Low-Ball Offers Are Increasingly Common
The Journal Sentinel reports from Wisconsin. “Suspense marks home-selling these days. Would-be buyers delight at house layout and location, only to disappear at the first whiff of musty basement. Sellers cling stubbornly to dreams of yesteryear’s heady prices, dooming their properties to long, lonely days unsold.”
“‘Buyers are taking chances, and so are sellers. It’s like they’re playing a poker hand, waiting for the other to blink,’ said Jay Krickeberg, an agent in West Allis.”
“Low-ball offers, way below asking price, are increasingly common, said Ron Nelson in Brookfield. ‘They offer you $20,000 below asking. You’re insulted, (but) deal with the offer you have, because you don’t know when the next one’s coming along,’ said Nelson, a founding member of the Wisconsin-based Discount Real Estate Brokers of America.”
“Metro MLS in Wauwatosa reported last week that in this year’s first quarter: Sales volume dropped 6.1% from a year ago; 3,596 sales, compared with 3,830. New listings rose 5% from a year ago; 10,246, compared with 9,762.”
“Time on the market was three to six weeks longer than a year ago; to 136 days in Delafield, 143 days in Port Washington and Glendale, 157 in Jackson, 174 in Erin and 372 in Lac La Belle. Prices dropped in many places below 2006 levels and, in some places, below 2005 levels.”
“Shoppers like Milwaukeeans Natalie and Melvin Finkley, buying their first house, are wielding new market power. Two years ago, they were overwhelmed by the fast pace of sales and aggressive pricing. Now, shopping is a leisurely pursuit.”
“The couple recently found a place and negotiated the seller’s $189,000 asking price down to $173,000 only to learn from their home inspector that the roof needs to be replaced soon. The parties clashed over who’d pay for it.”
“‘I’m not going to pay any more,’ Natalie Finkley said. ‘If the sellers are set in their price, we’ll just keep looking.’”
“Their agent was rueful, as the deal fell apart a day later. ‘What happened here is common,’ Krickeberg said. ‘Buyers are looking for a deal and sellers are holding their ground. It’s frustrating to be the agent in the middle.’”
“‘Buyers have so much to choose from that they’re driving prices down, I’d say, to a little below 2006 levels,’ said Nelson.”
“‘The thought of getting beat out on a property isn’t in a lot of buyers’ minds,’ said Dave Schmidt Jr., chairman of the Greater Milwaukee Association of Realtors.”
The Kane County Chronicle from Illinois. “Housing market predictions are generally best left to the experts, but these days even the experts aren’t weighing in. ‘If I had a crystal ball, it would be cloudy,’ said Donald Parisi, president of the Realtor Association of the Fox Valley.”
“Although the number of homes sold through the end of March is up 17 percent over the same period last year, the average sale price is down 6.1 percent, and the average home spent 125 days on the market, or about a month longer than the comparable period last year, according to MLS data.”
“McHenry County home sales were down 26.8 percent for the first three months of 2007, compared with the same period of 2006, but values have remained fairly stable.”
“The average sale price, January through March, for a McHenry County home was $253,103, compared with $256,834 in the first months of 2006, the MLS reported. ‘I was frankly surprised to see it dip even a little bit,’ said Jim Haisler, association executive for the McHenry County Association of Realtors.”
“‘There’s no panic selling,’ Haisler said, noting that local sellers are willing to wait for a higher bid, even for a year or two.”
“Brian Wesbury, chief economist at First Trust Portfolios in Lisle, said that current weakness in housing likely would not precede overall economic instability. ‘Housing is not weak because interest rates are too high,’ Wesbury said. ‘Housing is weak because the sector is no longer being artificially boosted by excessively low interest rates.’”
“Subprime lenders, who generally make low- or no-down payment loans to individuals with low credit scores, are seeing a dramatic rise in the number of borrowers defaulting on mortgages as low introductory interest rates head upward.”
“Foreclosure rates in both Kane and McHenry Counties were more than double the national average last year and are staying high. The year-to-date McHenry County numbers show there were 193 foreclosures in February, up 28.7 percent from the previous February.”
“Kane County had 707 foreclosures in the first two months of 2007, already more than 75 percent higher than the total for the full first quarter of 2006.”
“Parisi said he believes ‘doom and gloom’ media coverage has hurt the market. ‘We’ve seen some very ridiculous offers,’ Parisi said. ‘People shouldn’t be desperate … The problem is some buyers are out there just to take advantage of the marketplace.’”
