‘Everyone’s Offering Something’
The Wall Street Journal reports on a way to get home sales moving. “As a glutted real-estate market makes homes harder to sell, some sellers are trying a different approach: putting their house or condo on the auction block. In some areas along the East and West coasts and in Florida, the number of homes listed for sale has more than doubled from a year ago and prices are eroding. The market has chilled so fast that sellers have little idea how much their homes are now valued at or how to attract buyers. That creates a perfect opening for auctioneers.”
“Bill Loper put his house in Destin, Fla., on the market with a real-estate broker last year, asking about $510,000. With lots of other homes for sale nearby, ‘we were getting no lookers, no offers,’ Mr. Loper says. In March, with still no prospects, he put the home on the block in an auction. It sold it for $435,000. ‘I feel like we got the fair market value of the house on that day,’ he says.”
“Some online auction services say they also are benefiting from the weaker housing market. Real-estate agent Glenn Mayernik used RealtyBid to help one of his clients sell a three-bedroom home on Long Island, N.Y. The house was originally priced at $440,000 and then dropped to $365,000 on the conventional market, where it stayed for three months. The house finally sold for about $340,000 at the end of a 14-day online auction.”
The Christian Science Monitor looks at what makes a buyers market. “Real-estate reports all point to a slowdown after a long boom, but don’t assume that it’s suddenly a buyers market out there. Yet in most metro areas, the current cool-off doesn’t mean a surplus of bargain deals.”
“Experts have a warning for today’s home shoppers: It often takes a year or two for prices to adjust downward in a slowdown. So far, many areas appear to be in a ‘topping out’ phase more than a ‘bottoming out.’”
“So far, the market shift is visible more in the behavior of buyers and sellers than in the prices. ‘In the past, buyers were taking properties just as they were..because they were afraid of prices going up,’ says Linda Behnke, assistant manager at a (real estate) office near San Diego. ‘They were just happy to just get the house.’ Now, by contrast, buyers are ‘going to a store that’s fully stocked.’ It’s unusual to sell a home within 30 days near her office in Rancho Bernardo.”
“‘We’re trying to settle in to where prices should have been’ without some of the recent froth, Ms. Behnke says. That means it feels like a buyer’s market now, even though the median price, the middle price of all homes sold, hasn’t yet dipped.”
“Some builders are throwing in free granite countertops, while ordinary sellers are making sure their homes don’t need obvious repairs.”
Myrtle Beach Online reports on builder incentives in South Carolina. “Big builders, taking cues from the auto industry to sell their oversupply of homes, are offering big incentives. The deals are aimed at making cautious buyers during this real estate slowdown take the plunge and purchase.”
“‘[National builders] are seeing sales falling in general, seeing cancellation rates pick up, and they’re using the incentives to help drive sales and use it to sell inventory that they didn’t plan on having,’ said Todd Vencil, who covers eight publicly traded home builders.”
“Builders are not only competing with each other, but with ballooning inventory, said home builder analyst Jeremy Pinchot. ‘The result is that some builders who want to satisfy Wall Street with the best results possible, even in a declining housing market, are offering higher incentives to capture market share and drive volumes,’ Pinchot said.”
“Lennar Corp. is offering no payments until 2007 in its Brighton Woods single-family subdivision off S.C. 707 in Murrells Inlet. The company is also offering no closing costs. ‘The way the market is right now, everyone’s offering something. We’d make the payments until 2007. It’s working pretty good,’ said Donnie Long, Myrtle Beach division president. Long said he is expecting more spec homes in Brighton Woods in the next few months.”
“Once builders start offering these kind of large incentives, it can be a competitive cycle, Pinchot said. ‘Sometimes, the high cancellation rates for one builder are because another builder began offering better incentives on a similar product as the market deteriorated, then the buyer jumped ship. Eventually the original builder will have to increase incentives to lure buyers from the other builder,’ he said.”
“Builders aren’t saying how long they’ll be touting incentives, but analysts expect the enticements to stick around a while.’
