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Monday, September 27, 2010
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16 comments:
Jeremy-
I agree with you that when the seller is trying to get you to use seller financing that should be a huge warning that they don't think the house will appraise.
Hopefully the open houses you went to this weekend went well.
HB,
To be fair I didn't think of the appraisal issue, it was Arkey. I just thought it was them trying to get more for their house. I read online that most seller financing is a balloon loan. With interest rates so low now, it seems like the absolute worst thing you could do to take on a higher loan AND not lock in the low rate for the full 30 years.
One of the open houses went too well. My wife loves the house but I'm not convinced. The open house was packed and I felt rushed, so we are seeing it again this week with a tour agent. I liked the yard/lot of one we offered on last week better but this one is fully updated inside so of course it is my wife's favorite. I'm not looking forward to the discussion we might be having after the tour.
I have to disagree with Arkey (?) and housebuyer on the owner finance issue. As a seller, I would find owner financing a very attractive prospect. In fact, this is part of my retirement strategy. Having this form of sale provides an excellent stream of income for the seller (similar to an anniuty), far superior to the palty returns offered by CD's or MM's.
A purchaser can still make an offer contingent on an appraisal. A seller take-back (also know as "holding the paper) often results in a below market interest rate and always results in a big savings upfront due to lack of lender fee's.
I have purchased a number of properties with owner financing and I would have absolutely no qualms doing so again.
I prefer owner financing over conventional anytime, unless there is a balloon.
VA-
Perhaps you have seen better deals than I have. Every house that I have seen where they offer owner financing the house is overpriced by 15+%. Almost all of them end up going off the market and not selling. I usually find the same thing for houses that are for sale by owner.
You look at/have bought significantly more houses than I have, so I am sure you are right that there are plenty of owners that give competitive terms an owner financing, but from my experience it should at least be a red flag.
hb,
I never overpay :). You are correct that most FSBO's overprice, but some underprice. I've bought a few.
Owner financing has never been a red flag for me. I've purchased at least 5 or 6 that way. I don't need a bank appraisal to determine value.
Speaking of overpaying, a question for you all - does the list price on this one seem high, or have the reductions brought it to a reasonable price for the size and area?
http://franklymls.com/FA7384908
Katie,
Does this house really have 4 bedrooms? I see 3 listed on the main level, and one in the basement, but there are only 2 bedrooms listed with sizes on the main level. Maybe they are counting the sitting room as a 4th bedroom?
House is cute, but the main level seems small given the price.
Katie-
I am only moderately familiar with this area, but I would think the house is overpriced by ~50K. I would think that for just under 600K you should be able to get a similar sized house that is updated nicely. Too me the floors look in really bad shape, the kitchen may be updated (but fairly cheaply)...
Anyone want to make predictions on the CS number that comes out tomorrow. My only prediction is that even though it is a 3 month rolling average its will not increase anywhere near as much as the last 3 months (all were +1.7-2.3%). I actually wouldn't rule out this month as the first negative month we see starting a long string of negatives
Jewel - the three upper are really small and the one lower is a new addition that is a master with separate room as "sitting." They don't picture all 3 upper because they are so small, I think, and similar to each other.
housebuyer - you see correctly. I came up with a similar amount that it's overpriced, but was curious what others thought.
Katie -
What Jewel said.
Is that basement bedroom a legal bedroom? Bedrooms must have a secondary means of egress in case of fire. Requirements vary by local building codes but a good rule of thumb would be:
A vertical casement window with 6 sq. ft. of access. The height of the window installation is also important. The bottom of the window opening should be no more than 44 in. off the floor. Outside, an oversize window well is required. It will need to be at least 36 in. wide and extend 36 in. out from the window. The window well height is also limited to 44 in., as measured from the well floor. If a deep basement forces a deeper window well, most codes will allow a concrete block on the floor of the well to serve as a step, as long as it doesn't interfere with the window's opening.
For what it's worth, Zillow says that property only has three legal bedrooms.
I agree with others that it does appear to be overpriced, especially if the fourth "bedroom" does not meet code.
Washington Biz Journal: "Full list of properties sold at D.C. tax auction"
"the tax office auctioned the liens on 2,717 properties but fewer than half, 1,265, actually sold. The sale generated about $11.2 million, much less than the $35.9 million due to the city in delinquent real property taxes as of Sept. 20.
The vast majority of liens bought during the auction were taken by only a handful of buyers. At the time, we didn't know who they were.
Now we do: HMTR I LLC won the day with 249 buys, Capital Bank NA FBO Munitrust Capital Fund II LLC was second with 224, and Elm Capital LLC was third with 134. No other bidder bought more than 100 liens at auction."
c, thanks for your input. The Falls Church city assessment website lists 4 bedrooms for that house. I'm taking the city website's word that it's legal. The windows are small (although they might be 6 sq. ft., it's a raised rambler so they windows are above grade).
Wonder if the sellers will take a low-ball?
Katie,
As the name suggests, what do I know? But two smallish price reductions in 80 days sounds to me like a seller who is emotionally holding on to the sales price they have in mind. I'd be surprised if a low-ball would work. But you never know!
Katie-
If your interested in the house, but are not willing to pay close to the current asking price I would give a lowball offer. If the person will accept it than you can get the house, if they aren't than you haven't lost much, since you likely would not have ever come to agreement on the price.
newbie - you're no newer than me, trust me, and you make an excellent point
housebuyer - thanks. Comp-ing this house has proved to be awfully difficult for me. I'm having trouble finding something that would give me much of a good idea of what a similar house sold for simply because I can't find a similar house. I'm not sure if other solds v. tax assessment kinds of numbers are or price per sq. ft. are helpful. Should be interesting.
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