San Diego Housing Bubble News and Analysis

It's really hard to give blanket advice on how to get the best price. It depends on the location and condition of the property, the competition in the neighborhood, the motivation of the owner, ...

That said, you can offer as low as you want. The worst that can happen is that the offer gets accepted, and you'll actually have to buy the house :)

Selective sharing. I like it.

Okay, not really. $5,000 a month, must be a *heck* of a place. $2,500 for the new one, you must be putting down a *heck* of a lot of money and/or it isn't half as nice as the place you're renting.

I don't care how best a price you get on your new place, you'll be losing money and regretting it in the future.

To answer your misguided question though, I wouldn't expect that you could get more than 10% below asking on a place, and less if the seller priced it right in the first place.

If you're thinking you can take advantage of the deflating bubble to get a better price today, sorry you can't.

eccen in esc

We are renting 3 separate houses. We would be putting about $425K down on $749. Place has been on market for 10 months. Started out at $900. Very unique property doesn't come along very often. Hate renting. Would rather waste a little money and buy than rent 3 dumps. At $749K any predictions on how much I would be losing in the long run?
And with such a large down that is a consideration isn't it?
Sure appreciate all your advice and input. Buying is real scary after being a piggington fan for 10 months.

Eccen -

My advice would be to do alot of diligence on the market conditions, that are pertinent to that area. As you said 10 months is a long time. Have they listed prior to that? Are there expireds or cancelleds for that home? How much do the sellers owe on the mortgage, do they have any HELOCs? How long have they lived there? What did they buy it for and how long ago? What is the price per square foot in the area?

You say it started at 900 and now is at 749k... What is the chronology of the price reductions? When did they happen and by how much did they occur. What about recent sales of comparable properties in the area? How many have there been and how many have failed and turned into expired, cancelled or withdrawn listings?

A large down is obviously helpful, it pretty much shows that you should not have many financing problems. How much the seller or sellers agent considers this a factor is debateable. Without knowing these other factors I mentioned above, it is hard to advise on what to come in at. However, your realtor should be able to give you the answers to these questions, to help you assess where to start negotiations.

Of course, my first piece of advice would be to say try to wait if you can as I feel this area will keep declining. I was out in Valley Center last week and it is a GHOST TOWN. I know this is not Valley Center but still, I know of some very nice developments out in east Escondido that are also getting HAMMERED.

As always, I understand people have different needs, desires and situations so if you are going to buy now, get the answers to those questions above and work from there.

If you want to post the address I will see what I can do to advise you on this thread.

SD Realtor

You could offer 20% below,Just use a letter of intent.It is one page and non binding .Make sure you mention the falling market and your concerns about getting hurt, perhaps in a cover letter to the agent. Go away for a couple of months and if the house is still on the market they probably will have dropped the price a little. If it plays out that way go back and ask them what they think about your offer again. You can do this on several house to improve your odds. I don't know that many people who have this kind of discipline but I have done it and will do it again. It satisfies the itch to be in the market without totally ruining the fact that time is on your side. If the market really falls just start a new round of "lowballs".
Disclaimer: This stategy is not for everybody.
Best wishes

If you are talking about long-run, buying a house is a good long-term investment. But in the short-term, you may lose. How much, I cannot tell you because it depends on how deep the house slump is going down and how long house recession is going to last.

eccen in esc

wow. thanks to all of you for this helpful advice. I will post the address and a lot of questions will be answered. The elderly couple bought in '79 for $160 and I think they owe about $423. I will have to get comps from my agent but as far as asking him what to put down that's not going to work because he really needs the sale and doesn't want me to offer too low. I was thinking $675. The address is 2702 Mountain View Dr, Esc 92027. I guess I don't need to worry about any of the Piggingtonians underbidding me.

Wow, that's scary. They are 28 years into a 30 year mortgage and owe triple what they paid in the first place. This is the real danger of HELOCs and borrowing against equity.

