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Tuesday, July 27, 2010
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51 comments:
Oakton haircut:
http://www.franklymls.com/FX7213299
Here's another one for you NoVAwatcher:
FX7370221
Based on what the same model of homes on the same street are asking (and not selling) for, they will also be taking a haircut.
The new CS numbers just came out and not a huge surprise, but DC was up 1.5% to 182.1, which is the highest reading since late 2008. We will probably have another ~2 positive months related to the tax credit, before we see all of the gains taken away.
hb,
Thanks.
It beat my minimum expectation of exceeding last year's peak, but fell short of my 184 +/- 1 prediction.
I say April May June will be up again (or possibly flat), but as soon as we get a July number in there it will be down MoM.
Jeremy,
REO. Do you think the other seller's care too much? No haircut here. Look at what the guy paid. How do you think it looks after possibly a few years of defered maintenance?
Cara-
I agree with your numbers, and I think before the end of the year we will be back at the March number of ~175, although as volatile as the numbers have been recently who knows.
NoVa,
This is a short. FMV?
I don't think the 8K had much effect, if any, over 500K. So the mix will change and be dominated by the lower end.
VA-
I am not sure I agree the the 8K didn't have any impact on houses over 500K. I agree few first time buyers buying expensive houses cared that much, but it made a big difference for people who needed to sell. The 8K allowed a lot of people to sell their house for more creating additional move up demand. The move up buyers also got an additional 6.5K, and I think the additional cash plus ease of sale definitely stimulated demand in the upper middle tier of houses. (400-700K).
Are regular sellers taking foreclosures and short sales into account as comps when they set their prices or are there two separate worlds of prices?
What is up with all the houses in Oakton that aren't connected to the sewer lines?
Also, there is a surly-but-amusing house hunter looking in your same area, Jeremy. Check out the comments on these:
http://franklymls.com/FX7346892
nothing says romance like his and her toilets:
http://franklymls.com/FX7353926
Va,
That's the most logical scenario. If it's happening it must be coming from PGCounty and other parts of the metro area though. (very likely)
The MRIS numbers in NVAR actually showed (a) the median rising substantially, and (b) the mix changing towards more "high-end" sales with stuff over $600k finally thawing.
In NVAR, I think what happened is the lack of inventory at the low-end is constraining the number of sales that can happen there, such that the tail end of the $8k this time around couldn't effect the mix any longer.
But I only looked at the NoVa, and particularly NVAR MRIS, so it's likely that the mix towards low end sales in PG County is warping the DC CS, keeping it down from the 184 I predicted based on what the numbers for NVAR said.
What does FMV mean?
VA_Investor:
By haircut I always thought we were talking about the loss the bank took, not the seller. Don't most home "owners" just do a short or foreclosure rather than take the haircut themselves? Maybe I misunderstood.
As far as the one I posted, I don't know how to determine how much of a haircut the bank will take, as it appears the owner took out some equity in 2007 before defaulting just a couple years later. I just know when you compare it to the one Meshell posted it is pretty obvious they won't get their already-reduced asking price after the REO condition discount.
Meshell:
Those comments are funny. I wish I had seen the second one before we wasted our time visiting that house. It really wasn't suitable for our needs after what they had done to it.
Meshell: I think that when the houses were built, the development was so sparse, they were so rural, and the terrain was so rough that they didn't put in sewer lines. The minimum lot size in Oakton seems to be around half an acre (20k sqft) with many larger.
We were looking at a rental in that neighborhood a few years ago and the area was very tranquil.
Didn't rent because the house was crap. The out-of-state owners put the onus on the renters to do all of the maintenance, with predictable results (e.g. I think the front door had a doorknob intended for a closet). I'd hate to be their neighbors.
If you're looking for a nice graphical output of the C-S data, the Tim at the seattlebubble.com has them up already.
click on DC to get it charted in each graph, and then, dude you've got to click on San Francisco, holy moley what a roller coaster.
(no tiers).
I don't think the 8K had much effect, if any, over 500K.
A young couple with a decent combined salary could be buying in that range. Let's not forget the move-up sellers as well. It had an impact, though diminished.
NoVa,
Fair Market Value.
Arms lengh transaction, willing buyer and willing seller (i.e no duress), full knowledge of the market on both sides.
FMV = ~$600k, depending on shape:
http://franklymls.com/FX6943324
http://franklymls.com/FX7007844
Just watched Shiller on CNBC. He said housing was going to double dip. Why? Unemployment. He seems to think housing prices are related to jobs and income.
NoVa,
Is Milton(F.) still alive? If so, you better make a call.
