The Crash Coming Home To Roost
A reader wrote in with a situation many are now facing. “I have been reading the blog for a while and occasionally send a little support. In January 2008, I moved to Phoenix to start as a healthcare researcher. I intend to stay in Phoenix for a long time. I actually like it here. I have been renting a house and saving to buy one for my young family (1 year old girl and 5 year old boy).”
“Recently my landlord offered to sell me the house. I politely declined. Today I am home working on a technical report and see a strange car pull up and someone I did not recognize get out and walk into the driveway. By the time I went out to see how I could help, he had driven off. He left a notice of auction (Trustee Sale) taped to the post. The LL asked for $275,000 and the trustee sale is $163,064.00 (2043 sq ft 4 bdrm 2.5 bath). The auction is in December.”
“This is intriguing. I read about the stories on the HBB. Now I’m part of one. Should I keep sending my rent to the LL? (Does he) own the house? I have no contract with the trustee. It seems I should hold on to the rent until I have some idea of who owns the house.”
“I did not plan to buy this place, but it’s an intriguing thought (perhaps opportunity). What’s involved in bidding? Are there back taxes that the new owner has to settle?”
“There’s another part to the story. I have a registered letter notice from the USPS. I will pick it up tomorrow. It could be a note informing me that he has lost the property. It could be another offer to sell. I suspect the former. The former LL is a good guy. We have a good relationship. He is a broker/agent with five properties. He is struggling to hang on.”
“More than just commenting and snarking, I would like to propose an experiment. I am willing to go after this house on the collective wisdom of the HBB community. I will put my money where their mouths are.”
“Here are the facts behind my position. We don’t mind living in this house. The community has a HOA fee of $60/mth. The house is cookie cutter bland, but around the corner from (a) school that my teenage stepdaughter attends. It is up the street from (a school) my five-year old boy attends. While the house was not attractive at $275,000, it’s attractive at $163,054 ($78 per sq ft). I am ex-Navy and can use my VA loan. We don’t have a car payment or much other unsecured debt.”
“Our current plan is to save aggressively until 2014 and look for a place with a big lot and no HOA where I can install a grey water system, plant vegetables and raise rabbits, chickens, and ducks to my heart’s content. With this new development, I can look into what is required to get this house and plant vegetables (the HOA would probably not allow rabbits, chickens, and ducks).”
“I think the former LL will let me know if there are taxes or other charges against the house. I would love to know how to check myself. I suspect the Sale trustee would not know about other liens against the house.”
“So there you have it. I am willing to bet the trustee would be OK with a straight sale rather than risk an auction in the Xmas season. If the HBB community says go for it, I will approach my credit union and the VA about a loan.”
‘I am willing to bet the trustee would be OK with a straight sale rather than risk an auction’
This is a great opportunity for posters here to review and educate each other about the various roles parties play in the trustee sale process and other parts of the default timeline. I’m thinking this reader isn’t entirely clear on who the trustee is and what is that function. We talked about this on the forum a bit within the last year.
Also, the writer hopes to join us in the comments when he gets off work this evening.
Will it cost more to buy this place than rent another one?
Rough guide:
Interest paid and forgone 5%-7% of 163k = $680-950 /mo
Taxes & insurance 3% = $410/mo
Maintenance 2% = $260/mo
HOA Fees = $60/mo the least of your worries
On these numbers, It will cost somewhere between $1,400 and $2,000 a month if you buy the house for $163k. For how much can you rent? Are you even close to the ballpark here?
The 5% is your morgtage rate (after taxes), 7% is the opportunity cost of your own equity (a bit below the 100 yr avg return on the S&P 500). Plug in your own morgtage rate, the share you will finance, and your own expected long run investment return. Forget the repayment of principle, that is money you are saving, not an expense of ownership.
Local taxes and insurance may be differ, plug in your own if you have better numbers.
Maintenance costs will depend the construction, how hard it is used and, how much maintenance you do yourself. Most homeowners get some hobby value out of fixing things theselves and really do save on do it yourself projects. 2% works for me over about 40 years of home ownership.
You should be willing to pay a bit more to own than to rent. How much more depends on how much you like the house. Main gain is that you will have no worry about the stranger coming up the walk. This will be more important as the kids get older.
Having raised rabbits, chickens, and ducks I would not place much value on this activity, especially if you ever hope to take a vacation.
From the content of the post, I could have sworn the writer was a woman.
that’s what I thought too
What difference does that make, unless of course her secret name is ‘Suzanne’?
It’s just that Ben called the person a he, is all. If it’s a he, then he’s married to a woman who lost custody of her daughter and is a lot older than himself, which would be unusual, and he also focuses on his kids a lot more than what we usually see in a guy.
Oh.
Well, then, yes, that would flavor things.
From reading Charlotte’s Web and Stuart Little I had alway thought E.B.White was a woman. Was very surprised to find out not.
Thanks for posting this, Ben. A “How to” book in the making!
What are comps in the neighborhood? Be sure to include all the forced sales.
What are the chances that every house but yours could be abandoned in the near future? I don’t know about Phoenix, but some California towns face this problem.
Are you/will you be comfortable with the mortgage payment?
I don’t see it as very likely that a neighborhood within easy walking distance of both an elementary school and a high school will be completely abandoned unless you end up in a Detroit situation.
