in 2 months - I don't see a good ending to this madness...
http://franklymls.com/FX7216561
"you lack the intelligence to find the deal "
VA_Investor, that is uncalled for.
You don't build yourself up by knocking someone else down. Take the high ground.
I lack the intelligence to find the deal. That's why I asked for your guidance.
FYI, I've always been the silent partner, I never had to do the hard work. I have folding money, RE, and other investments.
Hit a nerve there huh VA_Investor?
I guess it must be kind of rough to have some of your more embarrassing statements highlighted when you spend as much time as you do hanging out on a messageboard telling everyone what a huge success you are.
I will give you credit for one thing.
At least this time you didn't try to pretend you didn't say what you did.
Now if we could just get you to take that next big step of admitting what is already apparent to everyone else here... that you were wrong for years about the market.
"WOW. That belongs on the David Lereah list of just freaking unbelievable quotes. I wonder how many of her friends followed such a seasoned expert's "advice" and are wiped out. Ouch."
I am really not clear what her whole motivation for hanging out on bubble messageboards is in the first place.
It certainly isn't to offer useful advice. She was always one of the nastier real estate pumpers back on the old bubblemeter blog. "bitter renter this.... bitter renter that..."
The most obvious answer is that she just likes talking about herself and gets some kind of sad ego boost out of proclaiming her success continually to a bunch of strangers.
"Heheh. I'd love for you to expand upon that thought then. Prices more than double in an eight year period and you say that it's no more expensive... I mean, wow."
Well, she also said she saw no evidence of a bubble(back at the height of the bubble of course), so I guess that just proves that decades of experience doesn't mean much without the ability to think a little bit.
New home on the market in Lansdowne (Leesburg):
http://www.redfin.com/VA/Leesburg/44052-Riverpoint-Dr-20176/home/12083503
How irritating. The real estate agent/owner got it for 425,001 just a few months ago. I doubt $225,000 worth in updates were made, as the house was built recently in 2004. I realize it's at market value, as other houses sell for that in that neighborhood. BUT that much of a markup - those spoils would satisfy the greediest amongst us. What irks me is that I'm searching hard (obsessively oversearching) as a retail consumer, and that is simply not available to ordinary folk.
Hey gang, the November sales numbers ought to be coming out soon. Anyone care to predict or comment on what we will see?
Bonus points to anyone who doesn't care to predict, but will help drive down the market price for the house I want and drive up the price for the one we own now and would have to sell to get the new one :-).
I talked to my agent about the Realist Report. She hadn't heard of it, then checked with her broker. She came back to me to tell me that her broker thought it was a crazy idea; why give out information like that when buyers might walk away from you to snag a foreclosure. I think that her RE agency might be very traditional, where less info for consumers is better? It sort of goes against the grain of the Internet Age. Somehow, the contradiction between having an agent to help you and feeling like the "system" won't at all provide valuable, relevant market info, made me uncomfortable.
That Lansdowne house above, perhaps that was an example of the courthouse step deals that VA Investor is talking about. I can't find any mls record on frankly on it.
REdealSeeker, could you please remind me about what the Realist Report is or provide a link? Thanks.
Ace,
I apologize for the lack of links, but here is the exchange between MM and Cara two days ago:
Blogger MM said...
Cara,
A couple buckets ago you said Jeff sent you a list of 15 or so homes that're coming on to the market but not on MLS yet, including some bank-owneds. I'm curious if it's common for agents to get their hands on such list. IOW, is it something I can expect from agents I work with? Do you know?
12/3/09 11:34 AM
Blogger Cara said...
I doubt it's common, in fact it wouldn't surprise me if Jeff Royce is the first agent in the DC area to hand such information off to a owner-occupant buyer, but I'm certain it's something you can ask them to do for you. After getting the full 60+ listings for an entire zip code I don't reccommend doing that, but if there's a discreet neighborhood or property you're serious about, having a real look at how many potential REO sales there will be in the future goes a long way in informing how much you're willing to pay now. It set a pretty hard upper limit for us, at almost 10% under the recent high comps, and the seller agreed to it...
