Greer Ranch – Murrietta – low ball builders??

[23109VC]

i’ve been watching the markt here in Temecula/Murrieta drop the past 6 months – a year.

One area my wife and I like is called Green Ranch. Richmond American Homes has a development they are on the tail end of called Whispering Oaks. Prices on the few remaining homes are $500-550k…

most of them are done. they are standing inventory…and they want to move them. i called the sales office and asked about incentives or about their receptiveness to “bids/offers” below asking. At first I was told, the homes aren’t being discounted, and gien all the “upgrades” they put intot he homes, the prices already refelct “discounts”. I commented a bit on comps, what other homes had sold for basded on my reive of property records..and I asked if I should personally deliver or fax in my “offer”.

i was then told if I made an offer they would submit it to the management/builder. whatever.

so my gut tells me tey WILL negotiate on the final sale price.

my question is this – for those of you who are more in the know that I am – on a home that they are “asking” $550k…. that is standing inventory… ready to move into..

as a non contingent buyer who wouldu se their lender,a nd could close in 30 days…what kidn of an offer would a placel ke this realitically take?

from looking at propertyh records…I saw a home there that is spec’d similalry, that sold about a year ago..similar lot/location,e tc… and it sold at $500k. my gut tells me this one should sel for no more than this one… making met hink ano ffer of $450k would be about right. at that price i migth be tempted to pull the trigger.

are builders/sellers willing to drop price almost $100k off asking..or would they just laugh at me.

thanks.

[masayako]

Half a million dollar house in Temecula/Murrieta?

Personally, I won’t pay anything beyond $350k for it. If you look at the price range of the house in the pre-bubble period, you should know that the house should worth in the high $200k range (pre-2000). With inflation in mind, anything beyond $350k lose the margin of safety of the investment.

If I were you, I won’t pull the trigger cos’, my friend, it will backfire.

masayako

[Diego Mamani]

Well said, Masayako. Why pay half a million, when you can rent for $2K a month? Even if rent is as high as $3K (which is not), you come out ahead by renting.

[mydogsarelazy]

I would make a lowball offer, and staple a copy of this press release to the top of the offer.

http://www.emediawire.com/releases/2007/1/emw497285.htm

JS

[sdrealtor]

The worst they can say is no

[23109VC]

yeah, i know..the worst they can say is no. I just wondered if they would laugh in my face or seriously negotiate.

I can rent the $550k house for $2000. There is one on the street for rent. VERY nicely upgraded. Backyard isn’t spectacular..but for a rental it’s nice. It’s 3000 sq ft. 4 BD plus a den. Lots of crown molding, granite, hard wood, stainless appliances… great floorplan. Brand new..built in 2005.

Suppose I rent the house for $2000.
suppose I could buy the same house for $500k even.

how much better off am I by renting it?

I figure a 500k home (100% financed) is goin to run me about $3500/month..give or take…that includes 2% taxes. Add a bit for insurance and HOAs and you are close to $3700-3800. After taxes..say I save $1500/month or so…mayb a bit more… and my monthly outlay is back down to almost $2000 out of pocket…. it’s not exact..but close…

am I missing something…

i’m not worried if the house drps $50k after I buy it.. the house I buy is a hosue I will stay in long term.. 10+ years… I would like the idea of a stable place to stay. the house i’m in now i really like..but the landlord is selling..i probbly won’t buy it..so i have to move. not my choice. i’d like tos tay put but it’s not my house so I have to pick up move. PITA.

if I can get a hosue purchase..that will be roughly equal to buying..wouldn’t it make sense to jsut buy..

unless you can predict that this 500k house will sell for $300k in two years..but i don’t see things falling tha badly…

do you guys?

[Reality]

You seem to have some inaccurate assumptions.

Your mortgage (before property taxes) would be about $3100/month with a 6.34% interest rate which is the current average. Property tax at 2% would be $833 per month wouldn’t it? ($500,000 times 2% = $10,000 per year divided by 12.)

Add in insurance and HOA let’s say $200 that makes your monthly payment about $4100. I’m not sure how you save $1500 in income taxes a month. That’s $18,000 a year. Your total interest the first year will only be about $30,000. Who has that high a tax rate? At 40% which is still too high, you’d only save $1,000 a month in taxes the first year. And that tax deduction will only shrink over time.

You’d still be paying a net $3100 vs. $2000 for renting. A lot to pay for “pride of ownership”.

[hipmatt]

First of all I agree with both Diego Mamani and masayako. I have been in the Temecula Valley for over 16 years. I am familiar with that area, and personally don’t like it. The taxes are high, I believe the HOA is high as well, its at the edge of Murrieta close to Wildomar. I don’t see the appeal, nor the rational on why to pay ridiculous prices for a home thats worth maybe $250k 5 years ago.