That being said, towns may have built a lot more school space than they really need because of the boom. Are these the schools that will be kept if the number of children in the district is much lower than it is today? I see that as a real issue.
Don’t think that Detroit situation won’t happen in some areas in and around Phoenix. No, there probably won’t be race riots, but there is way too much supply in the way of homes. As neighborhoods get run down the remaining people will leave, just like they did in Detroit. As enrollment declines schools will close.
I don’t see it as very likely that a neighborhood within easy walking distance of both an elementary school and a high school will be completely abandoned unless you end up in a Detroit situation.
Schools close thought, right? A few have closed right by me. That’s not to say the neighborhoods will become abandoned as a result (they’re all well-established), but if the schools close, there must be something else compelling in the area for it to remain viable…
Did you even read the second paragraph that I wrote?
Suggestions:
1) Figure out what the home is worth to you — i.e., set a reservation price (maximum amount you are willing to pay to own it).
2) Figure out an offer price lower than the amount in 1), based on a reasonable guess of what the home is worth in comparison to recent comparable sales.
3) Wait to see what happens to Dough-4-Dumps, as if they let it expire, you may be in a relatively better position than the crowd who only bought because of the free money.
Good luck!
In my opinion, the only reason to buy now is the upside of locking in a low mortgage rate.
The question is then: will the low mortgage rate offset the probability that the valule of the home will most probably drop in value as an excess supply of anything (and we do have an excess supply of housing) causes a price drop unlesss there is some increase in demand for the item.
Your case has one factor which make you want to buy - even after accepting the probability that the value of the home will drop. You seem content and your children go to schools tied to the home’s location.
So only you can decide the right choice.
Good luck.
How much is your rent and how much is the rent on similar houses in the same area that would allow the kids to continue in the schools they like.
If you live in the Phoenix Metro area then this link is probably the best friend you will have to do some research:
http://idx.diversesolutions.com/search/962/41/
(Sorry for the link post but I’m not trying to spam the RE Agent’s website, I found this tool and wanted to share with a fellow HBBer.)
I moved to the PHX area 2 years ago and have been waiting for the right time to buy in the Scottsdale area. We signed another 9 month lease with the intention of either buying a house next spring/summer or moving away from AZ for good. As an IT guy, I found this to be a very helpful tool & the best part is that it’s completely free. If you add this plus the AZ MLS website that most RE Agents have you can access more data using those tools.
For a start to get an idea what’s in your neighborhood to see if the opening bid is worth what’s currently on the market I would start here. Obviously if you sign up the RE Agent is going to contact you and ask if you’d like an account on the http://portal.flexmls.com website. That’ site has the ability to not only see all transactions that are currently in process, you can also get sales history from the map side and use it as a tool to contact with your RE Agent. The one down side of this tool i that as soon as a property goes “Pending”, “Canceled” or “Closed” it disappears from the Diversolutions.com web interface.
Bonus Tip: One of the nice items is that you can filter the data to see just rentals listed on MLS. So far the last 2 rentals I’ve lived in I used this tool to find them. Even if you end up leaving your current house you can see what’s for rent nearby.
Note: For all of you RE Agents out there in other metro areas YOU NEED THIS FOR YOUR WEBSITE!!!!! I’ve had to use Google to find other metro areas where RE Agents have this published. So far I’ve found one in San Diego, Seattle & a few on the East Coast. Take it from an IT guy I’d rather sit at home and use this tool that drive around in my car looking at properties that aren’t up to snuff. This way I don’t waste your time and you don’t waste mine.
Hope this helps. Let me know if you have any questions.
VinnieTheFish
BTW Sorry for the typo’s. I didn’t proof read and was in the process of making my coffee. Now that I’m fully caffeinated I wish I could edit the post.
Good Luck to you in getting even a cheaper house in the future that meets all your requirements . The problem right now is that many neighborhoods aren’t stable and you take a risk that the character of the neighborhood will change .In the future you risk higher interest rates and a possible credit market that is even more dried up . If I didn’t get even a cheaper price than the new cheap price to compensative for future risks ,I might want to pass ,but that’s me,you do what you want .
“If I didn’t get even a cheaper price than the new cheap price to compensative for future risks ,I might want to pass ,but that’s me,you do what you want.”
And here lies the key element missing from establishing a price for housing for most buyers. The determination of risk and pricing of said risk with accuracy is next to impossible.
Ex and HW:
How many places around schools are not relatively stable?
Unless you are already in a ghetto type place how many nabes really deteriorate walking distance from schools?
School lines get redrawn all the time. We lived 3 blocks from an elementary school, yet the kids were assigned to one 3 miles away. Then an new middle school was built. Instead of being able to walk 2 blocks, they went to the one 4 miles away.
SIL bought just inside of the lines for the yuppie high school. Her daughters attended the old school in the middle of town.
The proof is that it’s already gone down about 100k in spite of being near a school and apparently in a decent area according to the poster . Who are the major employers of the area and what will the employment situation be like in say a year . What about the fact that massive walking might render a location riddled with
vacant and boarded up houses ?
