That forum discussion is interesting. It reminds me of a realtor friend who is convinced prices can't go down. Or of republicans who are convinced that they're righteous tough guys.
If you only hang around with or listen to people who share your point of view, you're unlikely to get the full picture.
Eventually, though, the full picture will be undeniable. Enough people in their circles will eventually understand what's happening, a critical mass will be reached, and, once that happens sentiment will change fairly quickly. Kinda like Bush's poll numbers finally plummenting after all his years of incompetence. There'll always be a few who don't see the light, but, for the purposes of the housing market, those few won't matter much. The sea change in sentiment that should happen in the next year or two will be enough to send the market down substantially.
Submitted by waiting hawk on June 24, 2006 - 3:31pm.
"Kinda like Bush's poll numbers finally plummenting after all his years of incompetence."
Interesting cause I fliped floped. Bush sucks imo and cant wait till he goes. Comin from a republican. Democrates are going to take a lot of the house coming up.
They have to do with real estate because they illustrate the herd mentality. It was a clear, current example of how people go along with the crowd and how, once a critical mass of people changes their mind, a sea change of opinion follows. It was meant to illustrate that this phenomenon is a significant part of the human condition. And this phenomenon has everything to do with San Diego real estate.
"Thanks for sharing that and participating in this forum. I invite you to consider my point of view..."
You are right on zk. This does have everything to do with the state of our country's politics and economy, and our populations' current mind-set regarding spending.
the flipper got the place in 2/2006 for $465,000. Now they are trying to flip it for $598,000, a $133,000 profit.
They certainly did A LOT. The before pics showed a absolute disaster zone. I really wonder about the renovation cost. Which the flipper did not post on the forum.
I still think there are a fair number of people that do not believe the bubble exists. This is hard to believe, but I am convinced it is true. Even at years end, when we will have YOY negative median home changes, they will still be claiming the soft landing scenario is unfolding. This is what those of us looking for a price break want. At some point in the future, when they are convinced of the bubble, the mass selling will occur, which will accelerate things downward. Once we are in the mode where everyone is convinced things are coming down, it will be the buy spot.
Be clear that this will be a difficult time to buy a home. The new paradigm arguments will then exist on the downside, as to why prices will continue to decline. Be prepared to be criticized for being a fool to buy RE when this happens.
At times it is tough to stay with ones convictions, especially when they fly in contrast to the majority. However, it is the way to make money. The herd is rarely correct about an asset class direction. They are often correct in the middle, which will accelerate the trend to the peak, or tough. They are rarely, if ever, correct at the turns.
I am constantly seeking the other sides opinions on things, just so that I can determine if mine is incorrect. Constantly talking to people that share your opinion might make you feel good, but will not necessarily make you any money. I have yet to find a plausible argument for a continued rally in prices of RE.
It does appear to me that next year is shaping up as an ugly year for local real estate prices. Time will tell.
I agree about the difficulty of buying at the bottom. I spoke to that when a few people said they'd buy if prices dropped a certain percentage. It's hard, from our current perspective, to understand how things will be then. All the talk will be, "it's not like last time. Prices will not recover like they did before. The outsourcing of our jobs will render future increases in income meager at best. The damage to our economy from years of budget and trade defecits will take decades to recover from. China and other Asian nations have stopped funding our spending spree (buying our debt) and interest rates are going to keep rising. Unemployment and underemployment are so high that few can afford a house." The list will go on. The prevailing wisdom will be that buying real estate is pure tomfoolery. And when things start to get better, it will take a long time for the herd to catch up. They'll still be going with the prevailing wisdom. Just like they did on the way up. Just like they did with Bush. Just like humans do in countless other endeavors. Going against that takes courage. Going against that and doing it at the right time takes courage and smart research.
well, they bought for $465,000, so they are down to $100,000 minus all expenses.
on the forum, lots and lots of questions about the price of the renovation. silence from the flipper. quite frankly, sounds like she's still trying to figure it out. quite a number pointed out they wouldn't have done so much (ie. lots of unneccessary improvemts that will prove costly.)
here's the description of the improvements: "New roof, windows, bathrooms, kitchen, flooring, paint, doors, plumbing, carpet, appliances, recessed lighting, fixtures, electrical and more." These guys also knocked down walls, re-did openings, delt with tree roots in the pumbling, and brand new fencing all around.
I'm guessing $70,000 for the renovation. that would only be a $30,000 profit at the current price. if the agent's commission is 4%, that's about $8000 in profit. less uncle sam and the governator's taxation, we're looking at $5000.
Based on this description and depending on the quality of materials, the retail price on the improvements could be as little as $50,000 or as high as $100,000. Obviously it would be less if the owner is in the trades and is doing the work themself.
