- This topic has 39 replies, 17 voices, and was last updated 15 years, 6 months ago by want a good deal.
September 24, 2007 at 12:58 PM #10394
September 24, 2007 at 1:01 PM #85711Alex_angelParticipant
Look for comps in your area and undercut them all. If the area average for a home similar to yours is $700k then put yours up for $675k and then go to costco, buy a 50 inch visio plasma and offer it as an incentive to buy. You’ll be surprised at how many jackasses out there will drop $700k on a home for a “free” $1500 TV.
September 24, 2007 at 1:11 PM #85713
I like the TV idea 🙂 I live in Rancho Bernardo and the comps are all over the place! I live close to 4S Ranch and there are some foreclosures that aren’t even selling. They are newer and nicer than my 80’s house, but they have no lot which makes it hard to know whether I should use them to compare.
September 24, 2007 at 1:34 PM #85717patientlywaitingParticipant
seattle-relo. You’re not in a good position to sell having just bought 6 months ago. I don’t envy your situation.
Best wishes to you. You’re doing the right thing by taking care of your mom. She’s lucky to have you.
If you have a big lot, you might be able to build a guest suite with a separate entrance. It might cost you $60k to $90k but that might be better than taking a bath on selling your house. Plus rather than bring cash to escrow, you can finance the construction. The proceeds from your mom’s house could pay for the addition. Just a thought.
September 24, 2007 at 1:48 PM #85718
Our lot is pretty small. Not as small as the new construction lots, but not really big enough for a bed/bath addition. I might consider consulting with an contractor to see if reconfiguring the bedrooms/baths and bumping them out a little to make room for another would make sense. Our house is a single level and if our homeowners assoc. would allow, we could consider building up – but my guess is that they won’t. I need to look into that. The timing is just bad. We really thought we had a few more years of her being on her own, but it just doesn’t look that way anymore. I think the amount of cash (60-90K) it would take to add-on vs sell at a loss would be about the same. Argh…aging parents!
September 24, 2007 at 1:59 PM #85721
There are lots of Independent living/Sr living facilities in your area. There are also apartments. Why not find her a place to live nearby?
September 24, 2007 at 1:58 PM #85720
Have you thought of advertising a trade? I really have no concept of how it would work but in your shoes I might consider figuring that out. Offer to trade for a larger house with you making up the difference in cash from the sale of your Mother’s place. If you find somebody, pay a Realtor a nominal flat fee to help put it all together.In this market it might just work. Rumor has it builders are doing it(more or less). If you get the right place it is easy to modify it so that you mother has a private entrance and a little kitchenette if that is desired.
Disclaimer: Consider this along the lines of shoot from the hip brainstorming.The idea is that you have already lost your downpayment if you sell and all parties will avoid big commissions and perhaps get into a more suitable situation.Somebody out there must want to downsize but is facing the same problems in the market that you are.
September 24, 2007 at 2:10 PM #85723
Along the lines of Rustico’s trade idea, but less complicated …
If you wanted to hold this house long term, consider the costs to rent out your home and finding another place to rent. To make the numbers work, you’d have to move to a less expensive neighborhood.
September 24, 2007 at 3:31 PM #85731
My husband and I wondered if a senior living situation would work for her. I have been afraid that she’d run out of money – she has no savings at all, didn’t work much so her Soc. Sec. is very low (which she can’t even get yet)and only has her house, which I think is worth 150-175K. But I am certainly not opposed to having her in a senior apartment situation. I just don’t want her to run out of money in a few years. She’s only 60, but hasn’t been very successful at taking care of herself.
I have never heard of the trade idea, but it sounds interesting…
We have talked about renting out our place and renting a bigger place, but I think we’d be in the hole 500-700 dollars a month (because our mortage is way more than what we could rent it for). However, the 500ish a month is probably less than what she would need to live on in senior apts and could be taken from the proceeds of her home. We aren’t attached to our home, so selling it at a loss now or holding onto it in the longterm is more financially driven. So that’s why I am wondering what kind of price drops seems to be necessary to get a place (in decent condition) sold. I am happy to talk to a RE agent around here, but I’m afraid that they are in denial about how things need to be priced and I need solid info. to make a good decision.