My way of looking at things is in terms of stability . I would have to have under a 6% unemployment rate for starters . Than I would have to have a real stable job myself . Than I would have to be compensated for the risk of buying in a screwed up Political Society that is riddled with corruption .Than I would have to read the loan docs to see if the lender is pulling a fast one . I would need to know that under all future circumstance ,I could unload this house ,including costs ,without a loss ,if I needed to move fast because of either job change, or any reason . They have tons of developments near schools that are crashing these days . The next leg that is going to get hit is the upper scale areas IMHO . Everything also depends on what the government does these days also . It could be that prices start to go up and the opportunity is now ,(I doubt it because of supply of homes .)
AMEN!!!
If you wait for 6% unemployment you will be waiting for a looooong time. And you will be buying at the peak too. The last boom started at the peak of unemployment in early 2003. The bubble started leaking when unemployment was at its lowest point of the expansion in 2006. It’s a contrarian indicator if there ever was one.
If you want to avoid buying in an area that has the potential to turn into a ghetto, don’t buy in a new subdivision. Buy in an established old area with the best schools. Who cares how close you are to a school if the school is garbage? Make sure you’re in the best public school district. And also, look for private schools. The more of those around you, the better the chance the neighborhoods will stay stable.
In my opinion, few nabs in the Phoenix area are stable long term. I grew up in Tempe. Nice solid middle class area. I was a member of the first group of students to attend the brand new Arredondo elementary school, which was but a couple hundred yards from my house. Previously we had been bussed to Rural School (try to find that on the map!) which is now the site of a supermarket.
It was a decent area. Go there now and see if you like it. Graffiti, gangs, the whole bit. Granted it’s been 30 years now, but if you buy, how long do you intend to stay?
The $163,064 amount represents the current mortgage balance, plus maybe any shortage in the escrow (tax & insurance) account.
What are recent sales in your area? Try this site. I’m pretty sure it includes forced sales.
http://www.homes.com/Content/Sold-Homes-Prices.cfm
Be sure to disregard any sales that took place prior to May or June of this year.
Excellent resource Bill. I had not known about it before
thanks
It was a decent area. Go there now and see if you like it. Graffiti, gangs, the whole bit. Granted it’s been 30 years now, but if you buy, how long do you intend to stay?
Good point. 30 years goes by faster than you’d think it would.
*melancholy sigh *
I would view buying as a forever decision in this environment. As in, are you prepared to stay there forever?
That means thinking seriously about the community, in addition to the property. What are its finances like? How about the schools? Is this community going renter/empty nester, and might support for the schools decline?
How about the location relative to place of work? Not your current job. The next job, and the job after that.
How about access to shopping, and perhaps religious institutions? Could you see yourself becoming part of a community? Does or might a community exist?
Is Phoenix definately the place for you? Is your extended family nearby, or irrelvant? Are you from there?
Again, the difference is that in the past smart people said don’t buy unless you plan to stay at least five years. Now, forever is more like it. But if you are up for forever, it might be a good time to buy in places that have already adjusted.
I am with WT on this one….The venture of “home ownership” has changed…Its probably regressed 30 years or more…IMO, you can’t buy with a five year horizon…Save your money and rent in the area that accommodates your children for school…Wait umtil you can buy that property where you can raise your chickens & rabbits…
And then stay there until you can burn the mortgage documents.
‘That means thinking seriously about the community, in addition to the property.’
If it is a brand new community, then I would run away. The new ones are the ones that will be probably filled with foreclosures in the future.
The community seems to be fairly new. The houses were built in 2003. The development is across the street from a large apartment complex. The complex is not upscale, but not shabby either. There are quite a few large apartment complexes not too far from the development.
<<>>
Large multi-family properties nearby are a major red flag in Florida. These have a way of turning into subsidized housing with all the problems that come with them.
Great advice, well said.
I agree. And he already said his plan is to look for something else in 2014. My advice? Don’t buy this property if you’re not planning to stay long term.
literally millions of homes to choose from.. and you’re seriously considering buying one that you “don’t mind living in” ?
I suspect you’d NEVER have considered buying it if events didn’t turn out as they did, and the LL offered it.
Whatever you do, it’ll be an educational experience. I just hope you don’t end up learning from mistakes.
I agree with joey. The “don’t mind living in it” line was the one that jumped out at me as well.
I agree with Joey. It sounds a little to me like you’re trying to convince yourself you like the house well enough to own it - and you’re doing that because you think you might get a great deal on it. I’d totally buy a rental or flip that I didn’t want to live in if it penciled out to being a great deal, but I wouldn’t buy a house to live in that I didn’t like, even if it was a good deal.
Maybe in 5 years you can rent it out at a profit and buy the house you want and you sacrifice by living in a house for 5 years that you don’t like so much. That’s speculation. Only you can decide the risks/rewards of that option. If you don’t want to be a landlord in 5 years, there’s an even higher risk because you’ll be expecting to sell the house - and who knows what the market will look like in 5 years.
No offense here, but make sure you’re not thinking about buying the house just because you don’t feel like moving.
GREAT POINT, Joey. I too thought that the letter writer was a woman, and here’s why: The poster seems to want to buy this house just because it’s on sale. Like he’s trying to rationalize a pair of 40% off shoes.
It may be a better opportunity to find a better rental.
Back in late 2004 I got booted from an apartment that was being converted to condos. While I wasn’t in love with the place, it’s one I might have considered buying at the right price. Well the price wasn’t right, not even close. Fast forward to now, I’m renting a place that’s nicer in most ways other than granite countertops and new appliances than the converted condo. That converted condo, even with price declines (listed around 400-450K April 2005, selling for around 250K March 2009), would still be $1000 to $1200 per month more than my rent now.