An investor has to be careful about the amount of work they take on because some of it pays and some of it doesn't. Redoing the roof, kitchen and baths have better returns than replacing windows and moving walls around; and the tree roots are "invisible". The other problem is that no matter how much money goes in, this is still an 1,156 SqFt dogbox in Clairemont and it will be priced in competition with other homes in the neighborhood. If a lot of them are making similar improvements then this property is part of a trend and will profit accordingly. If hardly any of them are making those improvements then this one's an orphan.
I keep forgetting how small this place actually is. I read a bit more of the flipper's post in the investor forum. It looks like they were able to get the laminate flooring and carpet done for $3,000. But it also looks like they had a huge mold and asbestos problem (with the flipper inhaling some asbestos unknowningly during the initial heady days of 'let's try to do it ourselves'.)
let's just give this flipper the benefit of doubt and go with the $50,000 estimate. which would translate to roughly $20,000 after tax, if they manage to sell for $565,000.
Submitted by waiting hawk on July 19, 2006 - 4:19pm.
OCRenter post:
"I'm guessing $70,000 for the renovation. that would only be a $30,000 profit at the current price. if the agent's commission is 4%, that's about $8000 in profit. less uncle sam and the governator's taxation, we're looking at $5000. "
Submitted by SD Realtor on July 19, 2006 - 11:11pm.
Sad to see... however I cannot find sympathy. The house sat on the market for 160 days at 484k - 529k and then cancelled. Yes the buyers got it at 465k in a private sale. I would maintain they could have gotten less. I would also question how much analysis they did on solds of 3/2 1156 square foot homes in that mapcode.
the flipper range priced it for $565,000 to $598,000. yet when it came to describing the single offer they had, she said the $565,000 offer was a "low ball". looks like sellers are still aiming for the top figure on the range despite the falling market or their own dire situation.
Submitted by theplayers on August 28, 2006 - 12:24am.
I'm seeing a growing number of homes falling out of escrow and going back on market. Hope the buyer is solid, if the sale fell through and they had to put it on the market again, I think they'd be looking at an even bigger loss. If it was me, I don't think I'd sleep too well, until the day it closes.
That forum discussion is interesting. It reminds me of a realtor friend who is convinced prices can't go down. Or of republicans who are convinced that they're righteous tough guys.
If you only hang around with or listen to people who share your point of view, you're unlikely to get the full picture.
Eventually, though, the full picture will be undeniable. Enough people in their circles will eventually understand what's happening, a critical mass will be reached, and, once that happens sentiment will change fairly quickly. Kinda like Bush's poll numbers finally plummenting after all his years of incompetence. There'll always be a few who don't see the light, but, for the purposes of the housing market, those few won't matter much. The sea change in sentiment that should happen in the next year or two will be enough to send the market down substantially.
"Kinda like Bush's poll numbers finally plummenting after all his years of incompetence."
Interesting cause I fliped floped. Bush sucks imo and cant wait till he goes. Comin from a republican. Democrates are going to take a lot of the house coming up.
What do politics and Bush have to do with a Clairemont Mesa flipper and San Diego real estate?
Can we get past the politics here?
They have to do with real estate because they illustrate the herd mentality. It was a clear, current example of how people go along with the crowd and how, once a critical mass of people changes their mind, a sea change of opinion follows. It was meant to illustrate that this phenomenon is a significant part of the human condition. And this phenomenon has everything to do with San Diego real estate.
Kinda like Bush's poll numbers finally plummenting (sic) after all his years of incompetence.
I see the connection now. This has everything to do with San Diego real estate.
"Thanks for sharing that and participating in this forum. I invite you to consider my point of view..."
You are right on zk. This does have everything to do with the state of our country's politics and economy, and our populations' current mind-set regarding spending.
the flipper got the place in 2/2006 for $465,000. Now they are trying to flip it for $598,000, a $133,000 profit.
They certainly did A LOT. The before pics showed a absolute disaster zone. I really wonder about the renovation cost. Which the flipper did not post on the forum.
This one is worth tracking.
Chris Johnston
I still think there are a fair number of people that do not believe the bubble exists. This is hard to believe, but I am convinced it is true. Even at years end, when we will have YOY negative median home changes, they will still be claiming the soft landing scenario is unfolding. This is what those of us looking for a price break want. At some point in the future, when they are convinced of the bubble, the mass selling will occur, which will accelerate things downward. Once we are in the mode where everyone is convinced things are coming down, it will be the buy spot.
Be clear that this will be a difficult time to buy a home. The new paradigm arguments will then exist on the downside, as to why prices will continue to decline. Be prepared to be criticized for being a fool to buy RE when this happens.
At times it is tough to stay with ones convictions, especially when they fly in contrast to the majority. However, it is the way to make money. The herd is rarely correct about an asset class direction. They are often correct in the middle, which will accelerate the trend to the peak, or tough. They are rarely, if ever, correct at the turns.
I am constantly seeking the other sides opinions on things, just so that I can determine if mine is incorrect. Constantly talking to people that share your opinion might make you feel good, but will not necessarily make you any money. I have yet to find a plausible argument for a continued rally in prices of RE.