‘ Predicting prices. No one knows when home prices will start perking up. But builders, lenders and professional investors aren’t betting on gains in the next year. Since last May, the Chicago Mercantile Exchange has offered futures contracts based on a ‘housing index,’ or the collective price of homes in various metro markets including Chicago.’
‘Many of the contract purchasers are businesses involved in housing, because the futures contracts allow them to hedge against losses should prices dip. And some pension fund managers are buying the contracts as a way to invest in housing.’
‘The contracts are predicting a 3.3 percent decline in home prices in Chicago in February 2008 from what they were about a year earlier. That’s less of a decline than the 5.4 percent the contracts predict for the 10 major metro areas.’
‘Barbara Hunt of Detroit, who refinanced her house with a subprime loan in 2004 to help pay for a heart bypass operation. Last year, the interest rate on her loan increased from 10 percent to 13 percent, and her monthly payments jumped from $527 to $841. Hunt, already behind in paying off her mortgage, recently learned her interest rate will increase again.’
‘If it keeps going up, I can’t catch up,’ said Hunt. ‘I should have known more about my loan. I should have been a smarter person.’
‘Since last May, the Chicago Mercantile Exchange has offered futures contracts based on a ‘housing index,’ or the collective price of homes in various metro markets including Chicago.’
Is this anything more than bookmaking?
That’s all futures markets ever are. And I say that as someone who worked on the CME floor and traded them.
h_a_n aka passthebubbly
“Many of the contract purchasers are businesses involved in housing, because the futures contracts allow them to hedge against losses should prices dip.”
So while the RE bulls are telling us everything is fine they’re covering their asses. I wonder how much DL has in his portfolio?
‘We’ve seen some very ridiculous offers,’ Parisi said. ‘People shouldn’t be desperate … The problem is some buyers are out there just to take advantage of the marketplace.’”
Funny how this person would never use that kind of terminology during a hot market. I guess only buyers ever “take advantage” of the market, huh? And home appreciation is never “ridiculous” is it?
> The problem is some buyers are out there just to take advantage of the marketplace.
Who would have thought buyers wanted a deal. Wonderful!
I really would like to know what the official NAR line is for why this never gets applied to sellers, only buyers. Where were the headlines a couple years ago of “the problem is some sellers are out there overpricing their homes just to take advantage of the marketplace”? Why the double standard?
It may not be an exact fit , but the phrase “hoisted by ones own petard” seems somewhat apropos. I’m not implying that there was any malice in the actions of the majority of the people involved in the run up, but they certainly have “sown the seeds of their own demise”.
Buy now or be priced out forever is such nonsense, but what a great sales pitch that was for a while. Is the assumption in that statement that you will never sell? How will you ever sell if the only ones left are the ones that are supposedly priced out forever?
One more time. Seriously sellers, just think of the possibility that the only folks left to buy are the ones that can only offer you 50% of what you paid since you have priced them out! FOREVER! So either sit on your property and shut up, or start warming up the lube.
Sell now or never get these prices again!
LOL - good one.
Or you could say “Sell now or be priced in forever”.
“…or you could say “Sell now or be priced in forever”.
Now THAT, packman, is one hell of a quote. You should use that elsewhere…perhaps in everyday conversation when the situation warrants.
I agee. The “forever” concept will be valid until the next “new paradigm”.
“hoisted by ones own petard”
petard: Etymology: Middle French, from peter, to break wind, from pet expulsion of intestinal gas, from Latin peditum, from neuter of peditus, past participle of pedere, to break wind; akin to Greek bdein to break wind. (Merriam-Webster)
Therefore to be hoisted by one’s own petard means literally to be sent airborn by one’s own fart!
Not to be nitpicky, but the quote (from Hamlet) is “Tis the sport to have the engineer hoist with his own petard.” Here, “enginer” means a maker of military devices, “hoist” means to blown up by; and “petard” means an explosive device. So, the quote is talking about a military engineer being blown up by his own explosive device.
You’re both right. “Petard” is derived from an old French word meaning roughly “big fart”. Centuries ago, when explosives were first being used in warfare, French soldiers used “petard” as a descriptive nickname for the newfangled bombs. They thought the noise of the bomb exploding sounded like… well, you know….a big fart.
The problem is some buyers are out there just to take advantage of the marketplace.
Ah, perhaps sellers would prefer that even those buyers would go away? Sheesh.