You said you would be going 100% financed, ughhh thats financial suicide. I don’t understand how people think they can swing a $3500 month payment, but they can’t afford a dime when it comes to closing costs or down payment.

You said:
unless you can predict that this 500k house will sell for $300k in two years..but i don’t see things falling tha badly…

do you guys?

I think most here do, maybe more like 4-5 years though, certainly I do.

JohnAlt91941 was right about the math, yours is way off. Not only would you be paying over $1100 more to own that home, imagine if it did drop down to $300, you would have also lost at least $200k.

[FormerOwner]

Greer Ranch is boring and you have to drive a long way to get anywhere from there – even the mall. Personally, I agree with previous posters that I wouldn’t pay anything over the 200’s for any of the houses in there. I don’t care about the granite countertops and upgraded flooring that a lot of those houses have. Sitting at home marveling at what a nice house you have out in the middle of nowhere is not that much fun. I believe in buying into an area, not a floor plan.

[ocrenter]

The big problem comes with the 2% property tax/mello roos you are committing to. what you are really looking at is 1% mello roos on $500,000 = $5000/year or $400/month. That realistically bring the real cost of the home up by $50,000. so if you are successful in getting that $450,000 accepted, you’re really still paying for a $500,000 home.

I think the $350,000 mentioned earlier is really more of the true worth of these homes. 2007 is a critical year, the foreclosures are shooting up, the subprime lenders are dropping like flies, I know you are not looking for THE bottom, but waiting out 2007 will be very rewarding financially.

[23109VC]

i sincerely appreciate all the comments. and I appreciate “corrections” to my calculations.

I’m for SURE not a financial genius. I am educated, smart, and a professional – but not in the financial business. I am a gov’t attorney.

I’m not totally sure on my tax savings calculation. I am assuming a total tax of roughly 35%….then calculating the total interest I would pay in a year, and multiplying by .35 to figure roughly how much tax I would save. I know that’s not totally accurate..b/c it doesn’t take into account the standard deductionI alrady get..but it gives me a ballpark idea. any better way to figure it out?

100% financing is the way I will go – b/c as a young professional, I havea fairly high income, but haven’t had time to sock away a large pile of cash for a down payment. if you gross 10-11k/month …but lack a stockpile of cash, 100% financing of a home under 500k is doable. obvioulsy, having a down payment is better..but if you don’t..you don’t.

i will keep renting. i will sit tight. I hope the houses keep dropping this year. prices are a lot lower up here to start with. homes that I see in San diego/carmel valley/del mar…. that sell over 1 million would be half tha tmuch here… you get a lot for you money b/c the land is just not worth as much.

personally, I like it up here in Temecula a lot. it’s family oriented, and I have two young children. i could care less about being close to downtown or the beach. I can get there quick enough. i know i’m in the minority…as more people would prefer to live IN San diego…not 45 min north of it..but given my employer and where I work…Temecula is perfect. i have a 5 minute commute to the office and I can come home to see the wife/kids at lunch. Nice.

i’m just waiting for prices to drop. it would be nice to say a couple hundred grand on my next house.

i was surpised more of you dind’t like Greer Ranch. some of the homes have really nice city light views and it seems likea nice quiet gated area. true..further from stuff that’s important. my current rental in harveston is MUCH more convenient..better freeway access..close to the mall and costco too.

thanks again for the input.

[Raybyrnes]

Even if you had the down payment you might be better off doing 100% financing and investing the cash. If you are forced to pay PMI or have a high second the down payment makes sense when you are paying over 8% on the second. Otherwise I think you are best to keep the cash working for you. Right now if you put money into and HSBC online account you will get 6%. Bottom line liquidity is key and cash gives that to you. My father is a governmetn guy. Was a 15-10 when he finished and he never missed a baseball, basketball or football game. If you are 5 minutes to work and that work is not going to relocate you I would start thinking about owning. I can tell you that depreciation is uncertain but taxes are guaranteed. Besides the Stock Market is at an all time high so we might see correction in the market in the not too distant future.

[sdcellar]

taxes are guaranteed

Yes they are. Just don’t forget the property taxes and Mello-Roos. Not such a great deal when you’ve got to pay additional taxes to get your tax break.

[no_such_reality]

Is rent really $2000 in Temecula?

[hipmatt]

Rent on a home in Tem is anywhere from 1500-2500 depending on the size of home, and how much crack the owner is smoking. But the median seems to be about $1750, just check craigslist.

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