OTOH, if you see zero bank-owned or preforeclosures, then that's informative too.
The reason you only want to know about one neighborhood at a time is that you need to take the list, and double check it against the county records because some of them will already have been resold, or put in bank hands.
The reason why it's worthwhile to the agent to subscribe to the service is because it lets them know about REO deals that might be coming available for their clients. Given how quickly well-priced REOs sell, this is important... So they probably already have a subscription.
12/3/09 11:40 AM
Cara said it was called the Realist Report, and you can find it readily on a google search.
SAIC news? You mean like the short-sale I was looking at that was being sold by a person who works for SAIC? $850k new a few years back, $700k list?
thanks.
Leroy: "I am really not clear what her whole motivation for hanging out on bubble messageboards is in the first place."
Obviously it's because she saw no bubble. The whole "look for a great deal" when prices were at their absolute peak... ugh. I have friends that followed "expert" advice like that and they are up shit creek right now.
REdealSEEKER said...
"I think that her RE agency might be very traditional, where less info for consumers is better?"
The RE industry thrives on people being as ignorant as possible to a) get people to commit without thinking and b) to justify their horrific commissions.
They don't like well-read customers. In most cases, the agent knows squat about the market, just that it's "good" or "getting better". Anything to push a sale.
"It sort of goes against the grain of the Internet Age."
They're an endangered species trying to justify an existence at the costs of the homeowners. Give it time...
Spider Says:
"Until we see them screaming/crying, I don't think it is all over. This time around, I hope the lesson will be learnt for good."
I am waiting until i see a cover of
Time or Newsweek saying "American Nightmare: How houses destroy
wealth and futures"
that week i'll go buy ahouse
It depends on the market segment. In the first time home buyer market $400 and under, right now things within 10% of a reasonable contract price sell within 2 months. 45 days would be my cutoff for when a seller should consider that the market has spoken.
Looking at 22015 on Sawbuck shows 65 actives, but only 25 of those are less than 45 days on the market. 17 are more than 100 DOM.
So, savvy buyers would only be interested in 25? This 25 includes condos, THs, and SFHs. Trying to figure out how much inventory is WTF.
Of those 25, 6 are SS, and 2 are bank-owned.
My take in 05.06.07 there were
no good deals, unless you wanted to flip something.
If you wanted a house or an investment, nothing penciled out.
Heck even back in 02, it was hard to find deals that penciled out in current cash in MoCo.
So i was renting.
And every year i would see more IO's
more ARM's and more crazy financing.
80/20 piggybacks and 20 down with instant HELOC Out.
I figured when the madness stopped prices would return to value.
Of course then Paulsen, Bernanke and Geithner began printing money, zero interest rates and cash for clunkers.
so insted of a continuing reversion to mean, we've had a little bump out.
about 10-15% over list on some of the ones i was watching expecting to go 10-15% under list.
but Geithner can print only so much money.
As IO's recast (Not Reset) that amortization of principal will hurt,
and even at 2.5% people barely hanging on won't be able to keep that up.
My Cousin, is a nice guy, with a good job, his wife is an attorney,
they have an IO. They bought at $875K and comps are closer to $450K
in their neighborhood.
What do they do when their mortgage recasts next year?
I suspect they walk away.
"The next Act is the implosion of Arlington, Alexandria, McLean, and Great Falls, and it will be worse than the last Act (Loudoun, Prince William)."
Get a grip...
There is no plausible scenario that could bring something like that to pass.
You are like an anti-lance with your fruitloop economic theories. The only real difference is that all his predicted real estate shooting to the moon and all yours have it collapsing to nothing.
Jobs are constant in NOVA. That is true. NOVA has only lost 13,000 jobs over the past year, out of 1.3 million, about 1%. Salaries are only modestly higher - 2.2%.
So, we take out jobs and incomes and we're left with over priced real estate.