I apprechiate all the ideas. Thanks
September 24, 2007 at 3:56 PM #85733Sandi EganParticipant
Most of people on this blog are positive that the prices are going down significantly. Irrelevant to your situation, it might be more prudent to sell now, realize loss, and later recoup the loss on account of lower home prices. Don’t take my advise to seriously, though. I don’t own a home and for me it’s all very theoretical.
September 24, 2007 at 4:01 PM #85734
You should look at FSD’s proposal over a couple of years. Your Mother is actually going to add to you cashflow and youmay buy the bigger house at a steep discount in 2 years.The scenario absolutely looks different from there on out.
The trade would probably work. You might even be in a good bargaining position going into it if enough people would gladly trade down (to something affordable) and rid them selves of a nightmare about to happen. A few ideas come to mind, again just quick rough draft form. You could list your house as a trade, with a realtor who accepts the flat fee idea and target expired listings by having your agent call them . You could also use the union tripe. Of all things that can be said about it it is effective for advertising. Maybe Craigs’ list? I haven’t used that and some of the rest of the piggs will find your add and drag it over here to make fun of you!
The big downside of the trade is that you give up the opportunity to buy the larger house after prices come down….but you get rid of your own already depreciating asset. Yo could work the trade idea in conjunction with a straight forward listing for sale and take which ever one comes first in a suitable fashion.
I nominate SDR to get you through this :). I believe he lists for 1%.(Let him get a referral fee from the Arizona agent if anybody still bothers with that)
September 24, 2007 at 4:10 PM #85735surveyorParticipant
For the renting-out-the-house idea, if you take the lowering of your taxes into consideration, it could break even or at least minimize your negative cash flow. Also, with you renting out your house, you get access to all sorts of tax deductions.
Rough estimate, assuming you got your house for $500k, your income tax rate is around 30%, you could lower your income taxes by around $500 or more.
=shrug= Just a thought.
September 24, 2007 at 4:19 PM #85736bsrsharmaParticipant
Since many of us may have to face this, I am trying to understand the situation:
1. Is she not well? Since you say she is only 60, hence can’t get Social security/medicare. I am wondering how you are planning for healthcare? As an aside, if she is in good health, might it be a good idea for her to get some employment to get some health insurance. That will also ease the cash flow. It will help her a lot if she can complete the minimum credits for social security since she has such a long retirement to face.
2. Since big bucks (i.e. losses) are involved in home selling/buying in these unstable times, (a) Why can’t she continue to live in AZ (b) How about renting out AZ home and renting a small apartment here. The cash flows may be closer to match.
September 24, 2007 at 4:29 PM #85737
I’d look into senior affordable housing options also. They are pegged to your income so it may surprise you how affordable it would be for her. You wont know until you check into one.
September 24, 2007 at 4:30 PM #85738
At age 60, if she is unable to take care of herself, could she be considered disabled ? That’s awfully young to be too old.
You don’t have to provide details. Just consider the fact that if she has a condition that impairs her ability to work and/or take care of herself, she is likely eligible for disability payments from Social Security. Even before retirement age …
September 24, 2007 at 5:40 PM #85747
Seattle Relo there are some good ideas posted here. My mother in law lives with us but she is in good shape and takes care of the kids. She drives my wife alot crazier then myself.
Anyways you should try to investigate as many of the options as possible, attempt to come up with the different cash flow scenarios, and then see what fits you best.
Option 1 – Senior living. There are several senior living homes in San Diego, including RB and Escondido I believe that are both independent and assisted living. The difference has to do with the shape your mom is in. Both of these types generally have meal plans as well. Again, you need to dig around to find out more about them, but you need to do this legwork to make sure you have made a sound decision.
Option 2 – Rent out your home while you all move into a bigger home to rent. This may not be bad as well. Go to Craigslist and see what homes rent for that are comparable to yours in RB. Actually the rental market is doing okay right now. This will help your taxes somewhat because your rental property allows deductions that you cannot have when it is your primary. You also have depreciation expense. This is the good. The bad is that when you do sell the home, if you have not lived in it 2 of the past 5 years you cannot claim it as your primary residence to get the tax exclusion that is attained when you sell a primary residence. Now this exercise shall include pricing out what your home would rent for AND the new home you will rent. Then see where you come out cash flow wise. Unfortunately I am a renter and I own rental properties and when it all comes down to it, that pure loss of being able to write off the primary mortgage interest HURTS. Yes when you own a rental you get to depreciate the property and you get to expense HOA, Insurance, and basically EVERY expense to maintain the property. However it all gets offset by the rental income so just prepare for that.