No payments until 2007. What is this Best Buy, a used car, or a new home? What next, no interest, no payments until 2008 or 2009? WHen will this madness end? The economy is sloooooooowly running out of new buyers. Building projects are beginning to look like car dealerships (used and new) with all the inventory piling up. This is not going to end very nicely.
“….The deals are aimed at making cautious buyers during this real estate slowdown take the plunge and purchase.”
- their trying to find out who’s gonna blink first.
“Lennar Corp. is offering no payments until 2007 in its Brighton Woods single-family subdivision off S.C. 707 in Murrells Inlet. The company is also offering no closing costs. ‘The way the market is right now, everyone’s offering something. We’d make the payments until 2007. It’s working pretty good,’…”
- What’s the catch?
BayQT~
The catch is you have to buy a massively priced depreciating asset
“The economy is sloooooooowly running out of new buyers.”
Impossible! Where have you been the last 5 years. Haven’t you heard the realtor ™ forecasts of increased demand due to population growth in every area throughout the country for the foreseeable future? Beside’s they aren’t making anymore land!
No the best one is in Boulder CO. “Everyone wants to live here” and “Its a buyers market” they are enticing people to buy when as per the article this area is just “Topping out”. Bad 1960’s construction, that is run down and over priced. What a deal!
So if the builder then sells off these mortgages, does this avoid the buyback for the buyer defaulting or does the minimum 1 year good begin AFTER the buyer takes over payments? Smells of fraud to me.
Maybe the builders will take your old house as a trade-in? Oh wait.
I think they are doing just that in Phoenix.
A local home builder north of Cincinnati is offering to buy your existing house if you buy their new build. Wouldn’t that be nice for someone moving here from So Cal?
Saw a realtor who worked a deal with a lender to offer a reduced interest rate for the first 12 months (4.5%) and then it moves to 6.5% for the remaining 29 years.
Not sure what this is called, but who pays the other 2%, the seller? I doubt the lender is going to eat the difference.
Yes, the seller pays the extra interest up-front (like paying points). There is a local builder in central Florida that is doing the same thing, but over three years. One year at 3.5%, then next at 4.5%, the third at 5.5%, adn the remaining term of the loan at 6.5% (or whatever the current rate is).
Are people NUTS? Don’t they realize they are just taking on a larger amount of debt by playing these interest rate games. When the debt load becomes to great ,we will have a total lack of buyers on many consumer products and this economy will TANK! All savers will pick up the pieces and become the new middle class.
We are just starting to see the incentives here in Southeastern Virginia / Hampton Roads. Mostly closing cost assistance.
I got this spam from the local big condo project (That has yet to break ground). It is amazing. I already sent the magazine an email regarding their poor advice.
“Single Women Sold
on Condos!
Heather Brightbill can’t wait to show off her
soon-to-be-built highrise condo in downtown Norfolk. Her
Granby Tower residence will feature a lavish master
bedroom, stainless steel appliances, granite countertops,
designer carpeting, and a private balcony overlooking
bustling downtown streets, restaurants and shopping.
Heather is part of a wave of young, single women who
aren’t waiting for marriage
to settle down. Armed with buying power and investment
prowess, they are buying condos, townhouses, and
single-family homes in record numbers. In addition to
purchasing her ideal home, she is also making an
excellent investment.
“I wanted something sophisticated and luxurious; a nicer
place that I could be in for a while. And I knew I wanted
to live in Norfolk,” said the 28-year-old mortgage
broker. “When I toured the Granby Tower model, I knew
that’s where I wanted to be. It’s perfect for me,”
Heather said. “It has top-notch amenities such as
concierge service, pool, and spa, and it’s conveniently
located within walking distance to all of my favorite
shops and restaurants.”
According to the National Association of Realtors, single
women are the fastest-growing segment of the home buying
marketplace. Another factor many single women are also
considering is their investments.
[granbyheather.gif]
Pictured above: Heather Brightbill and Granby Tower Sales
Associate, Kristen Hopfenspirger
“Not only do they want a place to call their own, but a
lot of single women also view home buying as a way to
build a financial nest egg.”
