- This topic has 61 replies, 20 voices, and was last updated 17 years, 5 months ago by bob2007.
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May 8, 2007 at 9:59 PM #9031May 8, 2007 at 10:23 PM #52137GoUSCParticipant
Pull all the comps that have sold in that neighborhood in the past three years. Take equivalent homes that have sold in the past year and deduct 30% (give or take). That’s what you should pay for the house.
Just because your “gut” says it’s a good deal doesn’t mean it is. Don’t fall into the “Costco Trap” in that just because you think you are getting a great deal because of the situation (aka being at Costco). Look at what the comps tell you.
May 8, 2007 at 11:36 PM #52140greekfireParticipantMy personal opinion is that this situation has you wrapped up emotionally. Don’t take this the wrong way, but the sale is by a party with whom you have some sort of relationship (so you feel somewhat obligated), and you sold 3-4 years before the housing peak so you’ve had to endure some additional ridicule from friends/family than those that waited longer to sell.
My recommendation is to try your best to separate the emotional components of this transaction and view it as objectively as you can.
The first thing to do would be to view the historical price fluctuations of the property, along with all of the withdrawn and canceled offers that have been made over the years. Analyze the comps as a means of upping your negotiating power. It sounds like this home is quite unique, however, and reasonable comps may be hard to come by. So use them when they favor you and discount them when they don’t.
The next thing would be to try to transcend the fact that you have a relationship with the current owners. Without knowing the depth or breadth of that relationship, I would advise that you focus on how the transaction might benefit your situation, rather than how it might adversely affect the current owners’.
Delaying the process a month or so to perform “your research” may give you a wealth of information. Imagine your wife and the current owners pressuring you make a move and fast. This will give you insight into what their position might be in the sale – whether they are more or less motivated to sell for whatever reason(s). It is perfectly acceptable to tell them that you want to take your time in making the investment of a lifetime. Meanwhile, you may have earned yourself some additional savings in the form of reduced home values and/or negotiated price.
The first rule of negotiating is to NEVER lose the power to walk away from a negotiation. Your current situation is putting you in a position that may potentially compromise this rule, so you must work to overcome it.
I wish you the best of luck on this, and be sure to keep us all posted.
May 9, 2007 at 12:07 AM #52142hammerParticipantGreekfire… Thank you very much for the response. I have time for diligence. The owners are not pressuring. I also am not close to the owners, just a simple friendship that has provided a potential opportunity.
I am torn, because I have been such a bear for a long time, and I see ownership on the horizon.
This house is 3000ft which is approx 1200 ft larger than most homes in the neighborhood. Any ideas on comparing price per ft when looking at comps. Is there a science other than simple math.
Thanks again for the input and I will be hunting down the comps for the neighborhood.May 9, 2007 at 2:07 AM #52143greekfireParticipantObtaining price/square foot on other comps could be answered better by those on this site that have ready access to such information (SD Realtor, sdrealtor, etc.). I am not saying to buy or not, but rather to do as much research as you can in the time frame that you are given. Then, no matter what decision you make, you’ll be able to more easily sleep at night knowing that you did all that you could in the best interests of your family.
May 9, 2007 at 6:52 AM #52144CritterParticipantHammer,
Very good questions you have posed and I appreciate your courage in approaching this forum for the answers! One question for you – independently of this offer, would you have needed/wanted 3000 square feet for your family of four? In other words, would you have been looking for this size house if your friend had not approached you?
It might be a good deal for the price, but too much house in other respects. When you do your calculations, consider the cost of heating/cooling/furnishing a house of that size. I think some people are getting away from bigger homes and graviating towards smaller since they are easier and less expensive to manage.
I know a couple of people who live in 4000 – 5000 sq foot homes who regret having that much empty space – yours isn’t that big but I thought I would bring this up.
My personal experience was, I bought a house with a 10,000 square foot lot and had visions of water features, grottoes, tropical gardens, and whatnot dancing in my head. It only took a few months for me to curse the lawns and terraces and I eventually sold the house because the foliage was just too much to handle and maintenance was more than I had originally considered.
May 9, 2007 at 8:25 AM #52151hammerParticipantThanks Critter..
Never thought I needed a big house, but 3000ft is manageable.House is 1 block from the water with No AC. I imagine we will need heat for a few days in the winter, although it has 2 fireplaces. Just looking at the panoramic unobstructed views, in a supply restraint area, and thinking I need to examine. Homes will never be added to the south end of Sunset Cliffs.