Option 3 – Selling the house, or both the homes… Well all I can say is yes it is a brutal market out there. My advice is that if you do sell price that sucker to the bone and pretty it up nice. Run the numbers on the sale. Your net will be the sales price – commissions (to both listing agent and buyers agent) – “normal” sellers side closing costs (estimate 1% for a worst case here… usually they are a tad less) – any prepayment penalties – any credits or repairs that the buyer may ask for (sounds like the home is in good condition but beware as most buyers are now asking for a little moola for their own closing costs) – normal prorated mortgage interest and property taxes – your balance.
Another thing here… What were your long term intentions with the home? Were you guys intending to hold it a long time? Enough to ride out the storm? I recalled when you first posted we had a long debate on whether it would be better for you to just suck it up and sell now or sit tight and I forgot what the conclusion was.
In terms of the price drops I would not think of it in those terms. Just make sure that whoever you talk to does a very sound comp analysis. Look at where the numbers lie and see if it will work for you financially given all the nicks and cuts that come from the sales price.
September 24, 2007 at 7:48 PM #85766losgatos200Participant
Is she trailer trash or does she have an education ?
Send your mom to work !
September 25, 2007 at 7:35 AM #85803LookoutBelowParticipant
Hahahahahaaa….COMPS ?….COMPS MY ASS !
Comps mean NOTHING in this new arena ! Nobody is interested in what somebody paid for it back in the "Salad Day's" of irrational exuberance ! THAT MEANS NOTHING TODAY.
Think 2.5-3.5X annual earnings MAX !
What is a house worth ?:
EXACTLY what somebody is willing to pay for it, and what they can get FINANCED for…THAT may be TWO SEPARATE things now
This lesson will come with a LOT OF PAIN FOR THE IGNORANT !
September 25, 2007 at 9:30 AM #85818
SD R: Thanks for the reminder of the rent being taxable income – I had forgot about that when considering different scenarios.
You were remembering my post back in May when we were thinking about getting out of our mistake of buying a home in this market and cutting our losses sooner than later. After a lot (and I mean A LOT) of discussion my husband and I had decided to just stay put in our home and ride out the market. We looked at the numbers (with his handy dandy spreadsheet) and it seemed to make the most sense if homes went down another 35% (which I am sure they will). But after all the stressors of relocating, his new “big shot job”, and some medical issues we as a family have been dealing with, we decided that the added stress of trying to sell at a loss was just too much. But now with my mom’s issues creeping up on us, we are reconsidering the idea of waiting out the market and selling now. I’m still at a loss about what we should do with her. Some people have asked what’s up with her – basically she has many small medical issues related to her weight that makes it difficult for her to work all day, but the medical issues probably don’t qualify as a disability. Plus she has very little skills so getting a job is really hard for her, and then for some reason she keeps getting fired. (Argh!) Someone asked if she was trailer trash, and because she’s my mom I don’t want to rip on her too much, but I’ll just say she makes Rosanne (remember the Rosanne Show) look articulate and well mannered. Get the picture?
September 25, 2007 at 10:10 AM #85822
Thanks for the reminder of the rent being taxable income – I had forgot about that when considering different scenarios.
CAREFUL. Rent is only taxable to the extent that it exceeds your costs. In your case you will surely have a tax loss, which will adds to what you can deduct assuming you make less than 150K per year. These costs include Mortgage interest, Property Taxes, Insurance, Depreciation, maintenance, property management (if used), etc. Depreciation is about 3.6% of the value of the structure at the time you acquired it (land not included). If the structure was worth 250K, this is a paper (tax) loss of ~ 9000 per year.
You can deduct up to 25K of these losses per year against your income if you make under 100K. This maximum amount is reduced by 1$ for every 2$ you make aver 100K.