Reprinted from the August, 2006 issue of Tidewater Women
Magazine. For the entire article, please click here.
http://www.tidewaterwomen.com
Preconstruction pricing available for a limited time
only! Call the Granby Tower Sales Pavilion today!”
I don’t think they’re going to build those towers. They’re only half sold with little hope of selling the rest. Notice how construction that is supposed to have started is mysteriously absent.
Tower condo sales are falling off the face of the earth. No other segment is getting hammered harder. Add to that the sudden halt in condo sales at the Westin, declining condo prices throughout the area, the huge glut of condos in Va Beach, and Nofolk’s declining population, and I think the place has little chance of actually being built.
The insanty has for the most part ended.
That would be Heather’s luck day if the project didn’t go forward. She is a mortgage broker. Talk about a double-whammy. He place will drop in value just about the same time she loses her job.
I have a friend who is mortgage broker. Bought a house last years when he was raking in the dough. Now, business is dead and they are taking 401k loans from his wife’s account to pay the bills.
Even without the classic Ponzi scheme we witnessed, who’s going to buy from her if she decides to sell? A declining population being replaced by more traditional types of women aren’t going to be raising girls with western values like hers, so the next gen of girls will be looking to get married, not fool themselves into thinking they’re going to whore it up Sex and the City style in some crappy condo til prince charming decides to scoop them up and save them from themself. However you cut it, this would be a one way nightmare for her if she closes.
LOL !!!
They may find out that some of those loans are taxable (with penalties) as early distributions from retirement plan, depending on how much vesting the wife had. So not only are they borrowing against their retirment to try and save a sinking asset, but they are getting taxed on top of it - they will most likely end up with no home and no retirement savings.
Goodluck with that (condo)….what an excellent invetstment,since everyone wants to live in a sardine box.
When you work in corporate you pretty much get to see everything.
Dont be surprise these articles are gimmicks cooked up by the NAR marketing/promotions department and their contacts in the media. Thats why the media contacts NAR on the latest “News” on the RE market. You get this kind of nonsense. I saw much of this during the internet bubble.
Take some ’salt’ when you see articles like this. Its better to read WSJ or Businessweek articles. Better journalism!
Looks like even more ethnic’s will be taking over the country because any guy with half a brain wouldn’t touch this broad with ten foot pole if he knew how much she will be upside down on her mortgage.
“ethnics”? In case you hadn’t noticed, the US has a surplus of stupid white people.
Instead of buying, just sign a long term lease. There will be some great values in the repo market.
I like the ad for “Granby Towers” that follows the story (open the current issue pdf). It goes to show how objective print journalism is these days.
“Buy a full page ad and we’ll write up a fluff piece on your project!”
Heather is part of a wave of young, single women who
aren’t waiting for marriage to settle down. Armed with buying power and investment prowess, they are buying condos, townhouses, and single-family homes in record numbers.
I wonder how many of these geniuses are going to end up with paunchy middle-aged men with comb-overs and halotosis — who will rescue them from their financial distress, with strings attached — before this disaster plays itself out.
If I’m lucky, at least one will!
Remember, you only need one.
Isn’t this the same tower that is trying to get tax concessions in order to start building?
That’s the one! Construction was supposed to start this week, but oddly didn’t.
No one else noticed that the lady in the article is a mortgage broker
No reponse from the magazine that published the article. I dropped them an email.
wisdom from the wizard: interest rate can’t stop the real estate decline.
even if the fed completely stops raising interest rate, the re market will continue to decline, that’s because bubble is inflated by human greed not fundamentals. when a crack house is being priced at 500k, there is no fundamental in that. just like past bubbles, interest rates and other fundamentals played minimal roles.
don’t under estimate the staying power of human greed
Yes indeed, my unfettered money grubbing greed has kept me from buying a house all these past years!
“Experts have a warning for today’s home shoppers: It often takes a year or two for prices to adjust downward in a slowdown. So far, many areas appear to be in a ‘topping out’ phase more than a ‘bottoming out.’”
440k down to 340k, that’s a 23% drop, and the experts say it’s only begun. Imagine what that house will sell for when it actually bottoms.