Besides looking at the issues with buying the place where you’re living now, I’d also look at rentals. You may find that the rental market is still a much better deal that better meets your needs.
A quick note about trustee sales, and maybe someone can expand on it. Here in my area, the TS usually are postponed, or the property reverts back to the lender. It took me a while to understand that the TS is mostly the process of legal foreclosure. It gives the owner a due date to settle up or file bankruptcy, which in AZ puts the foreclosure on hold immediately.
Only a few times did I see third party bidding. Once, some neighbors wanted an adjacent plot to their house, and got to bidding against a developer looking for a cheap lot. Other times, though, I witnessed the auctioneer bidding on behalf of the lender! So the opening amount was more of a way to draw bidders and not the price they would accept.
The sale amount is almost always the amount owed. This is why TS aren’t a good deal very often these days; usually more is owed than it’s worth.
Also, I’ve seen second lien holders bid at TS. Presumably this was to protect their interest from getting wiped out. There is a lot to this process, and I don’t claim to understand it all. But I can say that with most TS, I would wait until it was in foreclosure, but that’s because inspections aren’t possible, and it takes so long to look up liens and the guy might trash the place anytime. In your case, the situation is a bit different, so I agree it’s worth looking into.
TS’s are common in DE and from what I can determine, it’s merely a mechanism for the lender to take legal ownership of the shack. It’s a matter of months before I see the same house on the banks REO list.
I’m confused, I thought that the Trustee doesn’t necessarily own the property?
In Arkansas, the bank will usually have the opening bid at the amount of default. It looks to me like a standard thing for the bank to ensure they either get the amount owed or the house (I’m guessing at this point they haven’t really given much consideration to what the house is worth in the open market). I’ve never seen anyone bid after the opening bid so I don’t know if the county clerk will keep bidding on behalf of the bank or not…
And the mortgagee doesn’t own the house (before the foreclosure process) they have a lien. When default occurs and it goes to auction, they have to bid like everyone else, but they are essentially bidding to pay themselves, so its really just a way for them to determine at what amount they would let it all go.
I heard there’s a legal precedent saying the bank has to bid the amount owed. Otherwise, they’re like sort of declaring that the house is worth less than what they lent on it.
I dunno. I could be wrong. I read something like that though.
Ben, that sounds similar to how those sales work in Illinois. Sales may be postponed at the last second for any number of reasons not disclosed at the time, usually because the debtor declared bankruptcy or began a new round of modification negotiations.
I was told that the lenders HAD to bid at these auctions in order to establish the amount of their loss. That doesn’t make sense to me (loss is already established based on mortgage & fees minus payments made), but nonetheless, from what I have observed, the starting bid is almost always the unpaid balance plus fees, etc. You used to see second leinholders and builders & flippers bidding, but I don’t know if that happens much anymore, since all properties that reach this stage are underwater. The primary (foreclosing) lenders never show at these auctions - they submit their bids in “increments” ahead of time and auctioneer bids on their behalf in accordance with their preset instructions.
Anyone with a certified check can bid, but you don’t get to inspect the property ahead of time. I don’t know about AZ, but by the time the house goes on the block in IL, the house is almost always empty.
I would suggest to the OP that if you decide to buy, you go with your idea to find out who the trustee is and try to work out something ahead of the auction. If they get too greedy and you have to move out, ask for a “cash for keys” deal.
Excellent post WT,
And I think you are right on point. The next house I buy, I plan on them taking me out of it feet first one day, so me and the wife are weighing this decision carefully. I wouldnt like the HOA. I dont need to pay someone to tell me what I can do in or around my home. You mentioned wanting to grow vegetables. Part of owning a home is the peace of mind that it’s your paradise. If that includes a garden, who is an HOA to tell you otherwise? You are paying that mortagage, why pay them extra? Personally, I would say, get your own property without an HOA, but if your kids like the school, and you can see yourself as an old fart (no offense to the old farts on this board) still living in that house, I say go for it….
“The former LL is a good guy. We have a good relationship. He is a broker/agent with five properties. He is struggling to hang on.”
The Truth: Aside from your personal good feelings about this person, he is nothing but your typical PARASITE. He has made money on leverage, doing no work, and taking properties that would have gone to REAL home-buyers off the market, marking up the prices and trying to “scalp” the ticket price.
Since the property is in foreclosure, it is clear that the payments you are making to him never went to the lender. he simply stole the money.
He has a collection of gambles, they aren’t panning out. He even tried to get you to pay him an extra $100,000 for the priviledge of “buying” the rental.
This guy is a crook with a nice smile and friendly manner. We call that a CON-Man where i come from.
It’s why I try to avoid Realtors(tm) whenever possible. I put them all in the same mold….leaches looking for someone to suck from.
That’s a beautifully accurate description of a realtor.
Thank you.
Working in a related industry I believe that 90% of real estate agents that got into real estate during the boom are absolute scum who couldn’t hold down a real job if they tried.
That said, I know a lot of people who were in this thing long before the boom. They are the ones who didn’t buy 5 rentals and didn’t advise people to buy $500,000 homes on a fast food salary. They didn’t make out as well during the boom times but are here picking up the pieces.
A real estate agent who acts as a passive voice of reason is the only one who is worth their fee. One who pushes you to make an offer, or worse tells you what you should offer fits in with that 90%.