You will surely not have any taxable gain. And will likely have a significant additional tax deduction beyond what you currently have.
September 25, 2007 at 10:49 AM #85829tazParticipant
My 70 year old mother recently moved into a senior (rent controlled) apartment. If you are considering that option for your mother, I suggest you scout out and identify SEVERAL acceptable locations/facilities and get her name on their waiting lists NOW! My mom and I discovered that the demand for these places is high and accordingly the wait list is LONG, it took close to 2 YEARS for my mom to get her place.
September 25, 2007 at 11:33 AM #85834
FSD thanks for clarification on the taxes. I thought it was implied in my post but good job explaining it… Also to add, you always must take the depreciation expense. Even if you do not, the IRS will recapture it regardless of whether you did or not.
September 25, 2007 at 11:54 AM #85838
As far as comps go. I would check recent pendings. I think it is safe to say that the majority of them went into escrow for a ballpark estimate of 5% off list price . You have to start somewhere.(In thi market list price has oftern been reduced a few times before an escrow) If I were motivated to sell something I would start a little lower than the best pending comp but be willing to get to 5% below a pendings based comp after a few weeks and work from there. Probably take something like 3 percent off a month later. That is very competetive. I would adjust according to the number of sales and other feedback from the sub market and also traffic to the subject property.
September 25, 2007 at 1:28 PM #85854
Actually when I refer to comps I look at several things. To me comps is inclusive of an entire analysis of the market to help you price the home. The factors to analyze include
-current active listings for sale
-recent cancelled, expireds, withdrawns
-going over and looking at the current active listings you are competing against
-your own motivation level to sell
Analysis of all of this data is important. I don’t like to say list at x% above or below comps because it really depends on the situation. If there is a 10:1 active to pending ratio then you may need to go well below the current comps of recent pendings to get activity. In markets like this it is really tough. Also many people really lean towards lets price it at this price now and we will lower it later. That strategy to me is pretty much a sure fire way to end up chasing the market down.
Unfortunately there are agents out there who will still encourage pricing that fits in with the sellers opinions or thoughts rather then what the data and market conditions dictate. That is sad but they end up getting the listings and then price adjusting later.
September 25, 2007 at 1:40 PM #85857patientlywaitingParticipant
sdrealtor, I think it’s smart to indulge the sellers and get them to adjust their asking later.
You need to slowly ease people into coming to terms with then accepting their situation. Shock therapy is painful and doesn’t work.
If I recall Seattle Relo is a therapist and might agree with that.
September 25, 2007 at 3:02 PM #85870
Your answer made me chuckle patiently waiting… yours to rus but rus… anyways I think the large brokerages have the time and money to serve people in that manner. Someone like me who carries much lower overhead and doesn’t have the time to deal with people who cannot seperate emotion from fact, it makes more sense to cut bait then to fish. Which is pretty much what the mainstream does… fish… then chase the market down… then take the listing off… then repeat in the ensuing spring.
September 25, 2007 at 4:21 PM #85884
Not to call you on that but dont you have an overpriced listing in Ramona for more than 1 year? How about the one in san carlos you held onto for about 1 year?
The truth is no one wants horribly overpriced listings. The reality is for a variety of reasons we all take them from time to time.
September 25, 2007 at 4:34 PM #85885
Not calling me on that at all. In previous postings I have already said I have TWO, not one overpriced listings. These are both personal friends of mine. One was in Oceanside in the Fire Mountain area (and was relisted and finally expired) and the second is on Orange in Ramona.
Again, I have mentioned these before and if you like I can go trudge through the archives and find the postings where I did mention them.
I have actually not mentioned it recently but here is one quick finding from August sdr..
tg – most engineers are not
Submitted by SD Realtor on August 15, 2007 – 8:57am.
tg – most engineers are not so good at math as they are really bad in english…count me as one of those…
The example here was to show that there are cases where sellers drive agents, not the other way around. I do have two listings that are priced in a ridiculous manner relative the submarkets they are in. They have been on the market forever and are the proverbial dogs… In both cases I know the sellers and I gave them the same advice but in those cases I did take the listings as they are friends. Why they don’t want to lower the prices and sell is beyond me….
Please let me know if you would like me to post the exact thread it came from.