The way I am talking, I feel like the head of the NAR, not a passionate bear for the last 5 years.SD Realtor any opinions on comping out price per foot?
May 9, 2007 at 9:12 AM #52154ibjamesParticipantI know what you are talking about, it’s not hard to see the emotion that is in this transaction for you. I would try to pull the comps from houses that are as similar as possible and see what you come up with. Leaping can be fun when it’s a fancy refridgerator or tv, a house is a little different. You’ve made it this far being smart and financially savvy so follow through.
Even if you don’t buy, why is renting a nice place so much worse than owning? I have to admit, a big ocean view is hard to pass up 🙂
May 9, 2007 at 9:40 AM #52158gnParticipanthammer,
I can’t help but thinking that you are exhausted from waiting for the last 5 years. And now, there is this seemingly “incredible” opportunity that knocks. So, it’s understandable that you want to make a leap.
In today’s market, where real estate is a depreciating asset & lenders are tightening credit standards, cash is KING. There are many desirable areas in SD county with ocean views, I wouldn’t worry about the lack of buying opportunities 15 months from now. If anything, there will be more opportunities/bargains next year.
May 9, 2007 at 10:27 AM #52171SD RealtorParticipantHammer –
I can do an analysis for you tonite and I will post the results later this evening if that is okay.
My take on the home itself will sound like a rerun of what I have said before:
IFF (if and only if)
– You can afford the payments
– You can ride out a depreciation cycle
– You REALLY love this home
– You are going to be in it (or at least planning to keep it) for several years, at least 7 IMO.
– You have good solid financingThen go buy the home! Many people who post here seriously devalue the aspect of home ownership. While there is NO ARGUMENT that the market is in a long term depreciating trend, there are aspects to ownership that many people value higher then finding the bottom of the market.
I will run some comps for ya so that you can negotiate a good deal. My home, albeit a smaller condo in crown point doesn’t have AC or heat either, just a fireplace. That close to the beach you dont need AC.
SD Realtor
May 9, 2007 at 10:55 AM #52176sdrealtorParticipantHammer,
I pretty much echo what SD R said. If you can afford it, will stay and truly want to be there… go for it. Houses like that are very hard to come by and you are right in that someone often has to die to get one. More so, the heirs have to be in the position not to want to live there themselves which adds more difficulty. Lastly, the home is probably owned free and clear or close to it. If the market is tough or gets tougher, the heirs will rent it out until times get better unless they absolutely dont have any options. For a house like that with unobstructable panoramic view 1 block from the cliffs, the price seems good without checking comps. It’s the price of admission if you want to own something like that. In Manhatten Beach it would probably be 2X or 3X that.Much of the advice you are getting comes from people on this board who have never tried to find a home like that. I have one in escrow that we searched 5 years to find. They are few and far between at any price not to mention what appears to be a reasonable price.
sdr
May 9, 2007 at 10:58 AM #52177blahblahblahParticipantSounds like an awesome house — the price is probably fair if you can afford it. If you plan on staying there a while you’re probably safe as long as you don’t stretch yourself too much…
May 9, 2007 at 11:00 AM #52179(former)FormerSanDieganParticipantIf your analysis shows that it would sell for 1.4 M in today’s market and you are getting it for 1.1. M, isn’t this a no-brainer ? It would be for me.
May 9, 2007 at 12:47 PM #52206hammerParticipantThanks for eveyones comments
My wife and I can afford it ( need to alter the lifestyle a little, which is probably a good thing.), but I am wrestling with my bear demons. I am not worried if it is worth less in the next few years, because this is a house we can be in forever.
Comps in the Azure Vista subdivision are few, and it is difficult in comparing sq ft #’s etc..I am in the commercial real estate world in aquisitions, and am still fundamentally driven on location. God only created so much ocean front land.
I would have lost a lot of money if I bet that I would be on this board considering a purchase in 2007.
Thanks very much SD Realtor and sdrealtor.
May 9, 2007 at 1:26 PM #522154plexownerParticipantI may end up being wrong but I expect to buy view property in Pt Loma / OB / Sunset Cliffs for $800K at the bottom of the market
I’m not expecting to get the ‘top of the hill estate with a 180 degree unobstructed view’ for this price but I believe I will find a single-level SFR with an unobstructable view for well under $1 mil (in today’s dollars)
Only time will tell
~
I expect view property in Bay Park / Bay Ho to be $600K or less
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