“Working in a related industry I believe that 90% of real estate agents that got into real estate during the boom are absolute scum who couldn’t hold down a real job if they tried.”
From what I’ve observed, most agents are divorcees or housewives re-entering the workforce in (what was for a few years) a high paying career with a low barrier to entry. Not very politically correct, but its the only explanation I can come up with as to why 80% of the agents I come across are middle age women.
I think you’re right.
…You know, I’ve noticed that you always have good posts, Kim. How about you post something dumb soon, just for variety?
Aww, thanks, Olygal. I’ve said plenty of dumb things on these boards before, though. Nothing as dumb as “Real estate only goes up”, mind you.
Knew a lady RE who worked Tiburon and Belvedere Island in SF bay area. She was the
most knowledgeable agent/broker I’ve ever
known and the hardest working. She drove
her Benz but she worked and deserved it.
One smart lady who was married to a klutz.
Go figure.
One smart lady who was married to a klutz.
Go figure.
And were YOU that klutz? XXL?
Now, don’t get mad. Someone had to ask it. You know that, right? May as well be me.
Kim, I got my real estate license because I really enjoy the process of looking at houses and trying to get a good bargain. And I’m a middle-aged woman, so I fit your description. I think it’s the shopping thing.
As far as our prospective Phoenix buyer, the thing that worries me the most is the VA loan. That’s a no down-payment loan. You should not buy until you can put down a substantial amount of money, unless you like being under water.
This comes from someone who has a cousin who is (gasp!) a realtor. That being said, I agree with what diogenes said.
+1
“He even tried to get you to pay him an extra $100,000 for the priviledge of “buying” the rental.”
This is not necessarily true. The trustee-sale price of $163,064.00 is most likely just the amount of the first mortgage, but I would bet that there is a second mortgage on the property as well. It was most likely impossible for the LL to sell for less than the first+second, since he has no cash to bring to closing.
So he may not have been trying to get an “extra $100,000″; he may have just been trying to get what was necessary to get out from under one of his alligators.
I agree with diogenes that the realtor /owner can’t be trusted . People do weird things when they are desperate .You don’t know what the bank thinks about this investor owner ,or what he really got himself into here in terms of liability . A person is limited by what they don’t know .There will be data on what the foreclosures are going out at in that area ,so those prices are really sitting comps ,than minus from that point to compensate for future risk .Maybe some consideration should be given for the fact that the place isn’t trashed yet ,or it hasn’t been sitting vacant .
But,it doesn’t sound like the poster is in love with the house anyway .
Honest landlords do exist. I used to be one.
So “parasite” as a for-sure declaration seems a little harsh.
Agree with the earlier comment above that a house that the guest poster “wouldn’t mind” living in shouldn’t be a factor that carries much weight.
The country is filled with homes and places and neighborhoods.
My landlord on the central coast of California was the best. WWII vet from Patton’s army. Quality person. Charged us well below market rent the whole time. Fixed everything and even took care of our yard with our thanks until he got too old. Told me once that he knew he could charge big bucks for the house but didn’t because he liked us and didn’t want to deal with turnovers, vacancies and the chance of getting bad tenants.
Yeah, but see, it went both ways, evidently. He was a good landlord, you were a good tenant(s). A back and forth sort of mutual symbiosis thingie, like in biology class. Would he have shown this helpful and loving way with as*shole tenants? Would you have been good tenants had you had an a*s*shole landlord? We won’t ever know the answers to these burning questions, alas, because the time for experimentation is past, unless you can go find your old landlord and make him do a re-enactment.
The only thing I’m getting out of your post is that good landlords exist. As do good tenants.
Still, I’m not complaining, because that’s a nice thing to hear.
Oh, yeah, and THIS landlord did not bother to inform his tenant that things were going even more south than before, and to expect all sorts of exciting mail and strange men walking up the driveway, and this is even after offering the property for a mere 100,000 bucks+ plus more than the next best offer.
Yup. Salespeople usually have a very easy manner, so they’re often mistaken for “good guys”. This one has demonstrated that he is out for himself only, just like everyone else.
Amen, V.
It sounds like if you buy this home you are settling. Perhaps its the convenience of not having to move again.
I think you should stick with your original plan and save like crazy and buy the house that allows you to have your little hobby farm.
Best of luck, I almost caved in and made the same mistake but I pulled my head out of my aXX at the last minute and realized and remembered what my goals were and always have been.
Best of luck.
+1
Also, by 2014 it should be pretty obvious which neighborhoods will survive and thrive. IMHO you’re rolling the dice with this one. If you do decide to buy, be ready to lose.
The only upside I see to buying this property cheaply is whether or not you can turn it into a rental at some point and make a profit.
Another question would be whether or not the PITI payments are less than current rent. If so, this might allow you to save more money for your dream house - barring some calamity like a burst pipe or some other expensive repairs.
Agreed. By 2014 the neighborhoods in Phoenix will return to the rightful residents. The liars will have long departed. The grafitti and other vandalism will have been erased and fixed. The genuine upscale professionals will live in genuine upscale places while the lower incomes will live in lower income places. Your neighborhood can sink into gang control in the meantime before then.
I’m with skb.