There are 3 types of money in real estate
1) Old Money : Estates, trusts, generational wealth. Mclean, Georgetown, North Arlingon, little falls, palisades, somerset,
2) Move up Money : Have equity, levered up, decent cash flows or incomes. Mclean, vienna, oakton,
eastern fairfax, MoCo (Bethesda, SS)
cleveland park, arlington alexandria
3) New Money : financed hard, using real estate to make money, no equity, cash flows maybe stable, maybe unstable.
The New money are all in trouble, the move up money are servicing debt but not happy about looking up
at the surface.
The Old money are fine.
But, if 30% of the market is screwed the market is screwed.
The old money may buy if it makes sense, but the moveup money is treading water.
Robert: "Looking at 22015 on Sawbuck shows ... "
My records show that units vanish off the market about November, join the hidden inventory, and resurface after March.
There's nothing to see during the winter.
Contrarian: "the implosion of Arlington, Alexandria, McLean, and Great Falls"
I don't see it. The available units were dropping all summer and fall in my area.
The Robert "metric" surprised me. People are finding jobs, good jobs are available.
Fewer available houses.
More and better jobs.
Record low interest rates.
Contrarian: "the implosion of Arlington, Alexandria, McLean, and Great Falls"
hasn't Great Falls already seen significant corrections in the past year or so? no implosion of course, but pretty bad i thought, something like 25% - 30% off peak? Arlington, Alexandria, McLean are nowhere near that (yet?)
Robert, can you chime in?
Robert,
No, it's just that those that have been listed more than 45 days, buyers should have no qualms low-balling. (hereby loosely defined as offering more than 10% off list)
If the seller thinks that they are indeed priced right, and the market is just dead in the winter, they can turn down your offer or counter high...
Many of the older listing simply don't show well, or have never had an open house. There's one really really nice Townhouse, that isn't off in price by more than 5%, but it's country-taste specific and has never had an open.
Over 100 days in 22015 it's either unlivable or really high-end (scarcity of buyers) or way over priced.
I am not in any hurry to buy, but starting to learn few tricks of the trade and be prepared. I am looking for some help from experts in this forum on few things where I lack knowledge:
- I understand 20% down payment to avoid PMI. But, is it better to go with lower down payment to make sure lenders have more skin in the game and assessments are serious affair to avoid overpayment? What is a good down payment % that balances different factors?
- How should I go about getting the best mortgage rate? Should I get pre-approval letter without worrying about the rate for now and shop for a better rate later once the offer is accepted? Or should I just use e-loan or similar service to find the best rate and lock it before I start looking? Is FHA better option or not?
- Can someone point me to correctly understand the cost of major improvements so as to evaluate the correct pricing for a given property. For example, improved kitchen, appliances, deck, roof etc.
- Is it possible to participate in foreclosure bidding process before such properties are listed. It seems several properties never get listed.
Thanks in advance.
Housing Crash Continues - It's Still A Terrible Time To Buy
Besides some other points that I agree - I am curious how this one will impact our region:
"Because boomers are retiring. There are 70 million Americans born between 1945-1960. One-third have zero retirement savings. The oldest are 64. The only money they have is equity in a house, so they must sell. This will add yet another flood of houses to the market, driving prices down even more."
Robert said
Sure, just your average strong economy. Stronger than the national economy EVERY year for the last 14 years and probably 90% of the years in the last century.
Agree with past 14 years part. So here we have constant variable of strong economy from 1995-2009. Let's review:
1995-2000: Flat to minimal growth; stronger local economy than national economy
2000-06: 20% annual return; stronger local economy than national economy
So the constant variable does not explain it. Must be another variable. Say a national housing bubble that came because lending standards were lowered, ARM loans became common, and so on.
@J@ said
FDIC locks down your bank, when they're busted, which seems to be close, then maybe it'll take a week or two to unlock your money.
According to the articles everyone could continue using their ATMs, checking accounts, and so on. The FDIC had a McLean based bank buy up the Reston bank.
From what I understand the FDIC does not make the announcement until it has usually set up a new buyer or (in the rare case of IndyMac) set up its own website.