One seller offered their home for sale at $440K. It didn’t sell a year ago for 440K. It’s irrelevant.
Auction is the “Kiss of Death” to the seller and the whole bubble.
Do I hear $500K for this once owned crack house?
I am waiting for a late night info-mercial with Ron Popiel selling Lennar homes with a free set of Ginsu knives, the spray on hair, and the in the egg- egg shell scrambler. THEN maybe I’ll buy a house- lol.
ARM Rate:
Set it, then regret it.
that’s too funny!
Destin, FL in the WSJ… how exciting, haha…
I have noticed a hefty increase in advertising for auctions the last couple months around here…
Inventory seems to be taken a bit of a break from its increases… Will be interesting to see what it does going into the slower winter season…
Still even houses that are pushing the market down are not selling… townhomes $100+K below last years prices still sitting on the market… Pretty crazy here…
I came across these talking points from a mortgage manager to the troops. Here’s a couple regarding real estate.
Real Estate prices nationally have only went down once in the last 75 years (1932) lock in your price today - buyers need to act now!
The next 6 to 18 months are exciting times for buyers as we enter into more of a buyers market. This buyers market may not last as new building slows down and demand catches up with existing supply buyers need to take advantage now while they can!
IMO we are still a long long long way from it being a buyers market. If anything we are still in a sellers market. If a seller wanted to, their house can be sold with a lowering to a price that is still out of whack and still gives the seller a huge profit.
When prices reach a level that is close to the historical mean, then it will be a normal market, neither buyers nor sellers. If it ever reaches below that mean, then and only then will it be a buyers market.
Just remember, paying 80% over is little different than paying 90% over market fundamentals.
So all this talk about a “buyers market” is nothing more than deceptive (is their any other kind?) marketing toward lemmings.
Real Estate prices nationally have only went down once in the last 75 years (1932) lock in your price today - buyers need to act now!
LOL! And we all know how well the buyers in THAT era performed…
“.. have only went down . . .” Say what??
With something like 30 million functional illiterates in this country — makes me think that there’ll be a LOT more ATVs and JetSkis than computers and encylopedias for sale in the near future.
LOL. And this one is teaching the other ones…
I dont go much for that learnin stuff - I am getting me a job at Cuntriwide.
Outstanding! I started to dizzy from that spin!
Better than drinking a ‘Perfect Manhattan’.
Prices didn’t decline nationally during the late 80s RE bust?
I was in Ft. Walton/Desin for a couple of weeks mid summer and noticed a number of auctions listed in the local paper’s real estate section. Seemed like most were more of a marketing ploy i.e. minimum price, disclaimer that the owner had the right to reject the auction results, owner reserves the right to sell the property before the auction date, etc.
There were a few absolute auctions with no minimum and no reserve and per my brother in law he has been noticing more and more absolute auctions popping up.
If someone wanted to do an interesting article they might want to travel down to the emerald coast and investigate what is happening with Watercolor, Seaside etc.
Dont know if this link will work… but worth a try…
http://www.sowal.com/bb/attachment.php?attachmentid=2545
Forgot to mention this is RE information for the past three years for Walton County Florida… Where all those beach communities (Seaside, WaterColor, Alys Beach, etc.) are being built up along State Road 30-A.
2,232 properties greater than $500,000 with more than a 100 properties greater than $3 million. For a bunch of fishermen you guys are living large over in Okaloosa/Walton County.
I was just in Seaside last month but for only a few hours. It truely was gorgeous, but minimum price for a home was 1 million and that’s without a view of the ocean. So what’s going on there, do tell???
That information destinsm gave is pretty telling… Many speculators (even large homebuilders from Atlanta) are losing their shirts right now. Lots prices in Watercolor have dropped big time, and many spec houses in Watersound and others are already upside down.
There will be a time when those lots can be had for pennies on the dollar (based on peak $$).
“‘We’re trying to settle in to where prices should have been’ without some of the recent froth, Ms. Behnke says. That means it feels like a buyer’s market now, even though the median price, the middle price of all homes sold, hasn’t yet dipped.”