…current plan is to save aggressively until 2014 and look for a place with a big lot and no HOA where I can install a grey water system, plant vegetables and raise rabbits, chickens, and ducks to my heart’s content…
To me, that sounds so much more attractive than getting tied down to a mortgage for a cookie-cutter bland place (perhaps in a cookie-cutter bland subdivision?) with an HOA that wouldn’t allow you to raise the animals you want (and might even limit the size or placement of a veggie garden).
There’s nothing better than doing what you want to do.
Screw ALL those HOA.
I really enjoy holiday season lights and decorations. If I want to put out pumpkins and Halloween decorations out for the little kids or hang up so many Xmas lights out that you can see them twinkle from the freakin’ space station and I draw down Wisconsin Electric Power Plant into SCRAM Mode when I flip the friggin’ switch, then that is between my LL, WE Engergies and my pocket book.
I didn’t have twinkle lights my parts of the Nam jungles and mikey IS GOING to have his LIGHTS, eggnog and pumpkin pie or I go Postal !
I really enjoy holiday season lights and decorations. If I want to put out pumpkins and Halloween decorations out … that you can see them twinkle from the freakin’ space station…
How did I already know this? I must be psychic!
Ooops…and Halloween candy for the kids. Lots and lots of quality candy with frost in the air and leaves everywhere… Yeah…I’m ready…bring it on Great Pumpkin !
“How did I already know this? I must be psychic”
pyschic !?!
Nah..you’re just the weirdest chic on the internet and we are very lucky to have you here.
I’M. NOT. WEIRD.
*blinks moist double eyelids in a contemplative fashion *
Hahaha!
(You’ll have to read below post re: nictitating-in-PA for why that’s funny. Well, I thought it was.)
But I’m still not weird, damm*it! Anyway, the reason you want to buy so much candy for the kiddies on Hallowe’en is that you secretly like to sit on the roof later and eat the whole bowlful while the wind blows in big oak trees and bats fly around the moon. Admit it, man.
Sheesh…you ARE psychic !
Yes, it’s one of my skillz. It’s even on my resume.
Naw, I just know what you’d do, when handed a situation filled with a dark night and bowls of candy and steep slippery rooflines.
That reminds me of the time that a neighborhood man hooked up a speaker in a jack-o-lantern and heckled the kids at his house. It was hilarious and cute to watch the kids double-take and then talk back to the pumpkin. Maybe you should try it this year, Mikey.
REhobbyist
One of our older neighbors on the next street goes all out with the full size scarecrow, haybale, cornstalks, pumpkins, tombstones, black cat and moonlite ontop
of his roof up until Halloween Eve.
Then he dresses as the scarecrow and MOVES just enough for the kids to NOTICE as they reach for the candy on his front doorsteps.
He’s really careful not to scare the younger kids too much. He’s done it for years and everyone has fun. It’s a great neighborhood for kids to Trick or Treat and people go all out for them to have a fun and safe day and evening. They need to enjoy being children as long as possible because this fast pace world is forcing them to grow up way too soon.
I bet mikey always back-talked the pumpkin.
Regarding back taxes:
You can call (602) 506-8511 and possibly get your parcel number.
With the parcel number in hand go to:
http://www.maricopa.gov/Assessor/GIS/map.html
With a little digging you can find all of the current information about your house.
I hope this ends weel for you!
Good luck
That SO-O-O unfair. We don’t have anything like that down here in Pima County.
It is 9/15, but I thought that I would comment anyway. First note, the advanced search option at the Maricopa assessor site allows you to just use street address, so parcel number is not needed. The link elsewhere on this thread for the Maricopa recorder helps you find all liens, which is easy as long as the name is not too common.
As a resident of the Phoenix suburbs and an occupant of a rented cookie-cutter stucco house, I urge you to reconsider even attempting to purchase this house. Retain the rent for your moving expenses and start preliminary packing. Pre-screen your future potential landlords for liens and/or FB status. That is right, no way in heck would I have rented a house from a realtor with at least five underwater houses. When the prospective house is owned by a dummy who says, “I’ll just rent it out until prices rebound,” move on to another choice. You can find houses owned by seasoned landlords in Maricopa County bought for cash or at least never cash-out refinanced and rent one of those like I did.
Many PHX area neighborhoods are deteriorating. You may find yourself in the equivalent of the next Maryvale, which I understand was once quite pleasant.
If this is a house you really want to buy, you will probably need an attorney to close the sale in any case - how would you know otherwise that you have clear title? Consider having an attorney do the due diligence for you ahead of deciding to make an offer or a bid. S/he can run title, talk to the HOA about fees that might be owed, check for judgments or liens against the owner of record that could attach against the property.
Considering how expensive these issues are to deal with a few hundred $ spent now could be advisable. FWIW, I am an attorney, but not one in Arizona, so this is not legal advice - just a recommendation to look into getting some legal advice.
Also how many are NOT current with payments. Are they drawing down the reserve fund to keep the HOA at $60 per month? Otherwise it could double.
——————————————
talk to the HOA about fees that might be owed
At least as a first step I’d go down to your county’s recorder’s office and pull the file on the property. Any liens to be effective should be recorded. You should be able to see the 1st mortgage and any junior mortgages, although it will only show initial balances. This will give you a “rough cut” of the situtation.
Hey I’m not admitted in AZ either.