Maybe these disatisfied sellers should do what the sellers in Kane County, Illinois are doing and just wait a year or two. LOL
“Low-ball offers, way below asking price, are increasingly common, said Ron Nelson in Brookfield. ‘They offer you $20,000 below asking. You’re insulted, (but) deal with the offer you have, because you don’t know when the next one’s coming along,’ said Nelson, a founding member of the Wisconsin-based Discount Real Estate Brokers of America.”
$20 grand below asking is a ‘low-ball offer?’ On what planet? Good grief. How about $100 grand below asking? I’m betting these folks are only DREAMING about getting offers that are $20 grand below asking.
Brookfield is an ok area, but it is not lake front, many houses are ~175K.
Ok, so the offer should be $50K below asking rather than the $100K Kent from Waco suggests. But I still agree $20K isn’t enough even on this lower priced home.
He must have meant a full offer price of $20K. Obviously a typo…
Shoots, I wouldn’t even think of making an offer that’s at least 20% low even in a good market. As they say, you can always come up, but you can’t go back down…
Ironic that this guy is a founding member of “Discount Real Estate Brokers of America” and can’t handle an only slightly lowball offer.
Sounds like he should be looking for a new job. Or change the Agencies name.
Such simple wisdom.
These “low-ball” offers are only painful because they are realistic. If a seller was asking for $200k and an offer came in at $60k, then that is a low-ball offer that nobody cares about. It gets ignored.
If an offer of $175k came in for the same house, it’s a low-ball offer that gets people all out of joint and righteous about “serious offers only”.
Why does $175K cause such an emotional response? IMO, it’s because sellers know that that offer might be a good one. One they don’t want it, but might have to accept if things don’t get any better.
yeah 100k less would be more realistic
“You’re insulted, (but) deal with the offer you have”
If you’re insulted, then don’t sell to me. It’s not like I *have* to buy your house.
And how about the insulting ask prices?
I’ve been so insulted, I haven’t even set foot in their crapbox open houses.
When I come across a serious seller, I’ll make an offer.
Insulted!?! I so agree. In my neighborhood in Boston, I’ve seen $60K to $100K taken right off the top! ThIS is the way it should be in this ridiculously overpriced market.
I love to low ball AND insult people. I just may go to one open house a week and low ball then insult the would be sellers for 60K under asking…
At least the third time I’ve posted this but it’s my favorite piece of advice: “If you don’t feel embarrassed to present your offer it’s too high.”
The Realtwhore may balk at presenting the price, but they are BOUND to do so, and tell em you will report them to the Seller.
Remember that the Realtwhore is BOUND to inform the seller of any offer. Dont allow them to not give the offer to the seller. I had to threaten one with reporting to the seller if he did not passs my offer to the owner.
I know a realtor who’s suing another realtor. Here’s the situation: Couple goes to Realtor 1, they find a house they like, they want to bid $XXX, Realtor 1 tells them that’s too low and won’t be taken seriously and suggests a higher bid, couple walks.
Couple later goes to Realtor 2. Do not know what specifics transpired (i.e. what original offer was made, what negotiating went on), but the end result was couple bought house in question. Apparently the purchase price was higher than the $XXX they wanted to initially bid with Realtor 1 (but, again, that doesn’t mean Realtor 2 didn’t first submit that offer).
So Realtor 1 is suing Realtor 2 (and/or possibly the couple) over this. How can she win this if she didn’t submit the offer?
Did the couple signed an exlusive buyer’s agency agreement with Realtor 1—either a general agreement or an agreement specific to that property? Otherwise I don’t see it.
I believe it was verbal. The couple were relatives of one of Realtor 1’s neighbors. So, obiously, there’s tension on the street. But, hey, her bad if she didn’t have anything signed, right?
“How can she win this if she didn’t submit the offer? ”
Snowballs have better odds in hell…
‘All verbal offers are worth the paper they’re written on’,by Sam Goldwin.
If realtor 1 actually showed the property then he can get the commission in court. I’m talking about he unlocked the door. This is how it works - show a house first and you have dibbs on commission no buyers agency contract needed - its implied. Anyway this is CA law.
The dogs are fighting amongst themselves for the few remaining scraps of meat.
This is a tough thing to know. Since the odds are long on low offers, how can you tell if your realitor wasn’t just tossing it in the garbage thinking she was saving everyone time and embarrasement or to protect her market (home?) from setting a low comp. I made a bunch of low ball offers back when things were rolling and never heard anything back unless I asked, and then just a verbal no joy from the realtor.