You might also say it is the beauty of buying instead of renting...Ouch ouch ..stop throwing those rocks..LOL
It is a joke.

BTW, since they are elderly, chances are they are retired and that mortgage payment is a burden - especially since it has grown over the years.

Rustico, dodge those boulders!!

Eccen...

Hear that sound... clunk clunk clunk... that is my head hitting the desk after reading your post...

"I will have to get comps from my agent but as far as asking him what to put down that's not going to work because he really needs the sale and doesn't want me to offer too low.."

Are you serious Eccen?

Is this agent a close friend or relative?

Look Prudential has listed this home and the seller is offering 3% as a co-op. At 700k that is $21,000 that is going to be split among your agent and his broker. Repeat after me... "I don't care about the commission my agent gets. I want to get the best deal possible..."

So not only should you lowball, you should ask your agent to split the commission with you. Even 1% of that split would be 7k for you and that would most likely cover your closing costs. Stand up for yourself because your agent will not be making the monthly payments on this home, you will.

********

Okay so after a quick look the home was previous listed for 270 days with Prudential. As you said they started at 900 and by the end of the listing they were at 799k. Now they relisted with Prudential again at 749k on 6/5/07. This home is in mapcode 1130F2. There have been NO as is ZERO sales in this mapcode in 2007. There is currently 1 home in this mapcode in escrow and that is from the new homes on Emerald Oaks Glen. The last sale recorded on the MLS was the sale on Royal Oaks on 12/15/06. That home was approximately 2500 sq ft and they had a very nice view of the valley. Now I cannot comment on the debt load these people are carrying. What I see on the Realist report is the original purchase back in 1979 for 160k. Now in 1993 there is a loan for 173k and another in late 1993 for 85k. Then in 1999 there is a loan another 165k. To be honest I would assume that one was a refi. I dont know for sure but common sense would dictate that if these people were carrying a heavier debt load they would have refinanced back in 03/04/05 at much lower rates then the 1999 or 1993 terms. So I would disagree with those who implied these people are strapped by the payments they are currently making. Yes this is a speculative statement but I am willing to stand by it.

Eccen I could go on forever with the analysis but I would recommend checking the surrounding mapcodes as well. You have read enough of Piggington to know the prevailing opinion here on whether you should buy or not. I think starting at 675k is not a bad idea. Hopefully they will counter and not totally disregard the offer. How motivated they are is questionable. The home is vacant and held in trust and I don't see a huge sense of urgency on their part. If you are shrewd, pick a number to hold the line at and be prepared to walk if you don't get it... then come back to them in a month or two and try again. You may get the home, you may lose it. It is a long hot summer and I don't see them getting it sold in the near term. I understand you have an extended family so the way that it is laid our may be perfect for you. Also note that the MLS states sale is AS IS. Actually this is meaningless and should not stop you from doing all of your diligence and asking for repairs or credits for repairs if they are needed.

Again, worry about Eccen's money and not the realtors money.

SD Realtor

It is definitely a long hot Summer and its only starting to get hot. Try selling a house like that in Mid July when it is 105 degrees.

Also, don't forget that buying as a collective has its own problems. People you love dearly have a way of getting on your nerves when you are forced into close proximity for extended periods. I imagine that problem will be compounded more by a remote location.

You should all agree on an exit plan just in case you cannot stand it after a few years. i.e. What will you do if one co-owner wants out, but the rest dont want to sell? If its all agreed beforehand you will avoid some big problems and ill feelings later on.

You might as well offer them whatever you feel is appropriate--don't be concerned about your agent's income. My husband is currently trying to sell two houses and a fourplex as an executor of a relative's estate, and in this market, he is seriously considering every lowball offer that comes in if the other terms are favorable (cash/high down payment/willing to have a longer escrow due to legal notification/as-is sales). His real estate agents are not thrilled about this, but they knew the deal when they signed up for the listings. If the house in Escondido is vacant and held in trust, it might be the same type of situation. Also, Mountain View is (at least used to be) a pretty nice street. You could do alot worse in Escondido.