Dennis is on track. And another thing to bear in mind with respect to the original balances of the liens - many debt instruments were written with negative amortization so there’s a high probability that the current balances are in excess of the original balances. The lien holders may have piled on late fees, attorney fees, and other garbage fees. Whether or not they are able to ever collect those fees is an altogether different question.
You can pull docs from the Maricopa County Recorder’s office here:
http://recorder.maricopa.gov/recdocdata/
I’m not an attorney, but I think you this is all you need to do a title search.
Possible problems with this deal:
1. There may be judgements against the owner or the property for taxes, utilities or repair work.
2. As mentioned above there could be a second mortgage.
3. It may be the second mortgage holder who is foreclosing.
The amount listed on the sale notice is usually the amount that the foreclosing agency is owed. It will not include any other amounts owing on the property. You will definitely be responsible for any unpaid taxes and (in PA) for any unpaid municipal services. You may also be responsible for any unpaid HOA fees.
You should absolutely have an attorney check out the title before you make any bid or offer on the house. One possible solution is to approach the foreclosing agency and determine if it is possible to purchase the property prior to the sale for the amount owed.
As always checking the comps for the neighborhood and determining if the owed amount on the property is reasonable.
Most of the foreclosures in my area go to the banks for costs as the sheriff adds a commission called poundage in PA and the banks just bid the costs unless there are other bids.
I initially read your name as ‘nictitatingPA’, and I was quite thrilled. But then I noticed you’re actually ‘nickinPA’ and was downcast.
However, I forgive you for tricking me because your post was so good.
*blinks moist double eyelids in a contemplative fashion *
So you did kiss the frog!!!!!
But only the once, so it doesn’t count…
Right?…Right?
I quite agree. This is critical. And you should contact an attorney to determine the legal status of your rent obligations and rights as contract renter as the forclosure process proceeds.
We were also considering a VA loan prior to buying in 2001. The obvious benefit was not having to put 20% down or pay PMI. After researching the VA loan we decided it wasn’t a good fit for us. More specifically, we had friends who had made offers on various houses and it took an additional 3+ months of paperwork, VA home inspection, etc before they were able to close.
As result, we went with a non VA loan - 80% primary loan and a 5% equity loan which negated the need for PMI. The VA loan might be a good fit depending on the circumstance when you’re ready to purchase. Best suggestion I think is to identify the pros and cons of the various financing options and be prepared to apply the appropriate option to the situation.
” I would like to propose an experiment. I am willing to go after this house on the collective wisdom of the HBB community. I will put my money where their mouths are.”
Although collectively the HBB bloggers here have a very good track record of knowing what lies ahead in real estate, do you think it’s wise to committ potentially $164,000 on what we say? A broken watch is correct twice a day.
“do you think it’s wise to committ potentially $164,000 on what we
say?”
Good question.
This writer could listen to Cramer, etc. Of course, we didn’t call what was going to happen in Phoenix near as well as say, the Arizona Republic, or the AZ realtors or…
and look for a place with a big lot and no HOA where I can install a grey water system, plant vegetables and raise rabbits, chickens, and ducks to my heart’s content.
I absolutely approve of your priorities. That’s what I waited for, too, and it is great*.
That’s why if you were me, I’d continue to wait.
There will be NO shortage of properties to pick from for a lonnnnnnng time. Why would you just sort of get this one by accident? It seems you’re concentrating quite a bit on the inconvenience of moving, and that really IS a serious pain in the a*ss, and also that your kids are in school, which is a very valid concern, but I think you need to remember what you really want.
You could be in your ‘We don’t mind living in it’ house for many years, waiting the whollllllle time for the HOA to approve your color of petunias, while meanwhile housing prices continue to decline.
This is just my 5 cents: continue to save aggressively and keep your eyes out for what you want, the real deal. It’ll come.
Whatever you do, though, good luck to you.
* Except for the bunny part. Bunnies suc*k. They eat gardens, just to warn you ahead of time.
I have to agree on the HOA part as well. Clients give me horror stories all the time of HOA dues going from something reasonable around $60 or $70 per month to $200 per month to compensate for all of the people not paying. I don’t know about you but $130 added to my budget would be pretty severe these days.
…around $60 or $70 per month to $200 per month to compensate for all of the people not paying. I don’t know about you but $130 added to my budget would be pretty severe these days.
And all for the delightful privilege of having some pucker-nutt*ed control-freaks tell you you can’t grow tomatoes in your front yard, because it clashes with the neighborhood color scheme.
Hooray! Wheeeee!
I don’t understand the desire to be in with a homeowners association, especially in a gated community. About the 3rd time I was locked out of my community because police were trying to find someone accused of something was my boiling point. Now I park my car and walk in. They’ve tried to stop me until I ask the lawful purpose for not allowing me into my community. Then they tell me to go straight home. Can you imagine being locked in or locked out of your own home?
They’ve tried to stop me until I ask the lawful purpose for not allowing me into my community. Then they tell me to go straight home.
Horrible. That is so opposite of a neighborhood!
Part of what I like about Zilker neighborhood is the people walking, biking, standing around talking, etc.
Another thing I like about my neighborhood is the variety of gardens and landscaping and yard art (and old RVs) - no HOA for me!
The only HOA I have experience with was more good than bad but I’m sure it’s very rare. I grew up in the Midwest on a private lake community built over a hundred years ago. It is surrounded by, and is inside of a hardwood forest, has a 9-hole golf course (with sand greens), outdoor tennis, volleyball and basketball courts, forest hiking trails a swim team and sometimes-good fishing.