I’m wondering if it even makes sense to use a realtor to make low ball offers, because you might get a situation where she says to herself “Sheesh, for that price I’LL take it.” The story you’d hear, is “Sorry, outbid.” In effect the only offer you can make through a realtor is to pay more that than what that realtor personally would pay.
Come to think of it, the way this last point came into mind about the realtor buying the property was that I actually had a realtor say that to me while discussing a lowball offer. She said something to the effect that for that price she would have bought it.
“In effect the only offer you can make through a realtor is to pay more that than what that realtor personally would pay.”
Are you kidding?… I have consistently presented offers that I would buy a property for… No one can buy everything. The next time a Realtor says that too you, Laugh at them and tell them that hey, I didn’t know you were the competition, guess I should find someone else to submit the offer and commence to walk especially in this market. The groveling that will ensue will be more entertaining than a circus performance.
LOLOLOL I think I need to try this.
Tormenting agents with low offers has become my new hobby. I did this last weekend with 70% lowball and then “changed my mind” but the agent seemed to really want it. How low will I need to go, half price?
Yes, “bound” by the NAR “code of ethics.” Don’t hold your breath expecting a realtor to behave in an ethical, honest manner.
I know realtors (buyer agents) just bury offers they don’t like, because they “don’t want to hurt their rep” in the town among the other realtors.
We purchased the home we are living in about 30 years ago. The asking price was $185,000. We offered $92,000 and the counter offer was $95,000. The house had been on the market for about 2 months with no offers. Our offering price was based on what we thought we could afford at that time, and I was surprised by the counter offer which I accepted.
My guess is the house is probably worth about $150,000 now, (that’s $300,000 in realtor dollars), but the bonus for me is the 16 acres that came with the house.
At least I will be able to grow my own food when the world goes to hell.;).
sorry, the comment I made should have followed the Kent from Waco comment. I wasn’t quite awake yet.
Your post contains no typos, correct? List price of $185,000 and you got it for $95,000??? For those who assisted me over the weekend on my townhouse dilemma, I’d be all over it if I could get it for half of list.
no typos, just grammer mistakes. One thing I left out is the house is a little bigger now, I added about 800sf to the original floor plan, hence the est. present value.
“no typos, just grammer mistakes
This is too funny, especially having just made a typo in my own post.>
off
eastcoaster, then if you are tempted to buy anything, only offer half of the asking price! Last time I was in hatboro I ate lunch at Daddypop’s. Nice town.
That townhouse complex (Stonybrook) is right across the street from Daddypop’s. I love that diner!
I also live in Hatboro and have eaten in Daddypops several times.I am still surprised that prices around Hatboro are still where they were last year.Lot of inventory though.easrcoaster I have seen you post often Where in the area do you live?
I’m actually in Willow Grove right now (near the Thunderbird Lanes). I’ve always loved Hatboro and I would like my son to go to Hatboro-Horsham (even though I was an Upper Moreland grad
).
list price is meaningless. some properties go for over list and are bargains. some are ripoff at half of list.
“The problem is some buyers are out there just to take advantage of the marketplace.”
Mr Parisi, welcome back from Mars! In case you didn’t know, in 2005 the problem was some sellers out there taking advantage of the marketplace. Unfortunately those sellers have run out of greater fools and the real buyers have emerged, intent on taking no prisoners.
I kind of admire these catch a falling knife buyers who are willing to go out there and put in the first lowball offers. Hurrah for them for softening up sellers! There job is really the hardest. In a year or two it will be so much easier for the rest of us.
That would be me but I’m really low-balling. I seriously doubt anyone will bite until August. I’m just priming the market >; )
“Their agent was rueful, as the deal fell apart a day later. ‘What happened here is common,’ Krickeberg said. ‘Buyers are looking for a deal and sellers are holding their ground. It’s frustrating to be the agent in the middle.’”
“‘Buyers have so much to choose from that they’re driving prices down, I’d say, to a little below 2006 levels,’ said Nelson.”
…to a little below 2006 levels, and BEYOND!! Welcome to the wonderful world of reality.
BayQT~
“The average sale price, January through March, for a McHenry County home was $253,103, compared with $256,834 in the first months of 2006, the MLS reported. ‘I was frankly surprised to see it dip even a little bit,’ “
This in an area of Illinois where people who make $15 / hr have a pretty good job. When I first started researching the data behind the bubble a year ago (in part because this site motivated me) I was amazed that you could spot the tell tale signs in almost every town and burg in this country. Even in rural areas like this in Illinois. I fear what on earth is going to happen to return this one to mean.
well, the ones who actually work in Mchenry county may make 15 bucks an hour, but many commute to downtown Chicago or to other burbs and so make some more. Most of the county by land area may be rural, but most of the people live in the SE/E part of the county and it’s typical suburbia nowadays (Algonquin, Lake in the Hills, Crystal Lake).