I'm sure there is some pain but I doubt it's worse than a day at most. So your Warwick opportunities are not harmed.
Arkey,
Soon I will be reformating the SOLD spreadsheet mode. I will be showing you % below list. So you can say to yourself, "what % of homes actually sold for 15% below list"
If the answer shows 1 and there are 100 results, you then know that you will have to make an offer on 100 places to find that one (which is fine for some people). Or you can see it as a 1% chance of getting it.
Sometimes people like ot lowball and figure "oh well it just starts the process." The problem with that is if you start too low, the seller just says "no."
And then (if you want it) leads to you having to offer again... higher. And the seller already learned that saying "no" works... so they call your bluff again.
I'm also going to be showing more data on the Listing Agent's track record. That way you can say "well in teh last 6 months, what is the LOWEST this agent has ever sold below list..." Well that might be a price point for you to try and beat.
As for sold data, we only show MLS data. I think Redfin shows Tax data (if not both). But the tax data is a couple months old.
As for COURTHOUSE FORECLOSURE SALES, yes I think they are making a comeback. But like everything... it is TOUGH. You have to be VERY flexible and open in what you want to buy. If you are buying for yourself to live in, the chances are near zilch. But if you are willing to buy anything, and something you can flip... sure.
As long as you are willing to make a smaller margin then the next 5 guys there bidding. Then sure.
I've checked out courthouse sales every 6 months or so. Was going to go to one last Friday. Problem was... they get cancelled. The great ones don't actual go to foreclosure. They get worked out.
But yes, if you go to 10, then maybe 1 or 2 will "go." So you have to wake up 10 times, get a $20,000 cashier's check and hope the foreclosure is on. (you can also call the morning of).
People that do this have a full time staff hunting down properties and working on dozens, with the hope of snagging one.
And then there is the risk of other liens on the property. You buy it for $400,000 but oops you have to cover a $100k lien on it as well. So like everything, you really have to do your research and not just wing it.
If I ever snag one (been trying for 2 years) I'll be sure to blog about it. I did recently do a blog post on Finding those "deals"
Cara, thanks for breaking down the CRA. Your a pro! I'm adding new features to the sold data to make it easier to analyze that data.
Frank
(probably won't be checking for replies, so email directly if you have a ?)
pat said
1) Old Money : Estates, trusts, generational wealth. Mclean, Georgetown, North Arlingon, little falls, palisades, somerset...
There is old money, move up money, and new money all across the region. Plenty of young families in Vienna or Oakton or Arlington etc. Plenty of move up families moving west, not just east. And so on. There's probably just as much old money (if not more) in far out places like Middleburg or Fauquier County than Georgetown (at least their country home.)
Sounds a lot like Geithner is saying capitalism failed.
hasn't Great Falls already seen significant corrections in the past year or so? no implosion of course, but pretty bad i thought, something like 25% - 30% off peak? Arlington, Alexandria, McLean are nowhere near that (yet?)
Robert, can you chime in?
Yes. 2009 was the worst housing year for Great Falls. It coincided with the stock market crashing at the end of 2008. Prices had held up reasonably well - down 5-10% - until the meltdown in the markets. This year everything is down across the board with the ultra high tier getting hit hardest, with lower mark downs percentage-wise as you move down in prices, with $600-$800k doing the least worst.
Thanks Frank..I'm sure there are plenty of future homebuyers that will find this invaluable info. It's extremly hard to price a house in this market. As a seller and a buyer, I do know there are quiet a few over priced listings on the MLS but it gets sticky real quick in trying to judge how much over fair market the home is. I had 2 buyers at 565,000 the first part of 09, left the market during the MAY HVCC fiasco, then returned in July 09 with a listing price with a current appraisal. I sold @full list with 2 in the wings after 80 days. I had full list offers at 550,000 with subsidies and conditions that didn't fly and so many low balls, 10% off that I literally lost count. I found it kind of weird that low ball offers in early 09 was 525,000 then after the spring bounce it dropped to 500,000. Go figure. There were a ton of them, tho. My agents just mentioned them in passing on their updates. I did have more than my fair share of buyers that couldn't get financing due to jingle mail, if they owned they couldn't pull equity or couldn't sell..tough, just tough..or were out of country and considered investors. Days on the market really doesn't mean much in this market.
maggi,
Those are all good things to be thinking and places to start. However, my answer is going to be mostly annoying... You need to price out all that stuff for yourself.