Robert,
Hope you are wrong and we stay around 6% (or less). But a double-dip will present some opportunities...
Hate to see people out of work, though.
should have been ~, not -
VA_Investor:
After re-reading my initial post I can see how you thought I meant that the other nearby homes for sale would take a haircut because of the one I posted. I worded it very poorly, but by "they will also be taking a haircut." I meant that the one I posted would take a haircut in addition to the property NoVAwatcher posted.
However, I do believe the two nearby similar homes will not sell for near their asking prices:
FX7353926
FX7282935
DOM already shows that to be true for the second one.
A much bigger home with a better lot and a pool sold last year just across the street from these two. Unfortunately it was out of our price range at the time.
FX7056953
Jeremy,
I looked up the last one. Dropping from a peak of 706K to 690K hardly seems worth pointing out.
Did I miss something?
"Are regular sellers taking foreclosures and short sales into account as comps when they set their prices or are there two separate worlds of prices?"
Meshell-
Most RE Agents try to brush off Foreclosure/Short Comps in neighborhoods
But smart Buyers that know the area Comps (both regular Sales & FC/SS's)take these statistics into account when making offers on homes
At least I do !!
Anyone else??
VA_Investor:
The last one was just to show a much better home that sold for 690k to demonstrate why the 679k home was so overpriced (as if 239 DOM isn't enough to show that aleady).
"Anyone else??"
Of course. Nobody is going to convince me their house is worth $400k when an identical model is on the market for $350k and its only obvious flaw is that the utilities are turned off. Comps are alternatives and so long as they are on the same market and I can purchase either, I'm going for the one with the realistic/better price.
Meshell, spunky,
In my neighborhood there have been enough SS/REOs and enough non-distressed sales to establish two competing set of comps. To an extent, this is justified and reflective of the condition of the properties in question, but not entirely. For properties of similar condition there's still about a 5% premium for a quick normal sale. (seems about right to me)
Most of the gap between the two sets is updated/move-in ready, versus original possibly shoddy condition. The cost to take the original condition places to move-in ready is well under the difference in price, such that flippers have had some luck in our neighborhood.
But this could be neighborhood specific. Or price-range specific. At $400-$450k for mildly to well updated for a SFH in a desirable school district my neighborhood attracts first time buyers who are at their limit, because anything cheaper is 400 sq ft smaller or not in the "right" district or same commute. And anything noticeably better starts at $550-600k. So cash-limited buyers don't have the $30k minimum and time/expertise (or more money) to devote to renovating the non-updated ones, but may have the income-stream to support a $400k purchase. And there's a limited number of people who want to renovate slowly over time while living there. (And a goodly chunk of those do so to get their foot in the door, expecting to have the money/income to do the renovations later).
There's definitely a time and patience premium being paid. But foreclosures and SS's have been a large part of the neighborhood dynamics since at least 2007, so it is now well-established that there can be two co-existing set of comps. (even though REOs did pull the regular sales down through 2008 and "real" sales pulled the REOs up in 2009-now).
Well, Jeremy,
It is what it is. You don't know the circumstances unless it is actually listed as an reo or short.
Do you think anyone not under some sort of urgency will slash their price? Estate sale, BK, job loss, divorce, can't afford the payments, ect. will have to sell in most cases. You won't know except for the price drops.
Just because values may have dropped, doesn't make people run for the exit.
As I've contended before; people settled in their home at an affordable payment are not going anywhere. I am an example, what do I care?
Did anyone tour this N. Arlington foreclosure last winter?
2022 N Dinwiddle
It was a complete wreck, but the potential was there if you had the $$$. It sold for $386k.
Now the same house is up for sale and they are asking $750k 3 months later? Keep dreaming... that neighborhood is probably the most depressed in all of N. Arlington. (relativity speaking of course) There is no way they get that much.
Do you think anyone not under some sort of urgency will slash their price?
If they're serious about selling they will. Has nothing to do with urgency, just reality.
spunky, their agent should definitely not have said that to you. They could lose their license for that. Of course since it helps you, I wouldn't urge you file a complaint=)
Speaking of open houses....
I've been taking classes for my RE license. I have to say, this industry is unapologetic about being a cartel and twisting the public's arms to comply. One thing that really stuck in my craw was that a successful selling agent will hold as many open houses as possible. While one would think this was to get a sale and help the seller, it's not. It's so you can lure as many prospective buyers as possible without a buyers agent so you can double-dip on your commission. See, couples like to drive around on Sunday looking at neighborhoods by themselves, before they even get an agent. If they see an open house, they'll check it out. As soon as they sign the registry, they belong to the listing broker and his agents.