That being said, yes, the prices are still too high.
I have been out of Illinois long enough that I am probably not up to speed at how far out the Chicago sprawl has gotten. What kind of drive times would there be from the west side of Aurora into the loop? I would guess well above an hour on a good day…
If you live in Aurora, you don’t drive to Chicago.
You’re right on the aurora drive. you can move sometimes on i-88 but once you get closer to the eisenhower you’re toast.
heck, this morning it was 60 minutes from wolf road into the loop. That’s all of 14 miles. On a monday.
The traffic has become so much more noticeably bad over last 10 years or so that I’m wondering if the burbs that have the closest metra/train access will do better overall with the housing prices. i’m not sure if it’s like that now
It is most certainly like that now. The Northwest suburbs along the Union Pacific Northwest Line have all had downtown revivals in the boom. Arlington Heights and Palatine have had incredible development surrounding the train stations (both of which were rebuilt within the last 10 years). It’s all been high-density too. Five-to-ten floor condos and row homes, all of fairly high quality (and prices to match).
The major high-paying job centers in Chicago are downtown (largest of all), the Northbrook area (north suburbs), the Schaumburg/Arlington Heights area (northwest suburbs), and the Downer’s Grove/Lisle/Naperville/Aurora corridor along I-88 stretching out to FermiLab with Argonne National Laboratory a bit south (for the west and southwest suburbs). As you know (but the prior posters not so much), the only people from the far out suburbs that commute downtown do so by train, while the rest commute by car to the outer employment centers.
Everyone is begging for more commuter train expansion in the region, though the outer suburbs are being idiots about it and trying to divide the regional transportation authority in the hopes of getting the majority of the money. Such stupidity is going to ensure nothing gets done.
Good point about the NW burbs–even in my neck of the woods around the oak park/forest park area there have been many new developments right next to the rail lines. I think the newbies buying SW of the city (like in the romeoville, plainfield areas where the metra is basically nonexistent) are the ones who are truly going to be up the creek. If gas prices and traffic times keep going up that is going to be a wasteland.
“Brian Wesbury, chief economist at First Trust Portfolios in Lisle, said that current weakness in housing likely would not precede overall economic instability. ‘Housing is not weak because interest rates are too high,’ Wesbury said. ‘Housing is weak because the sector is no longer being artificially boosted by excessively low interest rates.’”
So increases in interest rates are the only thing that ever precipitates overall economic instability? A huge contraction in the amount of money consumers can spend can be absorbed with no problems at all?
What is he smoking?
So he full Nelsoned me with an offer and I told him to pound sand…
“‘The thought of getting beat out on a property isn’t in a lot of buyers’ minds,’ said Dave Schmidt Jr., chairman of the Greater Milwaukee Association of Realtors.”
“There’s no panic selling,’ Haisler said, noting that local sellers are willing to wait for a higher bid, even for a year or two.”
If the seller has to wait a year or two, then the seller is gambling that interest rates remain low and oil cheap. Versus accepting a lower offer and getting out of their present situation. The scenario is present value of money versus future value or why do Power Ball winners opt for the lump sum payout?
I dont think Haisler is being honest.
There is a lot of stress on the seller after putting a home up for sale.
Nah, that ‘year or two’ is how long they figure they have until they are on the brink of BK - unless they don’t need to sell and are just trying to sell high (in which case they have a lot longer)
“New listings rose 5% from a year ago; 10,246, compared with 9,762.”
That’s nothing. In 93552 listing are up 98% YOY and that on top of 60% up this date last year.
Inventories aren’t just increasing, they’re accelerating.
Yes, but remember that the mid-west is much farther along, and still the inventory climbs.
I agree that the mid west is farther along, but I think the bigger difference is in the volatility.
Those midwesterns better get moving to Florida. They built a lot of condos for them.
In the Baltimore Housing Bubble, sellers are having a hard time understanding that their houses are not worth as much as they are trying to sell them for. What I like to do to fuel the soon coming onslaught of decline is to go to open houses and offer 50% of their asking prices. I know this seems cruel and unusually, but when the seller and their agents jaws drop, I simply point to the price on their open house flier and I drop my jaw too. Then I point to their hanging 60 inch plasma TV and I say, “My price also includes you throwing in that TV.” This is point that I usually get thrown out.
