[Tone]

MH,

What does your loan look like? You say its 30 years. Have you refied to a lower rate when interest rates dropped earlier in this decade? How much would you net if you sell? How much did you pay for the property?

Without knowing too many details I’d suggest (and I’m no expert – I just play one on the internet) that you sell. The property is a negative cash flow, you think its too small to move back into, and prices are not going up anymore.

With a 30 year loan you are not paying down a significant part of the principal and the equity in your home is likely to drop over the next three years (maybe dramtically – who knows). You could sell and stick your equity in a CD (at the least) and have it grow but keeping the home will only have the equity shrink with price declines or even inflation if housing prices simply flatten out.

But beware, the only houses selling now are ones that are fixed up. My house is completely remodeled and it recently went into escrow with several offers. Other less expensive houses (not upgraded) in the same neighborhood have languished on the market since last year.

Good luck.

[Tone]

MH,

What does your loan look like? You say its 30 years. Have you refied to a lower rate when interest rates dropped earlier in this decade? How much would you net if you sell? How much did you pay for the property?

Without knowing too many details I’d suggest (and I’m no expert – I just play one on the internet) that you sell. The property is a negative cash flow, you think its too small to move back into, and prices are not going up anymore.

With a 30 year loan you are not paying down a significant part of the principal and the equity in your home is likely to drop over the next three years (maybe dramtically – who knows). You could sell and stick your equity in a CD (at the least) and have it grow but keeping the home will only have the equity shrink with price declines or even inflation if housing prices simply flatten out.

But beware, the only houses selling now are ones that are fixed up. My house is completely remodeled and it recently went into escrow with several offers. Other less expensive houses (not upgraded) in the same neighborhood have languished on the market since last year.

Good luck.

[Tone]

Great discussion. I’m learning alot. 🙂

We’ll see what happens Monday or Tuesday – whether the contingencies clear or not. I’m going to delay signing the lease until Tuesday evening but I’m not so worried about that now since the worst I’ll lose is one month’s rent (it’s a gamble but I’ve spent more in Vegas for a weekend). I really need the peace of mind knowing I have somewhere to stay should my mortgage journey turn tortuous.

However, if the buyer fails to perform by Tuesday, I will definately request I be compensated for all damages should the escrow close late (PITI especially). I’ll also request the earnest money release should the buyer drop out. I hope I don’t scare them off, but as was mentioned earlier, perhaps that’s a good thing.

As for the bidding war I mentioned earlier – I had three offers. Two buyers came in with 100% financing and one buyer’s offer was contingent on a house selling. That house fell out of escrow (loan didn’t fund) and they withdrew their offer. From the two one hundred percenters, one had a higher FICO score, was 15 k under asking price, and my agent didn’t know the broker. The one I went with had the lower FICO score, but the offer was full price, and my agent knew the broker. The escrow was only 25 days as well. So we went with the later. The former verbally agreed to be a back up, but they never signed the official back up offer.

I’ll post updates if anyone’s interested — or even if you aren’t 😉

[Tone]

Great discussion. I’m learning alot. 🙂

We’ll see what happens Monday or Tuesday – whether the contingencies clear or not. I’m going to delay signing the lease until Tuesday evening but I’m not so worried about that now since the worst I’ll lose is one month’s rent (it’s a gamble but I’ve spent more in Vegas for a weekend). I really need the peace of mind knowing I have somewhere to stay should my mortgage journey turn tortuous.

However, if the buyer fails to perform by Tuesday, I will definately request I be compensated for all damages should the escrow close late (PITI especially). I’ll also request the earnest money release should the buyer drop out. I hope I don’t scare them off, but as was mentioned earlier, perhaps that’s a good thing.

As for the bidding war I mentioned earlier – I had three offers. Two buyers came in with 100% financing and one buyer’s offer was contingent on a house selling. That house fell out of escrow (loan didn’t fund) and they withdrew their offer. From the two one hundred percenters, one had a higher FICO score, was 15 k under asking price, and my agent didn’t know the broker. The one I went with had the lower FICO score, but the offer was full price, and my agent knew the broker. The escrow was only 25 days as well. So we went with the later. The former verbally agreed to be a back up, but they never signed the official back up offer.

I’ll post updates if anyone’s interested — or even if you aren’t 😉

[Tone]

Thanks for the advice, everyone.

I called the property manager for the house I was hoping to rent and offered one month’s rent as a penalty should I have to bail out of the lease. She agreed.

