Sellers’ Musings

[technovelist]

Yes, that is a keeper! I wonder what Laura would say if someone told her that the “market price” for a car, or anything else for that matter, was determined by expert opinions rather than by, um, the market? No wonder the government can run such an insane fiscal/monetary policy, with such ignorant citizens!

[salo_t]

Quite a few realtors are in denial as well. I happen to have my RE license but I’m not a carreer realtor so I think I have a whole different perspective on this market. I’m currently considering buying a condo that I plan to live in at least until single family homes become more affordable. I’m dropping some serious low ball offers on condo’s that have sat on the market way too long. You should hear some of the voice mails I get from rabid realtors that just can’t believe I would make such a low offer. Trust me they are still competitive offers just not by todays “standards”. I actually feel like I’m doing them a favor by helping them unload it but they dont see it that way yet. I have two offers out that have not been rejected yet, I’ll let you know if one pans out.

[Peace]

Of course this argument is all about the personal definition of what one can “afford”

That definition comes down to who you listen to – your gut feeling and personal knowledge of your finances?

OR

What someone tells you you can afford, makes the deal, and walks away.

Anecdote: We have always paid cash for our cars; we figure out what we can afford and then go shopping. Every single car dealer immediately jumps and says “with that kind of downpayment you can by this beauty!” This salesman may be sincere because this may be the way he does his personal business.

We were amazed when we first qualified for a mortgage – we thought “there is no way we can afford that”

Back when you actually had to qualify for mortgage money it was different. Nowdays people seem to think that if they can get it, it means they can afford it.

[JES]

Yes, when I was younger and we bought our first house I was amazed and excited that we qualified for the loan. I figured that since we qualified we must be able to afford it! I am thankful that people tend to become wiser with age:)

[PerryChase]

Salo_t, are you sure you want to buy a condo now? Why not rent a condo in the same complex you want to buy then wait fr the price to drop even more? I’m sure that your interest, property tax and HOA payment would be more than rent.

[salo_t]

To answer your question, no I’m not sure if I want to buy now but if the right deal presents itself than I will be open to going through with it. I’m in a great rental situation at the moment in a nice area so I’m in no hurry to buy. Actually the criteria on my offers are that the home price along with HOA is comparable with what rents are. Of course this usually means shaving 60 to 100k off the asking price right off the bat. Most sellers are under water on their loans but a quick check of their tax records usually show when they bought and for how much. I usually use eloan or other services to get quotes on current mortgage rates then add HOA to get my figure. Right now I’m shooting for $1200-$1400 range so this means I can borrow about 200k for a two bed condo. Anything higher is out of my price range. Sellers receiving an offer from me is the wake up call.

[no_such_reality]

How low-ball is it, Salo?

Just how low-ball is low-ball? What percentage off of asking? What precentage off of comps?

I was thinking it’s like the old song, you have to be cruel to be kind. You’ll get labeled a vulture, but in reality, you are probably helping them out.

I thought about that today as I looked at very similar homes with a 30-40% spread on asking price. I think I know how they got there. Some look at sales from December, added 10-20% and wallah, $1.2M. Others looked at December, realized the market has softened and turned and are doing December prices minus 10-20% trying to get out. If I recall December and Q1, these homes were all sitting at that oh-my million number.

I’ve also been wondering if it will be different this time. In previous downturns, prices where fairly sticky on the downside. I’m starting to see signs of a rout. The printed color ads are showing foreclosures being dumped claiming bank’s loss, your gain. Homes that look like they were set to be flipped, are being aborted and put back on the market.

I had a thought for Laura in the off-board thread regarding, the market can’t be determined by what buyers want to pay. I wonder what she would think when she gets an offer contingent on the buyer receiving a satisfactory letter explaining why the buyer should buy her house instead of one of the ten others for sale in the same housing track.

[salo_t]

Hey NSR,

yeah I’m sure I’m being labeled a vulture or bottom feeder or whatever. My response to that is. Sellers would have no issue with taking my money from me if decided to over pay for a property so why should I worry about them losing money now. right? Current sellers have found themselves on the wrong side of the coin. On one hand I feel bad for maybe causing undue stress with my low offers but on the other hand I just want a place of my own for a reasonable price. I’m not trying to buy an ATM machine like so many have I just want a house for me and my family. At this stage I’m not worried about comps or anything like that to me its all skewed anyway. I’ll come in at what I can afford plain and simple.

[PerryChase]

salo_t, what you’re doing is smart so long as you’re putting down 10% or less (money which you’ll no longer have use of). Don’t forget to add property taxes to your calculations as well. You might just get someone to bite.

Don’t worry about hurting the sellers’ feelings. We live in a capitalist society and a deal’s a deal.

Please let us know if things work out for you. Also please tell us about the funny/interesting responses from the sellers’ agents.

[jacksandgo]

Salo_t, your method reminds me of a buddy from Michigan who bought rental property rather than a home during the RE downturn in the 70’s. He had a mentor who helped him. They looked at 14 apt bldgs and offered them exactly 1/2 what they were asking. About 6 of them balked, but 8 of them took him up on his offer. He paid cash, and the cash flow was tremendous, evidently because he lived very well off of them.

Ten years later, he more than tripled his money on selling them. Now lives comfortably here in SD with $100k per year bond interest, a nice paid for condo, and no debt. Oh…and his retirement age? 40.

Maybe we’ll see some deals like this over the next few years. You can make money when it’s going up and make it going down.

Keep us posted on your progress.

[no_such_reality]

Salo, like others, I think you’re being smart. As for getting labeled a vulture, well, be Tibetan. 🙂

Someone, that’s me, you and others on this board and elsewhere, are going to have to clean up the wreckage of the overextended buyers.

I like the other suggestion of offering half. Sadly, that sounds about right, now. Many have their asking price skewed. You need to take 20-30% off, just to get to current reality, and adding another 20-30% off, is about what it’ll take to be able to buy, make minor fixes like paint, and hold it for 90 days to get it sold and pay commissions to make it worth doing ($30K or so) or worth riding out without a upside down situation.

[barnaby33]

I disagree bugs, remember that the toxic mortgages most people have used have gotten something like 40% more expensive. Lets just assume that the vast majority of people don’t recognize a bubble. Even if they wanted to stretch, they can do so alot less than in the past few years.

Josh

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