It not like I was offender the other buyers…I am almost always the only person looking at their home, opps I mean investment. I then proceed to walk next door to the neighbor’s house and proceed with my script. I can spend a whole afternoon doing this in just one neighborhood. Call me sadistic, but I find this truly entertaining to see the seller reactions. Even better is the agent’s reaction. Sometimes I even pull out my check book and start writing a check. This usually gets sellers angry. So to make it even better, I start to write a second check out for 30% of the selling value, but I post date it for 9 month later and I ask the seller which they would like. One guy called the cops on me. I decided to wait and see what the cops would do. I explained to the cop that I was trying to buy a house. The cop tells the seller that if they are having an open house then I am allowed to come and make an offer for their home. I trying to get a movement started. Anyone care to join?
-Kevin
You’re my hero. I’m too gutless to do this.
Kevin, you are an inspiration to us all. My weekend plans are beginning to look more entertaining! Forget that film festival crap going on, I’m going to be doing real estate performance art!
What about taking a friend with you who films?
Kevin, email the lovely Pamela Healey at High Noon Productions and offer her your concept. I am absolutely sure they are looking to develop programming that reflects the current and future “tone” of the housing market and I think your “schtick” might be a winner.
“House Haterz”
“On this week’s episode of House Haterz, Kevin has a very attractive FB perform a table dance for him on the granite countertop. Then, in this week’s installment of ‘Take It Or Leave It’, he pays a visit to a Miami condo armed with a briefcase full of pennies.”
Some please make a Youtube video out of this!
Damn. I’m 40 miles from Baltimore. I would love to see that in action. I’m not admitted in Maryland, but I am a lawyer. That would be some sort of cover for having another person with you.
I know an investor that, at closing, demanded that the car in the driveway be included in the home sale.
He got it.
The cops actually came? Now that’s funny.
“1 ADAM 12, see a seller complaining about a lowball offer.”
Gut ‘em like a flounder, sport!
Kevin, great idea. Sounds like great entertainment for the upcoming weekend. Especially in Miami where the asking price for a 1000sqft slum property is around $250K. Hey, I am looking for a place. What are 1000 sqft of slum property worth? $50K maybe?
You rock! While you’re at it, tell them that their granite countertops and stainless appliances are out of fashion and nobody wants them anymore.
Kevin, you better be careful. One of these days you’re going to end up owning a new home!
Would it be a ‘lowball’ offer if it was the price that could allow you to get a decent return from renting out the place? Just tell them you ran the numbers and xxx dollars is all you can offer because you expect an xxx return on investment via rental. When they mention their price, you can gawk and say THAT WOULD ONLY BE A 2% ROI!!!! Then rant about how you could get more from Treasuries… that would be good business, not lowballing
http://www.dqnews.com/ZIPIL.shtm
20k off of asking on a sale price is not a lowball offer. I wish people would get over that.
A lowball offer is when the selling price is 200k and you offer 80k. That is the definition of a lowball offer. Untill people collectively start making those kind of offers. Then the prices will remain unrealistic, and the unwinding of the bubble will continue to be like watching paint dry.
“You’re insulted, (but) deal with the offer you have, because you don’t know when the next one’s coming along,’ said Nelson…..
A more correct way to phrase this would be to state “IF another offer is coming along,” as opposed to WHEN.
The house next door to my brother’s just closed escrow 14 months after it was put on the market. The investors that bought it found out too late that they couldn’t make modifications to the floorplan (they had planned to subdivide it) and presto, it is back on the market today, two weeks later.
For $100K less than what they bought it for. Wonder how long it will take for them to get another offer to get out of the jam they are currently in (house unoccupied - heavy carrying cost) or IF they will get another offer?
“Parisi said he believes ‘doom and gloom’ media coverage has hurt the market. ‘We’ve seen some very ridiculous offers,’ Parisi said. ‘People shouldn’t be desperate … The problem is some buyers are out there just to take advantage of the marketplace.’”
I cant think of all the curse words i would use on “Parisi”, but im sure it would run into hundreds.
“Parisi, you freaking ……”
Higher mortgage defaults in CA, but mainly in crummy areas:
http://today.reuters.com/news/articlenews.aspx?type=domesticNews&storyID=2007-04-16T185500Z_01_N16324449_RTRUKOC_0_US-USA-SUBPRIME-CALIFORNIADEFAULTS.xml&pageNumber=1&imageid=&cap=&sz=&WTModLoc=NewsArt-C1-ArticlePage1
‘defaults’ or cash-back fraud?