Also regarding the San Carlos property that actually was not horribly overpriced relative to the market there. If you looked at the San Carlos comps relative to that listing period the home while slightly overpriced at first was not ridiculously overpriced. As it was the sellers did end up chasing the market down drastically and ended up selling for close to what the recent foreclosure went for not to long before their sale.
Ball is in your court now.
September 25, 2007 at 4:38 PM #85886
Like I said we all take overpriced listings from time to time for one reason or another. Your previous comment about not taking them and claiming the big brokerages do more often was both false and misleading.
September 25, 2007 at 5:31 PM #85895
I didn’t mean to be misleading however I do believe that the larger brokers do actually have more overhead to take listings that are overpriced. Pretty much every time I go to listing appointments, the clients say hey I have had other interviews with agents from *insert large broker name here* that said they believe my home will get this much for the home. In all those instances I tell them hey, you can list it for that much but in my opinion, you will not get much for it. So they invariably either list it with them or they list it with me at the higher price. I am trying now not to take those listings anymore but you are right, some of them I do take.
So let me clarify my point, I do believe that it is much easier for larger brokerages to carry listings that are priced in a manner that affords a lower probability of selling then it does for smaller brokerages with lower overhead.
In fact, in the older posting that I pulled the quote from, (where I spoke of the two dead dogs I had) that is a Lemon Grove listing that I did not take because the price that the guy wanted to price at was not what I agreed with, so he most likely listed it with his friend that worked for a larger brokerage.
Your point is very well taken however. In SOME instances we all do take overpriced listings, myself included. I just took one down on Valencia in Rolando, that IMO is well overpriced, although again, they are good friends who when they bought the place assured me they would be there for the long run but of course have since changed their minds and will take a huge bath. Another one was the Mira Lago listing down up in San Marcos. I begged the guy to list in the low 500’s when I took the listing and he wouldn’t do it… He stayed with me for awhile and it never sold… He said he would never sell at that price… so here he is with Prudential, after many many months on the market pending at 475k…
Now of course this is the same Prudential agent he said that he previously interviewed before he hired me who told him for sure it would sell at 550k due to the Prudential marketing power.
To finalize, yes you are correct, we do take listings that we sometimes view as overpriced. Personally I tell my clients flat out that I believe they are overpriced and in some cases way overpriced. Whether everyone else does that I am not sure.
September 25, 2007 at 6:01 PM #85898drunkleParticipant
you’re just an unscrupulous realtor trying to bag the easy cash by selling short and selling quick. just today on cnbc, a lady with corcoran group discussed lazy bums like you and how your kind was only in it for the quick cash. she said that *good* realtors were willing to let their own properties stay on the market for longer periods of time, waiting for the higher bids. and that that is the kind of realtor you want on your side, willing to wait the extra month or 12.
September 25, 2007 at 8:12 PM #85904bonfireParticipant
I sold my house in the San Bernardino mountains last October. I listed my house at what my realtor recommended, and it sat for 2 months. I then started lowering the price, every couple of weeks. My realtor thought I was being too agressive. But, by that time I had started reading Piggington, and conditions reminded me alot of the early 90’s. I finally got an offer, and sold at about 25% off of the original listing price. My realtor and my neighbors shook their heads at poor silly me. I laughed all the way back down to North County where I am renting until…?
By the way, find a rental or buy a senior condo or mobile home near you and your husband for your MOM whith the proceeds from her home. She and you will be happier in the end. Apply for Social Security Disability, and Medi-cal for her, she will qualify if you document her medical problems.
September 26, 2007 at 7:39 AM #85946bsrsharmaParticipant
I sold my house in ………….. last ……….. I listed my house at what my Realtor recommended, and it sat for … months. I then started lowering the price, every couple of weeks. My Realtor thought I was being too aggressive. But, by that time I had started reading Piggington, and conditions reminded me a lot of the early 90's. I finally got an offer, and sold at about ….% off of the original listing price. My Realtor and my neighbors shook their heads at poor silly me. I laughed all the way to ………….. where I am renting until…?
My experience too. This pattern is going to happen a lot during the falling edge of the price curve. Sadly, many Realtors have such a weak grasp on macroeconomic fundamentals that when the tsunami hits them, they think it is just heavy rain.