Near as I can tell from looking at the property is that it looks to be one and a half houses. That's half of what it sounds like you have now. I'll grant you the large lot, but unless somebody's idea of the high life is living in a tent, I'm not sure how this place is going to work for what sounds like three families. That would be my biggest concern if I were you.

Granted you've seen it and I haven't, so I may be missing something, but I'd also consider what_a_disasta's comment on buying as a collective. And not to mention that $425K nets you $1,750 a month before taxes pretty easily.

And yeah, finally, take the advice of the others who've posted and don't worry one bit about getting a sale for your agent. He works for you and the purchase has to make sense to you (and your group) both financially and with regard to quality of life. You'll be living with your decision for a long time.

eccen in esc

brrrr - my feet are getting colder by the minute. I have a lot of serious thinking to do. All this advice has been excellent and I will be considering it all very carefully.

As far as hot this summer, well the house does have a pool.

And I don't like the thought of leaving the piggingtons either.

Thanks to every one of you who took time to contribute to practical and sensible solutions to my dilemma. I really do appreciate all the input.

Eccen whether you buy or not I hope you stick around. Many people who already bought still hang around.

SD Realtor

Critter, Maybe they put the money in good investments over the years? I know lots of super smart people in similiar situations.I bought my house for 90k owed 400k when I sold it for 575k . OOPs forgot to say the difference got me a much better house in a better location for me and my family free and clear. the 90-400k was invested in real estate mostly. Those trips to Spain and Agentina and the cars paid cash for me instead of my landlord were all nice too. Working part time is cool too. Too bad I ran my mortgage up to 400k.Watch out for that avalanche!!!!!!

Yes maybe they have squandered their nest egg. We know lots of people like that too.

I know a few people who have walked the tightrope between taking their equity out in advance and investing it wisely - and others who have spent it foolishly, paying extra interest every month, and ended up wondering what happened to all their good intentions when the house finally sold and they had to bring a check to closing.

Some have thought their "genius" at buying property which increased in value would mean even more luck in the stock market and didn't do their homework when investing.

It takes a supreme amount of discipline to do what you have done - commendations for that. I just find it difficult to think of putting 28 years into a payment plan where the balance continues to ballooon instead of going down.... that said, I knew a guy who paid $32K for a really nice house on a hill in PB in 1962, and when he died in 2005 he owed that and much more!

I was very lucky too. Something about "preparation meeting opportunity". Anyway I am still relatively young.I am aware I could fall on my face tomorrow if I don't watch my step.That type of concern seems to be lacking in the players that made this Housing bubble.

"I just find it difficult to think of putting 28 years into a payment plan where the balance continues to ballooon instead of going down.."

It is not unusual for us to need or want to use our assets to live on in old age. They may have had a reverse mortagage. We should try not too be to harsh(or brag too much in my case).We might be in their shoes one day.

Lecture OFF.

eccen in esc

update: needless to say, like a proper piggingtonian I did not buy this place; my lowball verbal didn't fly. Apparently it was bought by an "investor". Wonder what it went for. I am getting used to waiting now, watching from the sidelines and getting more accustomed to my rental.
Love you all,

"Think of the most selfless thing to be,
Send it to the whole humanity
you and me"

Thanks for keeping us up to date - and congratulations on your first refused lowball!

It takes a lot of guts to present a possible scenario on this board and open it up for debate, another thing to be proud of. I wonder what happened to ole VC23915 or whatever his name was that was buying in Temecula despite three threads and 80 opinions not to?!?

Eccen way to hang in there... I have had a few lowballs refused as well...

The mountain view property sold for 675k and closed escrow on 8/3/07. The buyer put down 325 in cash and financed the rest with a 350k mortgage.

SD Realtor

eccen in esc

eccen in esc

Thanks for information SD and for all your advice and that of all others who posted helpful comments. I'm saved.

XXXOOO