“The couple recently found a place and negotiated the seller’s $189,000 asking price down to $173,000 only to learn from their home inspector that the roof needs to be replaced soon. The parties clashed over who’d pay for it.”
“‘I’m not going to pay any more,’ Natalie Finkley said. ‘If the sellers are set in their price, we’ll just keep looking.’”
“Their agent was rueful, as the deal fell apart a day later.”
Those sellers sure showed them! Soon, sellers will realize they have absolutely no bargaining power in this market and, instead of being insulted, will kiss the feet of whatever buyer who attempts to “lowball” them.
These sellers are particularly clueless.
If the roof has no life, no lender will fund the purchase. This exact thing happened when I bought my first home. The lender wouldn’t fund, my agent told the seller that only a cash buyer would be able to complete the transaction.
They paid for the roof, I bought the house.
‘No one knows when home prices will start perking up.’
I do.. Never. In real terms, house prices will never be higher than they are now. Ever. Every second of every day, inflation, increasing inventory, a decreasing pool of qualified buyers, and growing public skepticism are eroding the market value, while ITI erodes the owner’s interest in holding onto the depreciating asset.
Tick tock, the bubble popped, the money’s gone away.
I agree with that. In real terms, never. Too much overbuilding.
And just when people think RE will get back to 2005 prices in real terms, the sun will go supernova. Followed eventually by the heat death of the universe. And to think people are worred about inventory levels today.
“Housing market predictions are generally best left to the experts”
Boy, this thread’s just packed with memorable quotes, ain’t it?
i have a crystal ball. it says 40-60% down from here
John K. Galbraith:
‘The only function of economic forecasting is to make astrology look respectable. ‘
and another…
‘There is something wonderful in seeing a wrong-headed majority assailed by truth. ‘
QUESTION about going in to escrow. I have never purchased a home but am wondering what happens when a potential buyers backs out of deal. As a buyer, obviously you lose the time invested in attempting to purchase the home but what kind of monetary loss is there on say, a 500k house? Is there a deposit involved at this point if one is buying a resale home? Any answers to this question would be greatly appreicated. Thanks.
You normally will put down an earnest money deposit ranging from several hundred to several thousand dollars. This deposit remains with the seller if the buyer walks before closing. This deposit IS refundable if contingencies were not met or funding didn’t happen.
the buyer looses the deposit they had submitted with the initial offer… unless the deal fell thru due to a contengincy in the initial offer… just my 2 cents, more knowledegble readers may chime in..
got cash?
Yeah, you got it right. When you submit an offer to the seller, you have to give them a “good faith” deposit to prove you intend to finish the transaction. That deposit will end up in an escrow account somewhere (depending on the real estate closing customs in your area - it is different all over the country).
In the past few years, you probably couldn’t get much in the way of contingencies into a contract, but in “normal” times contingencies are in all contracts (”If I don’t sell my house in 90 days this contract goes poof”, “If I send an inspector through the house and he doesn’t like anything, I can back out”, etc). If you back out using a contingency, you get your money back. If the seller violates something in the contract, you get your money back. Otherwise, the seller keeps the cash.
“Their agent was rueful, as the deal fell apart a day later. ‘What happened here is common,’ Krickeberg said. ‘Buyers are looking for a deal and sellers are holding their ground. It’s frustrating to be the agent in the middle.’”
Translation from Realtwhorese to English:
“Their agent was rueful and soon to be broke, as the deal fell apart a day later and the payment for his Benz and his own over-priced POS was due the next day. ‘What happened here is not as common as it will be,’ Krickeberg said. ‘Buyers are trying to catch a falling knife and sellers are still living in gumdrop land. All I care about is closing the deal fast so that I can take my cut.’”
Yes, exactly. Based on all the foreclosure activity, guess who has the leverage?
I fit this description exactly. Wanted to buy in 2005, but took a look around and was shocked at the unaffordability. Spring 2006 same thing. Spring 2007 same thing–although prices are heading in the right direction now.
Meanwhile, the nest egg/down payment grows.
Let’s see how Spring 2008 looks…
Too funny. Using leverage in regards to a buyer against a seller.
Same thing here. Back in March 2005, before getting married we started saving for a down payment with future hb.