Most evenings after class, I feel like taking a long shower to remove the filth of this industry.
kevin,
Are you doing this as a career change or just so you can act as your own broker?
On that subject, I was told always to write down an agent, so was writing down redfin when we were just browsing. But later I ran across many registries in which there was no place to list who your broker was. What happens in this case? I had an agent already, just no space or method of indicating that.
If there's no space given for your agent/broker, which I'm SURE is accidental (wink wink), then don't sign it. Show them your ID or whatever, but refuse to sign a book that's a de facto contract if you decide to buy the house. Even if you're not going to buy and just want to browse, do this on principle so the buyer knows their agent is trying to pull a fast one. If they don't let you see the house because of this, I'd go a step further and write a nice letter and mail it to the owners letting them know that their agent is preventing people from seeing the house out of selfishness and is putting his/her own interests above the clients.
This industry is really really dirty. I didn't like it before, and I'm pretty appalled at groups like NAR that act like they're a moral authority in the industry while being the flip opposite. They're just a cartel that pushes for laws to help their bottom line while spoon-feeding propaganda jargon to their NARbots that repeat it to the public.
Sorry for the rant, I was just a little shocked that they could be so blatantly selfish and undermine their clients like this.
Yes, I guess that makes sense about the septic. And sometimes houses in that area are even on well water...! Its crazy to practically live off the grid so close to DC.
Cara, your explanations always make so much sense. Ever thought about writing a real estate column? You are a much more coherent writer than some of the hacks at WaPo.
Jewel, that price is crazy for that neighborhood--and they just bought it and gutted and want to sell you future renovations? We looked at a much nicer new big house right around the corner on Cameron a few years ago that was priced less.
That sign-in thing....really? I think I'll just sign a fake name from now on. Now, what name should I use? Something vaguely pornstar but not outlandishly so...
And no, I'm not going to do this full time. Have a new job now. This is just to save friends, family, and myself a lot of money. If my tone is any indicator, I'm doing this largely out of spite, for justice.
If you know any brokers that don't require NAR membership, please let me know. This system is very unfairly gamed against the populace.
Thanks, Kevin, keep 'em coming.
Our friend Frank posted something pretty similar on his blog and/or franklymls about the declaration that you have an agent and also not to contact the listing agent directly for the same reason. Or, be sure you declare to the listing agent (in writing if you can) if you do contact them, before you say anything else, that you have an agent. Otherwise you may owe to both the listing agent and whomever you end up using as a buyer's agent a commission for buying a property.
More than once, I have visited open houses and felt that the agent was doing next to nothing to help the seller get his/her house sold--or worse, making it harder for genuinely interested buyers to find out about the house. An agent once even asked me if I was asking questions about the dimensions of rooms (because he hadn't bothered to indicate them anywhere) if I was asking for myself or for someone else. Huh???
It seems to me that for every agent who has impressed me superficially, I have met 10 who made me wonder--including those "top agents". It also made me wonder how much time/money I lost on prior house sales because the agent just couldn't be bothered to do even the most basic follow up and lied about it to us.
Yes, Kevin I know that the Agent said things he shouldn't have..but you got my point, Opens are a way to obtain info
(BTW I am not interested in this house as it is too small, and I gave the WRONG neighborhood info as well!)
I post this info so that novices can learn a few 'tricks of the trade', some of which you have listed as well
NEVER put your correct name/info on those sign up sheets
YES, Opens are for Agents to collect Buyers, not sell the house they are in that Sunday
I am older than most of this blog and have played the RE game several times over in my lifetime
I am convinced that everyone (including myself!) gets royally screwed on their first home Purchase
It is a filthy Business & I trust no one in it !!
(including my Agent, whom I have worn out by so much low-balling over the past 2 years)
She (my Agent) actually is working against me cause she DOESN'T want me to get a "real-estate agent deal" as I call it
RE Agents are the ones that have the inside information, to be sure & get the BEST deals all to themselves
I could tell you stories that would curl your hair about transactions I have seen in Nova, but life is too short & I don't type well (obviously!)
Just my info to help others that are Buying in today's market
It's not that you would have to pay both their commissions. That's very rare for a buyer. It's just the principle of the matter. They do not deserve to double dip on the commission for doing nothing. That money ought to be returned to the seller and buyer. It's absurd that a house selling for say $600k could mean $18k in a sellers pocket. It's highway robbery if they engineer a sale (open house) to make it $36k.
I brought this up with my instructor, and she insisted it's perfectly fine since the buyer agrees in the contract with the agent for this. Of course, the agents and brokers are the ones that write the contract.