It does appear to me that next year is shaping up as an ugly year for local real estate prices. Time will tell.
I agree about the difficulty of buying at the bottom. I spoke to that when a few people said they'd buy if prices dropped a certain percentage. It's hard, from our current perspective, to understand how things will be then. All the talk will be, "it's not like last time. Prices will not recover like they did before. The outsourcing of our jobs will render future increases in income meager at best. The damage to our economy from years of budget and trade defecits will take decades to recover from. China and other Asian nations have stopped funding our spending spree (buying our debt) and interest rates are going to keep rising. Unemployment and underemployment are so high that few can afford a house." The list will go on. The prevailing wisdom will be that buying real estate is pure tomfoolery. And when things start to get better, it will take a long time for the herd to catch up. They'll still be going with the prevailing wisdom. Just like they did on the way up. Just like they did with Bush. Just like humans do in countless other endeavors. Going against that takes courage. Going against that and doing it at the right time takes courage and smart research.
DING!! First price reduction. That was fast.
598k to 565k
well, they bought for $465,000, so they are down to $100,000 minus all expenses.
on the forum, lots and lots of questions about the price of the renovation. silence from the flipper. quite frankly, sounds like she's still trying to figure it out. quite a number pointed out they wouldn't have done so much (ie. lots of unneccessary improvemts that will prove costly.)
here's the description of the improvements: "New roof, windows, bathrooms, kitchen, flooring, paint, doors, plumbing, carpet, appliances, recessed lighting, fixtures, electrical and more." These guys also knocked down walls, re-did openings, delt with tree roots in the pumbling, and brand new fencing all around.
I'm guessing $70,000 for the renovation. that would only be a $30,000 profit at the current price. if the agent's commission is 4%, that's about $8000 in profit. less uncle sam and the governator's taxation, we're looking at $5000.
or did I price the renovation too high?
Based on this description and depending on the quality of materials, the retail price on the improvements could be as little as $50,000 or as high as $100,000. Obviously it would be less if the owner is in the trades and is doing the work themself.
An investor has to be careful about the amount of work they take on because some of it pays and some of it doesn't. Redoing the roof, kitchen and baths have better returns than replacing windows and moving walls around; and the tree roots are "invisible". The other problem is that no matter how much money goes in, this is still an 1,156 SqFt dogbox in Clairemont and it will be priced in competition with other homes in the neighborhood. If a lot of them are making similar improvements then this property is part of a trend and will profit accordingly. If hardly any of them are making those improvements then this one's an orphan.
I keep forgetting how small this place actually is. I read a bit more of the flipper's post in the investor forum. It looks like they were able to get the laminate flooring and carpet done for $3,000. But it also looks like they had a huge mold and asbestos problem (with the flipper inhaling some asbestos unknowningly during the initial heady days of 'let's try to do it ourselves'.)
let's just give this flipper the benefit of doubt and go with the $50,000 estimate. which would translate to roughly $20,000 after tax, if they manage to sell for $565,000.
I have to bump my old thread back up. Flipper found out that they are under and now ask for help. So sad..
http://www.websitetoolbox.com/tool/post/...
My website tracking Temecula and South Riverside County
Very sad indeed. I see TxChick is her old compassionate self.
Ya tx chick really did not let up huh. My post is under the name Hessj on that forum. I don't think I will add that home to my site. It's to sad.
My website tracking Temecula and South Riverside County
That's sad. Beautiful work. Three mistakes: didn't buy deep enough discount, spent too much on the fix and took too long.
Any single one of those cripples your profit margin.
OCRenter post:
"I'm guessing $70,000 for the renovation. that would only be a $30,000 profit at the current price. if the agent's commission is 4%, that's about $8000 in profit. less uncle sam and the governator's taxation, we're looking at $5000. "
Damn OCrenter u were $7,000 off. Good job
My website tracking Temecula and South Riverside County
Dont foget holding costs for 4-6 months, another $8-12k.
Good point EG that cost puts it way into the red.
My website tracking Temecula and South Riverside County
Sad to see... however I cannot find sympathy. The house sat on the market for 160 days at 484k - 529k and then cancelled. Yes the buyers got it at 465k in a private sale. I would maintain they could have gotten less. I would also question how much analysis they did on solds of 3/2 1156 square foot homes in that mapcode.
the flipper range priced it for $565,000 to $598,000. yet when it came to describing the single offer they had, she said the $565,000 offer was a "low ball". looks like sellers are still aiming for the top figure on the range despite the falling market or their own dire situation.
Update: They lowered their price, and got an offer. Looks like they took a 50K loss.
Update to thread here
I'm seeing a growing number of homes falling out of escrow and going back on market. Hope the buyer is solid, if the sale fell through and they had to put it on the market again, I think they'd be looking at an even bigger loss. If it was me, I don't think I'd sleep too well, until the day it closes.