Almost the only useful pieces of research I encountered during my PhD in Finance were a handful of real estate papers. I immediately realized it was time to short homebuilders, lenders, home depot and the like. Cash will be king once again!
Told some friends about this (it was time to sell and rent). But nobody wanted to listen and even disappeared for a while. Now they are calling me again. It hurts but at least they know I’m not full of crap.
It’s surprising to me that people of my age that lived in this country all their lives (I came to study in 2001) don’t know about the real estate crash in the late 80s. Even though it probably affected their relatives directly.
Btw, I taught my American husband how to save back in 2005. It was painful for him the first year or so, but now he loves it!
JULIA SAID:
Told some friends about this (it was time to sell and rent). But nobody wanted to listen and even disappeared for a while. Now they are calling me again. It hurts but at least they know I’m not full of crap.
If I were you, I’d tell them to shove it.
HELLO Wisconsin…There’s a NEW DEAL in Town.
30% OFF of your wishing price, MINUS 1/2 the listing Agents Full commission subject to all Inspections and Stipulations and FULL review by my Attorney PROIR to signing OUR contract.
Offer is good for 24 hours Local owner, 48 hours if they are out of State.
Cash and Closing 30 Days
Take it or LEAVE IT ….Insulted ??? TELL it to your SQUIRRELS
The ultimate irony - granite is radioactive (can’t recall the website where I found this, Google granite radioactive to find it):
Radon is a hard element to pin down: You can’t see it because it’s a clear gas, and you can’t even have a vial of it because it’s extremely radioactive and has a half life of only 3.2 days. One place it can be found, if only in microscopic and invisible quantities, is in granite rocks. Granite contains uranium and thorium impurities, which constantly give off small amounts of radon gas. This is why areas of the country with certain kinds of bedrock also have problems with radon collecting in basements. And it’s why large granite buildings are measurably more radioactive than normal.
There’s background levels of radiation all around us in the environment. What most people don’t understand is “the dose makes the poison.” Radiation emissions from granite is far too low to pose any kind of long-term health hazard.
Yeah, but it would still be fun to say to a seller… “Granite countertops? Didn’t you know that they are known to release radon gas?”
“‘Buyers have so much to choose from that they’re driving prices down, I’d say, to a little below 2006 levels,’ said Nelson.”
Buyers don’t “drive prices down”, they drive prices up. Without those buyers price = 0.
“‘There’s no panic selling,’ Haisler said, noting that local sellers are willing to wait for a higher bid, even for a year or two.”
Hey, no prob. There’s no ‘panic-buying’ either. Like most other buyers out there I can wait 3 or 4 years, or even 5 or 6.
We may be moving to the Chicago suburbs in a couple of years, and will sell the AZ house fast and reasonable - market value whatever it is.
When we get up to IL, we get an apartment for 6 months to get our bearings, then the shopping begins. It will be like the Asians - offer 45 cents on the dollar with a blank look on the face.
I can’t wait to write up a contract that includes the phrases “this offer decreases by $5000 per day”, and “subject to thorough inspection of all plumbing, electrical, HVAC, foundation, etc”. Deferred maintenance and cheapo repairs are nothing I want to be involved with.
10% less than asking price is NOT a low ball offer. It’s actually a high ball offer. If I was in “the market” (which I’d be nuts to do here in Cali) I wouldn’t hesitate to offer 20%+ less than asking price!
“Parisi said he believes ‘doom and gloom’ media coverage has hurt the market. ‘We’ve seen some very ridiculous offers,’ Parisi said. ‘People shouldn’t be desperate … The problem is some buyers are out there just to take advantage of the marketplace.’”
Utter bullsh*t….buyers are out there to get a FAIR deal…not pay 1/2 million dollars for a 2 bedroom, 1000 sqft condo.
I can’t stand hearing these sellers whine bitch and moan. For one, they’ve made a killing. Second, this isn’t even their money. None of these “smart” investors even had a clue as to what the home prices would do the last 5 years.
Essentially, the ludicrous windfall that so many owners think they worked so hard to get is the last chance they have in making more than they ever could have otherwise. They’re going to fight tooth and nail to keep that magic money because every single one of them knows that they’ll NEVER make this kind of money so easily ever again in their lives.
I’ve said it before and I’ll say it again, when people start using homes - the places where people live, make families, raise children, enjoy their lives, etc - you’re going to have a social and economic crisis every single time. Quality of life is going to go down, people are going to suffer.
But hey, so far it looks like people in LA are willing to piss in the pot they live in.