This dirty trick is courtesy of NAR. They realized several years ago that buyers were looking online to find houses, making the buyers agent near-obsolete. So they "encourage" these agreements on the seller's end that generates full commission whether there are two agents or not.
I asked our instructor what would happen if, say, as an unrepresented buyer I submit a generous offer contingent upon them re-writing their agency agreement to 3%. She said "nice try, no." I reminded her that it's her fiduciary and legal duty to submit all offers. Of course, she changed her answer=)
In part the populace is to blame for this. The agents and brokers wouldn't get away with this if people were aware. We need some sort of public awareness message to keep people informed of how badly they're getting screwed. We saw all sorts of actions from Congress over the years to make credit card companies and lenders operate more transparently with their customers, so what happened with real estate? The total opposite occurred. NAR got Congress to spend billions bribing people to buy and generate commission. It's just sickening.
Kevin, thanks. Sorry my comment was a bit unclear.
Here's the frankly post I had in mind.
don't call listing agent
What I should have said is that in the scenario we described:
1) in my view, the buyer is paying the full 6% commission to the seller's agent, because the buyer is in the end paying for the house, even though technically by law the seller "pays" the agent--the point is that the buyer will have to pay the negotiated price and the seller gets the full 6% but does not split it with the buyer's agent; and
2) the buyer may owe his or her buyer's agent an additional amount if their contract says the BA gets a commission of 3%, when the BA negotiates or raises questions on behalf of the buyer, but enters the picture AFTER the listing agent has first met the buyer, e.g., at an open house, when the buyer doesn't indicate s/he has an agent.
See the frankly post for the explanation, although he view #1 differently--the end result is the same.
Meshell,
Agreed - N. Arlington buyers will pay more for "move-in ready", but not that much more!
The first house my wife and I looked at in person finally sold today,
FX7200814.
Another Oakton haircut to the tune of $170k.
jeremy,
random, but the previous owner (the one who paid 800k in 2004) was part of the family that used to own that old-fashioned diner on chain bridge road that closed down a few years ago. I knew one of their cousins at college.
jeremy,
Would you have paid 645K or is it going lower?
No, we would not have paid 645k for it. Not one thing had been updated in that house since it was built in 1978. I liked the big garage, but that was about it. My wife said she could not find one thing she liked about that house.
Since it was the first thing we looked at we didn't really know at the time how much better we liked contemporaries. Some of the colonials built in the mid-80's have a more spacious feel to them that we like too.
As for if it is going lower - I'm going to say that whoever bought it will have to fix it up before selling it. I think it would sit on the market another year if they tried to sell it without putting some money into it. I don't think the profit margin is high enough for a flipper, but you'd know better than me. I just know it needs a lot of work.
To answer your question more directly, no I do not think they could find another person to pay 645k for it in its current condition. I also think the market gets worse over the next year, not better - so they would take a loss.
Ace,
1 smart agent for every 10, sounds about right.
One agent, (who's actually very good) her open houses are to convince everyone in the neighborhood that they should sell through her. I'm sure she collects buyers interested in the neighborhood but not that particular house at them too. Hence why her sales are either quick or not at all (one went off market earlier this year because it was overpriced for what it was, but they had priced it as low as they could given their purchase price and made a decent stab at getting an $8k buyer).
She's terrible at taking pictures
(the houses always look better in person than they did online, which is not necessarily a bad strategy) but man does she put out a spread of food for the open house. Hot cheese dips and sausage balls and brownies and cookies, and drinks.
The price she gets things to sell for isn't any higher than anyone else, just in line with comps, but she gets them sold faster. AND I think she actually takes a smaller commision 2.5 instead of 3. Not a huge deal, but something. Then again 6 out of 24 times she's been the selling agent in the past 4 years she's also been the listing agent on the house (or out of 31 lists, take your pick)... Whether this is unusually high or not, I don't know.
Cara, thanks, She does sound better than the average agent. And those are good ideas for me to try when I FINALLY find something to buy and have to sell this place.
There haven't been many houses in our neighborhood for sale recently. One agent (who has the kind of blunt, aggressive personality sometimes seen on HGTV) seems to be able to convince some of his "estate sale" condition clients to (a) set the price below market value for comps. and (b) spend several weeks getting rid of all clutter, cleaning, painting, and in some cases doing more before selling.
In other cases, he doesn't seem to be able to convince clients to do this (the houses are clean, maybe have been updated already, but are overpriced).
For all of them, he takes good photos, sends out flyers before the house is on the market, provides informative descriptions in MLS.
But only the first group sell quickly.
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