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Agreed. It would have been a good plan if the upswing had kept on going like NAR and Alan Nevin said it would. Just think, had they sold in 2005 instead of refinancing, they would have cleared a lot of money even after taxes.

Regardless, the reality on this one is that the lender for the 2nd is going to get scalped on this by the time the holding costs and costs of sale are factored in. They’re facing a loss of at least $200k right now, and that’s if the house sells at the list price.

Even though the loan was probably sold off in the secondary market, there would probably be a buy-back clause in it for an NOD within this 2-year window. That means the lender may very well be on the hook for the entire loss. You gotta wonder how many losses like this any lender can take.

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My wife and I work from home so we were always around when our kids were teenagers. I cannot express how much of a difference that has made in my relationship with them as a father when I compare it to my relationship with my own corporate warrior dad. He was a CPA/CFO type for a couple of the big contracting companies (Flour and Parsons) and he was never home when I was growing up. He’s a good man but I don’t know him nearly as well as my kids know me.

People do what they have to do, but if you and your wife can arrange your lives so that you can spend even a little more time with your kids when they’re growing up I don’t think you’ll regret it. I sure don’t.

Something else. You already making references to doing things on the outside, like possibly getting into RE development or running a home business. If you’re already thinking about a large share of your money coming from sources other than your full-time job then perhaps you should concentrate on maximizing those outside sources. Law school has little to do with RE development or selling widgets on EBay.

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Financial stability is obviously something that is high on your list of priorities, otherwise you’d be carying too much debt right now to make any decisions other than to carry on. The fact that you have saved the $200k while living here says a lot about your priorities in life.

A government job in an area with reasonable living costs is a pretty safe and secure way to sit out an economic recession. Only a fraction of the attorneys I know do substantially better economically than the pay+benefits package you are describing, and those that do have to work long and hard to do it. That’s fine if they love what they’re doing or if they love the money, but by then we’re talking about different priorities.

As you have apparently figured out by now it isn’t how much money you make that counts, but how much you spend that determines your economic well-being.

You should go to law school if you have that burning desire to do it and, to a lesser degree, if your self-image revolves primarily around your occupation. Other than that, you might want to give more weight to the other aspects of your life.

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As it happens, I reviewed an appraisal on that street (same side, even) that was dated in late May of 2005. This home was a smaller model (in the 3,900 SqFt range) and also had an original purchase price of just under $1MM in mid 2004. The appraisal I reviewed came in just under $1,400,000, and based on my review of it I came to the opinion that value nominally was within reason. My review expressed a value opinion as a range for the property involved at $1.3MM – $1.4MM, and this appraisal came in at the upper end of that range.

Considering the property we’re talking about is 700 SqFt larger (which probably includes the casita) than the one I was reviewing, it is quite possible that most appraisers would have developed an opinion of value in mid-2005 for this property in the $1.4 – $1.5MM ranges. That’s what the sales in that project were doing at the time. Besides the sales data that were listed in the appraisal report I reviewed, I remember finding a significant number of other sales data during that time period (late 2004 – early 2005) that demonstrated the same value trends.

You would want to bear in mind that new construction sale prices during that period of time were commonly being negotiated 6-9 months or even in excess of a year prior to completion of the home and close of escrow. the Semi-p[ro flippers were camping out at the sales offices on the eves of the release dates for these phases and snatching up the available listings on the day of release, hoping to sell the units off in a double escrow on the date of completion.

Unlike a lot of other areas, that area was still increasing in pricing up through the end of 2005. So the disparity between a pre-construction contract price of $1MM and a value opinion of $1.5MM 24 months later and near peak pricing is not completely crazy to think about. Especially when considering all the other stupid moves these agressive investor/flipper types were doing at the time.

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A 5-year breather in new home construction is common during economic downswings. Very few homes got built between 1991 and 1998 when compared to the periods before and after.

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I think the surfing crowd is probably a lot like the hiking crowd, the offroad crowd, the sailing crowd and the horse crowd. Each of these subcultures include a prevailing mainstream with its own established ideas of what is and isn’t acceptable; as well as the people who are coming in from the outside who do not assimilate, whether by ignorance or by arrogance.

Try blasting a boombox on a hiking trail or tacking the wrong way on the bay or sporting an all-new set of Nike boots, chaps, hat and saddle down at the stables and see if you don’t generate the equivalent of the surfers’ stinkeye from those hikers or sailors or riders who comprise their respective mainstreams. Unlike football and basketball and even soccer, these other activities are not considered sports by most people who regularly participate in them, but are lifestyles.

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There is surf in Texas, but Oregon or the Carolinas are a little more attractive to me than Texas. No offense intended.

There are way too many RE/surfer dude maggots out in the line-up. They’re somewhat related to the soccermom surf-divas, only more obnoxious and not quite as dangerous and unpredictable to be around. Take it from me, that guy isn’t a surfer, he’s just another a golfer on a longboard. I guarantee there’s something in his Land Rover with a Nike swoosh on it. I have to put up with those guys when I go grocery shopping; it kills me a little every time I run into them out in the water too. I surf to get away from people like that.

As I said, if I wasn’t connected to this area by family and lifestyle I’d consider leaving. I might leave anyway.

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Based on your lifestyle I think Texas makes a lot more sense than SD County. If I didn’t surf and if my extended family didn’t live in the area, I’d basically have no reason to live in Carlsbad. I can’t stand the yuppie scum with whom I have to share these roads, I’m not big into the nightlife or entertainment and I’d never drive down to the beach to hang out on the sand or watch the sunsets.