September 26, 2007 at 12:46 PM #85997want a good dealParticipant
Speaking from experience, make sure your new place is either 1 story or has a full bed/bath on the first floor so as she ages you dont have to buy again because she cant get up the stairs. Also good idea to buy in an area where there are good health care providers. RB has the Sharp building which has excellent services but the closest hospital is out on Pomerado road and is small. Lots of oldsters so there must be stuff in the area.
September 25, 2007 at 11:07 PM #85929
A little common sense here that you seem to be missing. When you interview for a listing I doubt you are competing against HelpUSell, Assist to Sell, RedFin, Ipayone etc. People interview you because they are looking to save on commissions. I’ll bet you generally go up against the larger brokerages when you are in competition because that is who the neighborhood experts tend to be with. You get interviewed because you are cheaper and they also interview agents with the major brokerages because they “perceive” them to be better but more expensive. So any time you lose a listing to an agent who “bought the listing” it will generally be an agent with one of the big guys. That is your experience, hence you believe that to be the case. I can honestly say that after spending years analyzing properties for sale in my area that there is absolutely no rhyme nor reason to who takes the overpriced listings. Sometimes it’s the discount guy and sometimes its the major brokerage guy.
September 25, 2007 at 11:40 PM #85934
Your synopsis is entirely correct. I do agree and that is usually the case.
September 25, 2007 at 2:24 PM #85867
I don’t like to say list at x% above or below comps because it really depends on the situation.
“I would adjust according to the number of sales and other feedback from the sub market and also traffic to the subject property.”
I think that covers the other bases you reference MR. One Upper ;).
In my account I already adjusted for the fact that the seller is motivated. In this market If I were motivated closed sales matter to me less than pendings (depending on the activity). Of course to make a superstar presentaion to a seller of unknown motivation you might have to bring what they were looking for …closed sales comps.
I think getting something sold and pleasing deluded clients are two different topics. I am not doing therapy on anybody on this issue especially after the sign is in the front yard.
September 25, 2007 at 11:09 AM #85831
Seattle Relo –
Another thing you may want to consider is getting a CNA to visit here. A typical CNA is about 22-25 an hour from a certified agency. There is usually a 4 hour minimum and a CNA can prepare meals, light housekeeping, run errands, etc. They cannot administer medicine (say insulin for instance) nor can they populate a pillbox perhaps. They can remind your mom to take here medication.
Anyways you can also go to craigslist and advertise for a caregiver/companion. You will get a better price but they will not be a certified.
So perhaps you can have the CNA visit her a little bit each week. Or look into a companion.
September 25, 2007 at 9:48 AM #85820stockstradrParticipant
A quick story for those thinking of selling now. A friend of mine lives in Minnesota, a nice quiet midwestern state many believed would be least affected. He put his house up for sale 9 months ago. He had to. He accepted a job offer taking him to the Bay Area.
Back then I told him, “Sell NOW at any price you can get.”
But he chased the market down. What do you think he said to me last week?
He said that 6-9 months ago the market may not have been great, but at least you could sell a house for a low but reasonable price.
He wishes he had sold. Since then he has seen the housing market fall off a CLIFF.
He says “the real estate market is completely locked up, frozen with no signs of life because people cannot get loans. Prices are dropping so fast the appraisers don’t know what to do, and the loan officers are SCARED to approve anything.”
IF you can find a comp that sold in the last 30-days, you price 10% under that and still NO OFFERS, or lowball offers that fall through because nobody can get a mortgage approved.
My friend emphasized that VERY FEW people with good credit are house hunting (those with solid credit and down payments already own a home, or are smart enough to have sold and switched to renting)
That’s the housing market up in quiet sleepy Minnesota. California is much worse.
It is too late to be thinking about selling. We are too deep now into this housing crash. The next 36 months are going to see the worst housing hell in over fifty years.
September 25, 2007 at 11:11 AM #85832
Yes comps are what you have to look at to establish a starting point. Then if you are motivated to sell your home you price below them. How far below is the only question. Also determining how nice your competition is, is another important factor.
I don’t think Settle Relo or anyone else knows what you earn so how would they price a home at 2.5-3.5x what you earn.
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