Last time I checked, her office in Rancho Bernardo was still part of San Diego where the median price has negatively “dipped” in the past two months. Maybe the newest Suzanne’s Research Report isn’t out yet.
A place in boise has been advertising their RE auctions heaviliy on the radio. A sign of the times are these three “new construction” homes going up on auction: http://www.markbottles.com/Auction.htm
What’s that “5% Buyer’s Premium” nonsense?
I’ve begun to wonder: can you really call it a real estate bust if the only reason housing isn’t selling is because it is too expensive?
There may be some excess supply in the Midwest, and some McMansion developments on the suburban fringe.
In Boston, New York, California, and places like it, however, all sellers have to do is price housing at a level where their current neighbors could afford it with traditional mortgage standards and — BOOM — it would sell. People want to live there. They are priced out.
Kind of like saying stock prices are low with a 20 PE. They are HIGH; they WERE even higher.
> can you really call it a real estate bust if the only reason housing isn’t selling is because it is too expensive
It is mostly not a bust of the real estate itself, but a bust of the equity in it. Due to leverage, the owner looses his shirt.
Busts in real estate are rare. They happen in places with job losses and net outward migration, think Detroit etc.
yes but how many sellers can afford to price their homes at the level where their current neighbors could afford it with traditional mortgages? think median income x 2.5-3.5 = affordable home price. i think most sellers owe far more on their mortgages than that, thus the ensuing disaster/bust as prices drop.
“In Boston, New York, California, and places like it, however, all sellers have to do is price housing at a level where their current neighbors could afford it with traditional mortgage standards and — BOOM — it would sell. People want to live there. They are priced out.”
There is more to it than that. The lenders arent about to roll over and play nice. Same for the realtors, if a realtor told you that you need to overbid by 10% above asking without knowing what all the other bids are … would you make counter-bid +10%.
I dont think so. This is a huge scam to pump prices up.
Ad to this people like one of my relatives… they think they’re due $1.3 mil on a home they bought for $650k +$150k improvements just 3 years ago! So they’re renting. I advised dropping the price…
The reality is that So cal is going to see middle class job flight a la Detroit. A la Detroit… I do not expect LA to recover for a long time.
Alas, I love it here, so I’ll stay. But is that really smart???
This market needs another 6 to 9 months to mature. Its sort of like a young red wine… it just needs a little aging.
Man is 2007 going to be ugly and into 2008…
Neil
Builders have to sell no matter what. Once the inventives start losing steam, they’ll just cut prices. They can’t hold on to inventory, wall street will beat them senseless.
Even in a supposedly non-bubble market here in Atlanta, Pulte is slashing prices:
Price Reduced: 06/13/06 — $407,895 to $362,900
This is for a townhouse in a very desirable neighborhood. Quite a clip–although I’m still not taking the bait.
Incentives, huh?
Is that another word for “hell no, we won’t lower the price, but we’ll give you a bunch of dumb stuff that will make you think you’re getting a deal”
They’re still looking for that bag of money and box of stupid.
Oh, yeah, I forgot something…
“and we’ll give you some stuff so we can prop up the sell price so we don’t get our ass sued by recent buyers”
Catherine
Is there any sucessful lawsuits by people who bought at the higher prices? Is there any presidence for this?
AZgolfer - just curious, did your friend sell her house yet? maybe i missed it if you posted a while back.
renter
I have it bookmarked and as of today it is still on the market for 364K. That seems to be her must get price because she has not lowered the price for over a month. The house is now empty and she has moved into her 400K 1200 sq ft Toll Bros condo. The MLS for the house is 2488530 if you want to look at it. I found out that she had a hard time getting financing for the condo because they had sold less than 30% of the units. The reason I was asking about lawsuits is you know that Toll Bros is going to start discounting the price of these condo’s to get them moving. I don’t think they can offer upgrades because granit counters and that kind of stuff was standard upgrades already. Maybe a new car or something. I am really enjoying this because I had to sit there and take the “my house is going up 10K a month from her and other golfers” Who is getting the last laugh now? Ha Ha Ha!
