[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

First, and most importantly, people do not sell at 20% below market just to avoid a 6% real estate broker fee. If you are confident in your ability to place an accurate market value on the house, assumed to be in good condition, the discount is for some reason, and you should be clear what that reason is.

The most difficult challenge in buying, with or without an agent, is accurately assessing property condition.

For assessing the condition of a house, real estate agents can be incredibly helpful (rare) or completely useless (common). Not having an agent in the deal is no loss as far as property assessment is concerned.

Unfortunately, many of the “professional” property inspectors, who charge as much as $500, are also nearly useless, when it comes to certain high-cost areas (foundation, roof, plumbing, electrical, heating and air conditioning, pest control).

If this is a California house, the law requires full disclosure by the seller of negative conditions of which the seller is aware. Selling “as is” does not remove the seller burden to disclose. It only alerts the buyer that the seller will not remedy any negative conditions disclosed or discovered.

First, seek out an escrow company that caters to transactions without agents, and will assist with the voluminous paperwork requirements.

Second, insure that your offer to purchase is contingent on your acceptance of negative conditions disclosed by the seller and any property inspections. In agent-involved deals, there is commonly a 17-day period after offer acceptance, during which the buyer can back out without putting any deposit money at risk.

Third, insure that the seller understands his burden to disclose all negative conditions, regardless of the “as is” declaration. Deliver this advisory in person, and pay very close attention to his reaction upon being told.

Fourth, select your property inspector(s) carefully if you decide to proceed. If you are indeed buying well below market (for a squared-away house), you can afford to engage specialist contractors to separately inspect each of the high-cost areas mentioned above.

[analyst]

[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]

This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]

As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.

I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.

It can happen either way.

The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.

[analyst]

[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]

This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]

As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.

I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.

It can happen either way.

The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.

[analyst]

[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]

This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]

As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.

I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.

It can happen either way.

The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.

[analyst]

[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]

This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]

As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.

I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.

It can happen either way.

The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.

[analyst]

[quote=davelj][quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]

This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”[/quote]

As an active participant in the real estate market at the time, I can tell you that the conditions described by davelj (high inflation, rising interest rates, rising real estate prices) did exist in the early to mid-1970’s, triggered by Nixon’s ending of the right to redeem dollars for U. S. Government gold. Dollar holders went looking for places to put their dollars, and a non-trivial percentage of dollars (from both foreign and domestic sources) flowed into U. S. real estate.

I can also tell you that when Volcker’s inflation-killing policies raised interest rates between 1979 and 1982, prices fell abruptly by one-third or more, and San Diego mid-market houses became nearly impossible to sell unless seller financing was provided.

It can happen either way.

The Federal Reserve and Congress will determine what we see this time by the cleverness (or lack thereof) they show in future monetary and fiscal policy. In other words, nobody knows what will happen.

[analyst]

[quote=sdrealtor]

So what does all this add up to? Are they really paying it back? Was the program a success? Yet to be seen? Is this just PR nonsense?[/quote]

Summary of events:

1. Treasury Secretary Paulson proposes that Congress authorize $700 billion to buy devalued MBS, with the condition that he not be accountable to anybody for his disposition of the funds.

2. Congress responds “Hell no!”.

3. Paulson says the sky is falling.

4. Congress appropriates the money with completely insufficient controls.

5. Paulson figures out that:
a. MBS owners don’t want to sell low,
b. Treasury doesn’t want to buy high,
c. $700 billion is totally insufficient to handle the magnitude of the problem.

6. Paulson and Bernanke privately agree that the $700 billion will be “invested” in certain organizations to defuse the liquidity crisis, while the Federal Reserve will print money in massive quantities to handle the bigger problem (insolvency of all the large financial organizations).

7. Federal Reserve easy money and MBS purchases, along with relaxed accounting rules, return the large banks to “solvency” and “profitability”.

8. Banks are now able to convince somebody to buy new issues of stock.

9. TARP money is repaid.

To the people running the show, #8 is the definition of success (not of TARP, but of Treasury/Federal Reserve Plan B).

It remains to be seen what consequences arise from the massive Federal Reserve money printing. To the short-term thinkers in government, any such consequences are tomorrow’s problems. (Maybe some magic will happen.)

[analyst]

[quote=sdrealtor]

So what does all this add up to? Are they really paying it back? Was the program a success? Yet to be seen? Is this just PR nonsense?[/quote]

Summary of events:

1. Treasury Secretary Paulson proposes that Congress authorize $700 billion to buy devalued MBS, with the condition that he not be accountable to anybody for his disposition of the funds.

2. Congress responds “Hell no!”.

3. Paulson says the sky is falling.

4. Congress appropriates the money with completely insufficient controls.

5. Paulson figures out that:
a. MBS owners don’t want to sell low,
b. Treasury doesn’t want to buy high,
c. $700 billion is totally insufficient to handle the magnitude of the problem.

