lowballing

[sdcellar]

I’ll tell you why I think the “I don’t care what my house is like since all track homes are the same” is relevant to the discourse on this site.

First, they’re not. Plain and simple. Even in the most boring development (from any era), almost all homes have distinguishing characteristics. Even the defenders of this position have listed things that make one house more attractive than another even if all other things are the same.

I understand that certain things matter more to others and that is certainly reasonable. That said, being a bear about RE, I am more compelled by the opinions of those who care about what the details of the house they would buy. If you don’t care, then housing must be pretty low on your priority list and I extend that to indicate that you don’t see much value in home ownership and I extend that further to suggest the tendency to be bearish in the first place.

I’d rather hear how bad it is from someone who loves homes and ownership of same.

Think of it the other way around, do we get as much value out of the “you gotta own a home” mantra from people who are housing bulls and think you’re defective or something if you don’t agree?

[an]

I don’t think any will disagree that no two houses are exactly the same. However, I have a question, for you, how would you prioritize which is feature should add more to the home and is that the same as what the seller is thinking? The reason I ask is, lets say two houses is a few house from each other with the same floor plan, so it remove the variable of lot size, house size, and direction the house is facing. Then there are things at sets it apart, one has a pool and granite counter top while the other have hard wood floor, stainless steel appliances and brand new carpet. Which one would you like more and be willing to pay more? I’m almost certain that no house less than a custom home built for you have everything you want.

However, back to the original topic. I don’t see why it’s so wrong for trying to get the best price you can get. To my experience of buying things, you always get lower price when you pit seller together. So, why can’t you do the same for houses?

[sdcellar]

I’ll take the wood floor, s/s appliances and carpet (unless it’s covering the wood!) I *think* my choice would cost me less as well. Woohoo!

And as you say, back to the original topic. Houses are not televisions. It’s very difficult to truly pit seller against seller when you’re talking about houses. Possibly you could try with a pair of developers, but even that would seem difficult.

Nothing wrong with trying to get the best price for things. I always do (kind of to a fault). For housing, my preferred strategy would be one property at a time.

[(former)FormerSanDiegan]

In a market like this one, you can buy on the cheap if you are patient. I don’t think trying to engineer a reverse bidding war will work too well because of the points made by the realotrs (I agree with both SD Realtor and sdrealtor on that point). However, the sellers are (or will be) under extreme pressure to not let a buyer slip through their hands. This is similar to the pressure that buyers had in recent years when they felt pressured to put in no-contingency offers within 3 minutes of a house going on the market. Put in the bid with a short-fuse response time (e.g. 24-48 hours) and move on if they don’t take it. If they don’t know they are effectively in a reverse bidding war, they will after they lose both potential buyers that submit offers in a 3-month period.

[an]

I think because I never bought a home before, I might over simplifying things, but I would think that of the sell are desperate enough, they might try to work with you on the price just a little bit more than they would have if they know you’re keeping your options open.

[sdcellar]

That’s the beauty of a buyers market, especially as it becomes more apparent to everyone. Sellers already know you have options open to you.

[no_such_reality]

Even in the most boring development (from any era), almost all homes have distinguishing characteristics.

Maybe that’s the key point SDcellar. It is the land of tract homes and compared to the unique older homes I see, they are very similar. One may face west, the other south, one on a cul de sac end will others are on the lane in, but, essentially the same. The interiors may vary, sometimes dramatically, tile, versus wood floors, tan granite versus dark granite, Maple cabinets versus old cabinets or dark cabinets. But…

All that is trivial.

In fact, most if it, is often going to be replaced by me, it’s a matter of when. The difference is I look at floorplan, location, and lot. Those are the biggy items you aren’t changing.

A $30,000 kitchen upgrade means nothing to me if they’ve used dark cherry and dark granite or maple and tan granite, I like maple and dark green granite. So the interior with cherry and dark granite is worth significantly less than it’s upgrade. In fact, the tract home that has cabinets and countertops that need replacing and has the price discounted or rebate for their replacement attached is probably more attractive.

If I look for a home that has the floorplan, location and lot I want and a previous owner that shared my sense of style, it isn’t happening. Nor should I limit my looking homes that are close, the big challenge is floorplan, lot and location, the rest is correctable. Heck, even floorplan can be somewhat modified. It’s a matter of cost, so if you have the floorplan I want, in the right location, on an acceptable lot, I could buy your home. I still have to make it MY home.

Even if I buy a gorgeous home, I still have to make it MY home.

[Peace]

I’m waiting for the day that the realtors start talking to sellers like they used to talk to me when I was looking in San Francisco at what were starter homes in the $650,000 range.

To Buyer: “If you are serious you need to bid at least $100,000 over, not so serious then $50,000”

To Seller: “If you are a serious seller you should take the first $100,000 below asking and if you’re not so serious you can hope for a $50,000 below asking”

[an]

no_such_reality, you take the words right out of my mouth.

[(former)FormerSanDiegan]

asianautica, my fellow G35 compensator – you are right about sellers finally getting the picture and willing to cave.
In fact during the last great buyer’s market in SD we bought our first house and asked the sellers to agree to a 90-day escrow so that we could save up $3000 of the ~$9000 we needed to close on a 5% down with 3% credit from seller. Does that sound like a strong buyer to you ? They took it because they knew there were no other sucker-buyers around to which to sell their house. An offer, any offer is golden to a desperate seller.

[(former)FormerSanDiegan]

Peace – When that day comes, wait 6 months, then buy a house. The days of big-balled low balling are coming !

[sdcellar]

no_such_reality and asianautica–

I agree as well! Whew!

[an]

FormerSanDiegan, I’m glad I wasn’t the only one driving a G35 to compensate. What you describe seems to be the reverse of what has been happening the last few years, where buyers would have to cater to every needs/wants from the sellers. I hear people even writing cover letter begging seller to sell it to them. It will definitely be a glorious day when it’s the other way around.

[sdcellar]

no_such_reality– I happened to notice you prefer maple cabinets and dark green granite. The house I just sold had maple cabinets and dark green granite. I should have sold my house to you! Then again, it doesn’t sound like I would have gotten a premium for them!

[no_such_reality]

When you say premium, why would kitchen cabinets and countertop warrant a premium, it would only warrant the value they are worth.

A house with a modern functional kitchen may be worth $500K, the $30,000 maple granite upgrade may only be worth $510K, whereas the house that needs it’s kitchen replaced, may only be worth $470 or $480.

The owner may have spent $30K on an upgrade, but from the home standpoint, $10K of the house value is just kitchen space, $10K is functional value. By upgrading the $30K, kitchen, the owner destroyed the previous $10K space and reused it, then destroyed the previous $10K of functional value rebuilding it and then put in the upgrade. Hence, that $30K of kitchen work is really only worth $10K above the other house with a functional kitchen.

The cost versus value numbers on remodeling have been getting distorted by the bubble just like home values. In additional, un-like previous remodel efforts, people are remodeling kitchens that are completely viable in essence, destroying value to add value where-as previously, remodels that even then only added 60 cents on the dollar where repairing detriments to the property that were actually decreasing the property value.

[Author]

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