I should add that the house has been for sale for 5 months and she has not had ONE SINGLE offer. Not even a low ball one.
wiat your telling me that she was dumb enough to buy a $400K condo when she hadn’t sold the home she was already in - does she read at all or have any clue, apparently not. Well at you and I both can pickup some good prices on barely used golf clubs in the near future. I am going to enjoy getting the new Sasquatch at 30% off list.
When she bought the condo it was still in the development stage and the market was hot, hot, hot. It took 6-8 months longer than expected to build the condo’s. House prices were going up rapidly and she “didn’t want to sell too early and miss some of the price run up” Everything would have been fine if the builder had been on time.
dibs on the calloways
wow - thanks for the update. i still can’t believe how quickly things have turned!
AZgolfer,
I personally haven’t heard of someone doing it yet…there hasn’t been any reason to until now…hey, everyone was happy as clams…everyone was getting rich, rich, rich!!! But I’d bet a bag full of toaster ovens that it’s only a matter of time before we’ll see a lot of that type of litigation…the fall-out is just beginning.
“Lennar Corp. is offering no payments until 2007 in its Brighton Woods single-family subdivision off S.C. 707 in Murrells Inlet. The company is also offering no closing costs.”
Translation: We’ll be doing a lot of evictions in 2007
Also, this whole “auction” thing is a bit of a scam. I personally witnessed a house down the street (that’s been on the market since last winter) put itself “on the auction block” a few weeks back. The problem? They listed the starting bid at $300K, which is exactly what the list price was to begin with. (FYI, the house is really worth about $225K, but don’t tell the owner nor his realtor that)
So, what kind of action did the excitement of this auction generate? Zero bids and the house still sitting there, empty. Nice try.
The auction should be a Dutch auction, starting high and lowering until someone bites.
Maybe they should just do a “Dutch oven” to these idiots. Let out a big fart and pull the covers over their heads. Maybe that will clear their minds and help them think straight. It can’t hurt.
“Translation: We’ll be doing a lot of evictions in 2007″
That’s the first thing that went through my mind as well.
Are the builders actually providing the financing for the purchases where they (builders) are actually still the bagholder in the event of default or are they arranging third party financing and just picking up the first year’s payments?
I love this line,
“Some builders are throwing in free granite countertops”
WOW let me get my check book
100% financing and no payments for 4 months! Hurry because I need to sell this damn house!
http://boise.craigslist.org/rfs/194934719.html
It’s nice to see they left 5ft between the neighbors house. Not to worry though “things are different in Boise”
“It’s nice to see they left 5ft between the neighbors house”
Didn’t you hear about the land shortage? I need to take some pictures of the sub down the block from me. 300k+ houses with 10ft deep backyards. Most of these house have no back fences, so you can sit on the back patio and stare at the back of your neighbors house 20ft away.
“some sellers are trying a different approach: putting their house or condo on the auction block”
It’s a given we will see mor auctions…..especially on the courthouse steps.
Nice!
Mortgage rates drop to a new 4 week low. Inflation is going to roar and the dollar will fall. I guess they want to prolong the bubble popping until after the elections so that they can try and keep their control in Congress.
CAR has a new BS affordability index. Check it out:
http://www.car.org/index.php?id=MzY0ODc=
“C.A.R. developed the new index measuring affordability for first-time home buyers to better reflect the realities of today’s real estate market.”
Well, based on the new numbers reality pretty much sux for home buyers in California.
According to a quick glance at the chart, it looks like they consider “affordability” to be about 5X annual income. Isn’t that pretty high? And wouldn’t that mean that buyers would be paying somewhere over half their take-home pay? Doesn’t leave much left over.
I love it! It’s like the government’s inflation stats. When the old measure gives you numbers that look too ugly, just revise the index. Voila — no inflation and houses are affordable. Why not just use the 1.25% start rate of an option ARM suicide loan with 0% down to show how “affordable” things really are? I scoff at these “strict” 10% down payment standards.
At last, a smart seller. He’s exactly right, if you auction something correctly you always get full market value. And if the seller previously had an idea that full market value was higher, he can simply shrug it off as his own over-optimism and move on. Every house ought to be sold that way, rather than the present weird and sneaky process that enriches real estate agents and rarely results in a correct price.