6. Paulson and Bernanke privately agree that the $700 billion will be “invested” in certain organizations to defuse the liquidity crisis, while the Federal Reserve will print money in massive quantities to handle the bigger problem (insolvency of all the large financial organizations).

7. Federal Reserve easy money and MBS purchases, along with relaxed accounting rules, return the large banks to “solvency” and “profitability”.

8. Banks are now able to convince somebody to buy new issues of stock.

9. TARP money is repaid.

To the people running the show, #8 is the definition of success (not of TARP, but of Treasury/Federal Reserve Plan B).

It remains to be seen what consequences arise from the massive Federal Reserve money printing. To the short-term thinkers in government, any such consequences are tomorrow’s problems. (Maybe some magic will happen.)

[analyst]

[quote=sdrealtor]

So what does all this add up to? Are they really paying it back? Was the program a success? Yet to be seen? Is this just PR nonsense?[/quote]

Summary of events:

1. Treasury Secretary Paulson proposes that Congress authorize $700 billion to buy devalued MBS, with the condition that he not be accountable to anybody for his disposition of the funds.

2. Congress responds “Hell no!”.

3. Paulson says the sky is falling.

4. Congress appropriates the money with completely insufficient controls.

5. Paulson figures out that:
a. MBS owners don’t want to sell low,
b. Treasury doesn’t want to buy high,
c. $700 billion is totally insufficient to handle the magnitude of the problem.

6. Paulson and Bernanke privately agree that the $700 billion will be “invested” in certain organizations to defuse the liquidity crisis, while the Federal Reserve will print money in massive quantities to handle the bigger problem (insolvency of all the large financial organizations).

7. Federal Reserve easy money and MBS purchases, along with relaxed accounting rules, return the large banks to “solvency” and “profitability”.

8. Banks are now able to convince somebody to buy new issues of stock.

9. TARP money is repaid.

To the people running the show, #8 is the definition of success (not of TARP, but of Treasury/Federal Reserve Plan B).

It remains to be seen what consequences arise from the massive Federal Reserve money printing. To the short-term thinkers in government, any such consequences are tomorrow’s problems. (Maybe some magic will happen.)

[analyst]

[quote=sdrealtor]

So what does all this add up to? Are they really paying it back? Was the program a success? Yet to be seen? Is this just PR nonsense?[/quote]

Summary of events:

1. Treasury Secretary Paulson proposes that Congress authorize $700 billion to buy devalued MBS, with the condition that he not be accountable to anybody for his disposition of the funds.

2. Congress responds “Hell no!”.

3. Paulson says the sky is falling.

4. Congress appropriates the money with completely insufficient controls.

5. Paulson figures out that:
a. MBS owners don’t want to sell low,
b. Treasury doesn’t want to buy high,
c. $700 billion is totally insufficient to handle the magnitude of the problem.

6. Paulson and Bernanke privately agree that the $700 billion will be “invested” in certain organizations to defuse the liquidity crisis, while the Federal Reserve will print money in massive quantities to handle the bigger problem (insolvency of all the large financial organizations).

7. Federal Reserve easy money and MBS purchases, along with relaxed accounting rules, return the large banks to “solvency” and “profitability”.

8. Banks are now able to convince somebody to buy new issues of stock.

9. TARP money is repaid.

To the people running the show, #8 is the definition of success (not of TARP, but of Treasury/Federal Reserve Plan B).

It remains to be seen what consequences arise from the massive Federal Reserve money printing. To the short-term thinkers in government, any such consequences are tomorrow’s problems. (Maybe some magic will happen.)

[analyst]

[quote=sdrealtor]

So what does all this add up to? Are they really paying it back? Was the program a success? Yet to be seen? Is this just PR nonsense?[/quote]

Summary of events:

1. Treasury Secretary Paulson proposes that Congress authorize $700 billion to buy devalued MBS, with the condition that he not be accountable to anybody for his disposition of the funds.

2. Congress responds “Hell no!”.

3. Paulson says the sky is falling.

4. Congress appropriates the money with completely insufficient controls.

5. Paulson figures out that:
a. MBS owners don’t want to sell low,
b. Treasury doesn’t want to buy high,
c. $700 billion is totally insufficient to handle the magnitude of the problem.

6. Paulson and Bernanke privately agree that the $700 billion will be “invested” in certain organizations to defuse the liquidity crisis, while the Federal Reserve will print money in massive quantities to handle the bigger problem (insolvency of all the large financial organizations).

7. Federal Reserve easy money and MBS purchases, along with relaxed accounting rules, return the large banks to “solvency” and “profitability”.

8. Banks are now able to convince somebody to buy new issues of stock.

9. TARP money is repaid.

To the people running the show, #8 is the definition of success (not of TARP, but of Treasury/Federal Reserve Plan B).

It remains to be seen what consequences arise from the massive Federal Reserve money printing. To the short-term thinkers in government, any such consequences are tomorrow’s problems. (Maybe some magic will happen.)

[Author]

Posts