Now that that’s taken care of, she wants to sign the lease on Monday (the day my contingencies are supposed to be met). I called my realtor and she told me that contingencies could clear Monday, or maybe Tuesday (“maybe”? WTF?). And if the contingencies don’t clear, my realtor is going to send the buyer a “notice to perform.” I asked her what would happen if they didn’t perform and everything got fuzzy (my realtor is older and a friend of the family – she’s nice but I can’t get a stright answer from her half the time — but that’s my problem).

Anyhow, as Rustico pointed out, a Notice to Perform seems like the time to add new items into the contract, so I was wondering what I should do. I could just sign the rental lease (with out-clause) now even without my buyer’s contingencies met, and then maybe stick the buyers with some more items advantgeous to me should they fail to perform. I don’t know what. If this thing drags out beyond the 31st then I’m out one months rent (as penalty for getting out of my rental lease) and my house is back on the market and I would struggle to get the buyer’s escrow deposit. Doesn’t seem so bad, unless I’m missing something.

Of course all this is moot should the contingencies be met, but still, I like to think worst case scenario to help get my mind around the process.

I feel like calling the lender directly myself on Monday to iron out where this loan is. I really hate dealing with so many middle men.

[Tone]

Thanks for the advice, everyone.

I called the property manager for the house I was hoping to rent and offered one month’s rent as a penalty should I have to bail out of the lease. She agreed.

Now that that’s taken care of, she wants to sign the lease on Monday (the day my contingencies are supposed to be met). I called my realtor and she told me that contingencies could clear Monday, or maybe Tuesday (“maybe”? WTF?). And if the contingencies don’t clear, my realtor is going to send the buyer a “notice to perform.” I asked her what would happen if they didn’t perform and everything got fuzzy (my realtor is older and a friend of the family – she’s nice but I can’t get a stright answer from her half the time — but that’s my problem).

Anyhow, as Rustico pointed out, a Notice to Perform seems like the time to add new items into the contract, so I was wondering what I should do. I could just sign the rental lease (with out-clause) now even without my buyer’s contingencies met, and then maybe stick the buyers with some more items advantgeous to me should they fail to perform. I don’t know what. If this thing drags out beyond the 31st then I’m out one months rent (as penalty for getting out of my rental lease) and my house is back on the market and I would struggle to get the buyer’s escrow deposit. Doesn’t seem so bad, unless I’m missing something.

Of course all this is moot should the contingencies be met, but still, I like to think worst case scenario to help get my mind around the process.

I feel like calling the lender directly myself on Monday to iron out where this loan is. I really hate dealing with so many middle men.

[Tone]

“We renters could also be screwed by interest rates dropping to below 5 percent again. That could trigger another wave of buying, coupled with already slightly lower prices, sending prices skyward once again.”

Perhaps prices would skyrocket, if one believes low interest rates are what drove the housing boom. More than likely, it was mostly exotic loans that were the chief culpret. Once these are constrained, I believe prices will fall.

[Tone]

Rotting in debtor’s prison was once the punishment for those who could not manage their money.

My how the pendulumn has swung.

[Tone]

Great advice everyone. Thank you for replying. I am even more undecided than before!!!!

I have alot to think about and alot of numbers to crunch over the next few days.

[Tone]

Again if this is true, just what is the “pre-bubble” level for this current RE bubble? I noticed SD Realtor mentions something about “a multiple of 7” in the previous post. How can I figure out a rough estimate of what price my home might drop down to according to this study?

Sorry if this might be obvious to some of you. I’m trying to wrap my mind around this. I’m just a caveman.

[Tone]

Very interesting waiting hawk.

My parents had retired about 10 years ago to Sun City (out Murietta way) and that place has boomed during that time. Housing developments are everywhere where once was open pasture. My folks have been trying to get me to move out that way (I live in Long Beach/Orange county) and have a large, new, affordable house, but I’ve always balked. I can’t stand the climate and there didn’t seem to be any industry out there. I suspeceted that most people commute to LA and SD and it made me wary.

On the subject of industry in the inland empire, I read in the LA Times about a year ago that Murietta/Temecula was going to be the new Orange County. The logic was that OC started off as a bedroom community to Los Angeles. Industry moved to OC once the population was in place to support it. Hence the article proposed that the same thing would happen with Riverside once the land was developed with housing — industry would follow.

This could happen, but I suspect more that the housing boom in Riverside is more of an overflow of those who can’t afford a house near the coast and are willing to brave an arduous commute. Once the LA and SD markets slow, Riverside will take a big hit. I have no data — just thinking.

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