The concept of putting less money down such that the appraisal is more "serious" is a good idea... but let's think about how it works in practice.
If you put 20% down yourself, what's to stop you from doing your own incredibly thorough comparative market analysis. Assuming you already know the answers to your third question on how much everything costs, you as a buyer can/should be the best judge of how much a property is worth in the current market.
Now what an FHA appraisal could do for you is come in below what you know it's worth, forcing you and the seller to renegotiate. And you might get lucky, and the seller eats the difference such that a poor appraisal gives you a cheaper house. On the flip side, this is also why seller's hate FHA offers if they can avoid them. And they will take nominally lower conventional offers to avoid this potential problem. If you're already confident in the price you've agreed on, why gamble the sale on possibly having the FHA appraiser come in lower? This might just end up in you having to put more money down to close the deal without it helping your final LTV. That's no good. Anyway, the above is just my opinion. If you've got 20% down, use that to your advantage in the bidding process and be your own best judge of value.
Pre-approvals. No it doesn't matter where you get one from. Not really anyway... But I would like to make a recommendation for Jeff Divack from Intercoastal Mortgage. While we haven't closed yet, so I can't tell a full story. I must say they have totally competitive rates and the best service. They're a correspondence lender, not a broker or a bank, so they are lending out their own money for 1-2 months, and then they sell the loan at wholesale rates and the servicing rights once you've made a payment. What this means for you is all the underwriting is local, all the appraisers are local, and the service is excellent. None of this $50 for this $50 for that of BofA, no crazy things like proof you've made your last 12 months rent payments (like BofA). And given that they're selling them directly the rates are absolutely competitive. And around here, agents know Jeff Divack. The L.A. on our property saw that and knew, this is going to be a simple close.
Again, this means we had to be the vigilant ones on making sure we didn't overpay, because the appraiser thought we're underpaying by $11k and I think he's crazy, though I understand how he arrived at that number.
Oh, and you can't lock a rate until you have a ratified (signed by all parties) contract.
For home improvements, shop for them now. Check out Sears for appliances, Home Depot and IKEA for kitchens, lumber liquidators for floors and decking, or wherever else you think you would
go. And price out, how much does getting what you would want, cost. Not what's the cheapest, what does your taste in these things cost? How much are then when they're on sale, how much are they if you have to buy them at full price? (It almost always pays to wait for a sale, if you can possible live without the item in the meantime).
This is why outfits like Capital Investments LLC do so well in flipping properties (except when they ignore the architecture... IMO). They buy high-end looking stuff (maybe some of it is high end, I haven't seen it in person to check) in bulk and do all their homes in the same way. You don't have access to these bulk prices, so often, buying from them is cheaper than doing it yourself even with their mark-up and profit margin. If you like their taste. It's not my taste, but it is very pretty.
Now for some people, shopping for home improvements itself is going to drive you to want to buy a house... I found the feeling wore off after 2 weeks.
I agree with most of what Frank said about the Courthouse. Lot's of time, effort and wheel spinning. Many, many sales are cancelled and all your prep is for naught. I heard, recently, that one of the "regular's" is paying so much that his margin is negligible and he and his employee's are buying everything in sight.
You can call an hour before the sale and still have it be cancelled 2 minutes before the auction is to start. You can "buy" a property and find out the next day that a bankruptcy was filed 5 minutes before the auction.
I would take issue with Frank's warning about other lien's. You would want to make sure the foreclosure was on a first trust and whether certain steps were taken if an IRS lien exists; but as long as you aren't foolish enough to forego an Owner's Title insurance policy (enhanced), you should be fine.
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