I have a friend whoes wife got transferred to Minneapolis for work. He says the people there are so much nicer than here that it’s not even close. Apparently, there are still areas of the nation where the first question out of someone’s mouth when they meet you does not involve what you do for work, where you live and what kind of car you drive.

Imagine that.

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It sounds like a vacant parcel. I don’t know how there would be any cash back involved, unless they think they can get the parcel overappraised based on an inflated sale price. It’s still kinda tough – most lenders won’t go over 50% Loan-To-Value on a mortgage for land.

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I’m not getting involved in debates about the merits of the realty agent commission system. For me it comes down to the one thing – are the facts about the sales transaction being fully disclosed to the lender during the loan application process? If so then everything’s cool; if not then there’s a problem and it doesn’t matter how many people have gotten over, it still isn’t right.

On every appraisal report there are questions asked of appraisers that require very specific answers. Here are but a couple of them:

“Is there any financial assistance (loan charges, sale concessions, gift or downpayment assistance, etc) paid by any party on behalf of the borrower”, followed by yes/no checkboxes. Then “If yes, report the total dollar amount and describe the items to be paid.”

This $5,000 cash rebate would definitely fall under the category of being reportable; and yes, if it isn’t reported to the lender it is a form of mortgage fraud. You’re welcome to ask around and see if I’m making this up.

Now the sale price is the sale price, and the appraisal should reflect the market value of the property regardless of the details of the transaction. However, if there are sales concessions or any reduction to the price actually being paid by the borrower the appraisal reports are required to both show them and reconcile them in the appraisal; and the lender is supposed to make their loan decisions from there. Most lenders will not make their loan based on the (let’s say) $600k sale price in this type of situation, but will back it down by the $5,000 that the borrower is not paying for the home. In other words, it’s not how much the seller nets that the lenders make their decision on, but how much the borrower is actually paying in terms of cash equivalency.

Negotiation of how much to pay a realty agent is a completely different subject, one which I have no strong feelings about one way or the other.

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Well little lady, I’m not a realty agent but I am an appraiser and I can tell you that such a kickback is something that must be disclosed in an appraisal as financial assistance; and yes, it would affect the cash equivalency of your sale price as well as the amount that most lenders would finance. You’re buying a (let’s say) $600k property, but you’re only paying $595,000 after the cash back. In the vast scheme of things it’s not a large amount of money, but it would affect your loan if you’re maxed out on your financing.

I only have 20 years of experience at this and I’ve only NEVER seen such a kickback that didn’t involve keeping the mortgage lender out of the loop – which omission is mortgage fraud and is a felony – so if you find my observations insulting, well, I already apologized in advance for that, didn’t I?

Besides, I already suggested you could negotiate a lower commission up front or wait for the prices to drop, so it’s not like I didn’t offer a constructive suggestion as an alternative. BTW, those alternatives would both have the same effect (if your goal is to save money) without creating a tax headache for your agent or a financing problem with your loan. But the way I read it, you specifically asked about how to get cash back rather than how to save the money, so that’s why I responded in the manner I did.

Sorry.

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I’m not a realty agent and I don’t play one on TV. If you want to save $5k it seems to me your best bet is to either wait a few months for the prices to drop that far or use a discount broker up front.

Maybe it’s just me, but the only reason I can think of for asking for cash back from a broker is to hide it from your lender. If that’s the case then you are basically soliciting an agent to conspire with you to commit mortgage fraud, and I wouldn’t think Pigginton’s would be a good venue for that.

On the other hand I might be reading this all wrong. If so, I apologize profusely in advance.

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The person who put in the bid may be an investor who’s looking to flip. They only have to be successful one time to make it worth their while to put in these types of bids.

In my experience, if there is any mention of a seller needing to sell mentioned in an MLS listing the seller can expect bids like this. Putting the terms “foreclosure”, “short sale” or “bank owned” in an MLS listing is like advertising for a discounted sale price.

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Temecula and Murietta got nailed the last time around, partly because they were more of a bedroom community at that time. Now they’ve got a lot more businesses in town, and they’re starting to come into their own more as a population center. I’d just about compare Temecula to Escondido, only newer and nicer. I’m thinking that this time around the declines won’t be as bad compared to other areas as last time, but they’ll still be significant.

I think you might have a shot at getting that $550k (peak) house at $350,000 if you can hold out long enough. No matter what, time is on your side.

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A 10% annual reduction in price might seem like a slow rate of decline, but it adds up pretty quickly if that trend continues for more than a couple years. The drop of the 90s that “trapped” so many people in their homes only amounted to a 25% – 30% decrease in pricing over 5 years.

A 30% cumulative reduction in nominal prices over 3 years + a 10% cumulative increase in inflation = a 40% reduction in value. That’s nothing to sneeze at, and with average prices in the $600k ranges were talking about people losing $200,000 real-life U.S. dollars. Most working people cannot afford to take such a loss.

Don’t forget how many of the jobs that make enough money to buy these homes are, or more correctly, were RE related; and how unlikely it will be that some of the people in those jobs who are now being starved out to replace those incomes in other occupations. There are a lot of people who have the means to hold on during the downturn, but only barely – they have to hope they don’t so much as catch a cold. I guarantee some of them won’t make it.

I haven’t seen so many short sales and bank-owned foreclosure sales since the mid-90s. I don’t think we’re anywhere near a turning point.

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