“Bill Loper put his house in Destin, Fla., on the market with a real-estate broker last year, asking about $510,000 … In March, with still no prospects, he put the home on the block in an auction. It sold it for $435,000. ‘I feel like we got the fair market value of the house on that day,’ he says.”
“Experts have a warning for today’s home shoppers: It often takes a year or two for prices to adjust downward in a slowdown. So far, many areas appear to be in a ‘topping out’ phase more than a ‘bottoming out.’”
——————————————————————————–
A year or two — or three or four or five if this time is not different. Or fifteen or more if it is more like US 1929 or Japan 1989 than US 1979.
BTW, even though the 1-2 year timeframe is either a blatant lie or bad reporting, it is significant to see an article that does not misleading claim that we are already in a buyer’s market.
http://www.azcentral.com/business/columns/articles/0817biz-talton0817.html
good article…thanks for the link.
He appears to have consolidated into that one article what AZ people on this blog have been saying for a long time.
Live in MA ? Check out foreclosures by lender
http://www.foreclosuresmass.com/about/lenders.html
I’ve gotta say, I’ve never achieved superior results with an auction. Auctions, whether foreclosure or private, for real estate bring out bargain hunters and more serious investors. They don’t tend to go for top dollar, they know what the property is worth on the prevailing market, and they know what they need for a profit to make it worth their while. If the house isn’t in that range, they’re out. If they think they’re bidding against another investor and the bidding gets near their break point, they’re out. The only people who will stay in are either a) ignorant, b) desperate, or c) consumers who “love” the property and will pay more than they should for it. The current market is glutted with a), b) isn’t buying anymore, and c) is in really short supply. I really wouldn’t recommend an auction approach unless you want to lose money or are in dire straights.
The premium you get is directly related to the number of participants.
Someone pointed this out awhile back and it made perfect sense to me. The key is that to truly win an auction you must what you think the property is worth minus the “bad news” you would be getting if you actually won.
So the key to getting a good price is find a lot of suckers, which I think are still out there. I don’t be planning to do any bidding myself until it’s awfully lonely out there.
Who are the buyers these days? What are they thinking?
A friend of mine just bought a SFH for $650 in Queens, NY. I hangup the phone and started laughing! I’ve heard all of the usual pitches about NYC, the immigrants and stuff, but if someone like myself who’s making $100k+ can’t even afford to pay these kind of prices, where’s the demand?
Gee, for another $200K your friend could have bought a loft in lovely Long Island City.
Denial is so thick in Queens that it is laughable. They think the 7 Train is the gateway to paradise. By the way, John Rocker was right when he spoke of the 7. The neighborhoods lining the 7 are frightful. Falling down pieces of crap in which a pit bull wouldn’t want to live are going for $400k. In decent neighborhoods they are demolishing SFH and creating multi-family eye soars. It is brutal. Queens and Long Island are going to get pummeled. Good luck finding somebody that agrees.
I think most of us in NYC would agree that this area is behind the curve by about six months. Most people are vaguely aware that things aren’t booming the way they were, but the buying continues…
My husband and I have been looking for a home in the zip 23059 area (West End, Richmond). We were there in May and saw about 10+ homes in the area. Well, 3 months later, none of them have sold, yet the prices are still the same. The area has appreciated a whopping 80% over the past 5 years (especially in the last 3 years), and we are so disappointed that we simply cannot find anything we like in our price range (mid to high 200s, no kids, FTHB). We are so priced out and the area is basically flooded with unsold condos and more condos on the way. I zillowed some of the houses on the market and found out that people bought their houses in 2002 or 2003 for 200K are now trying to sell theirs for 320K. Sorry, I am nice but not that nice. J Strangely though, according to zillow, the area is still appreciating. Is this the sign of “topping out”? I am just amazed that there are still people out there who believe the Richmond housing market is and will be OK when DC is crashing. The realtor keeps showing us houses close to 400K, which should be right in our price range if there was no bubble. NO THANK YOU!
The houses look nice
http://moveinforonedollar.com/