It has a beautiful clubhouse and a private bar that on Fridays or big game days serves $1 (optional donation) drinks and you can walk home. One of the common buildings that houses a tiny US post office is on the National Historic Registry. It has holiday parties, a little 4th of July parade, fireworks, bake sales and fundraisers. Every 5 or 10 years the members get hit with a big assessment like new sewers or roads, but most feel it’s worth it.
It has about 160 houses, is way more middle class and rustic than rich. (Average home price maybe 230K maybe 35K in the mid 70s) It has one way in and one way out and a gate. The advantages were less crime, no police unless they were called in and you had to be a member or guest to get in. When I was a kid my dog could run free and you could ride your dirt bike on trails and the roads. Today many ride around in golf carts. I think the dues are about $120 per month now.
Now of course I liked it because I never had to pay the dues, my mommy and daddy did, lol. But my mom still lives there today and I always look forward to going back there and visiting. It’s like the Americana that America forgot. I could live there again and would pay the dues.
I could live there again and would pay the dues.
Heck, from the way you describe it, IIII’d even live there and pay the dues.
Until my golf-cart exploded from going too fast. Would I get either censured and/or ejected at that time?
Well it is has just gotten worse for HOA’s and everyone one-board knows why. I was in a good one for 4 years. It is marginal now. I would never venture into another in this lifetime.
one=on
Yup. I once lived in a very nice and well-run HOA community. It really came in handy to have a third party to intervene when a neighbor stopped picking up after her dog and I was hesitant to let my 3YO nieces run freely around the yard. However, after reading about so many HOA meltdowns, I can be just as happy posting “no tresspassing” signs and saving the monthly HOA fees.
However, after reading about so many HOA meltdowns, I can be just as happy posting “no tresspassing” signs and saving the monthly HOA fees.
Good fences make good neighbors. I believe that.
Hey, look! I got a cliche right! Hooray! This is like a red-letter day for me!
HOA community? Never again. And they won’t welcome me ever again. The problems may have started when I labelled the clipboard toting architectural committee the Nazi Patrol during a HOA meeting.
Flower pot on entry step - FOUL unapproved edging materials - FOUL - Wreath on deck - FOUL - small American flag on Holiday - FOUL - small window mounted bird feeder - FOUL…and on and on and on.
I was relieved to move away from that nightmare of mini-power hungry idiots. I sold that golf course country club townhouse for 20% less than I could have sold it for just to piss off the Nazi’s.
Sold in one day and paid the outstanding assessed penalties on a check written with a crayon.
The new neighborhood (no HOA) was a mix of houses and people that made a real community. Heck there was an old place up the street that had a chicken coop built on a shaky tower of cinder blocks with no mortar - best people you could ever meet.
If you buy into a HOA community you really own nothing. Personal property rights is the tru value of homeownership.
Nice one, watching the carnage!
I love watchingthecarnage. You are welcome to move to my non-HOA neighborhood. I really enjoyed reading that post!
Jeeze, I’m feeling rather enraptured, myself.
What rhymes with ‘watching the carnage’? ‘Cause I want to write a pretty poem.
PersonallyI wouldn’t want to own anywhere that had a HOA.
I’ve lived in a few sfh HOA totalitarian nightmares, myself. I was willing to give up the freedom, for what I feared was the risk of living around others with bad taste. As it turned out, the oppression was worse than taking the risk of a bad neighbor. Never again. Free at last.
I was willing to give up the freedom, for what I feared was the risk of living around others with bad taste.
Far as I can see, that’s the ONLY attraction a HOA could ever offer, the desire to not have someone with ‘bad taste’ messing up your view on your evening stroll. I can see not wanting to have someone with 17 oil-leaking pickups in the front yard to go with their elegant and tasteful toilet-bowl petunia planter, but every now and then I come across articles about HOA’s who won’t let you put up a freakin’ birdhouse without approval, or sue you for installing a flagpole without prior approval. That’s just crazy!
Oh, another reason is the pretense of enhanced safety and security that comes with a vigilant HOA. Yeah, yeah…over in bits Muggy just posted about a daddy and his kid going to the park in a gated community and having to deal with druggies.
Sure…some added value there.
I don’t think I expressed what I was trying to express. I meant, HOA’s offer nothing but a pretense; that you will be somehow spared everyone else’s horrible taste and life will be pleasant and smooth and eventually no one on your street will even have a bumh*ole anymore, is how tasteful and decorous things will become. And all you have to do is obey the pucker-nut control freaks.
Oh, yeah—and pay, too. Don’t forget THAT part…
My point is, it’s best to have frogs as neighbors. Frogs have natural good taste and hardly ever plant petunias in toilets. Plus their parties are fun.
I wouldn’t mind being in charge of a HOA so I could share my commie ways.
Well, I wouldn’t mind being Empress of Freakin’ Everything, so I could share MY ways. Because my ways are the best ways, of course.
But, see, that would be okay if I was, because I would be wayyyy different from a pucker-nutted HOA boardperson, because I would only mean well, and my demands are reasonable…
Yeah, yeah— much of the world would be smoking craters in about half an hour, ’cause I’m kinda high-strung, and because I don’t like tastelessly colored birdhouses, and there’d only be about 500 people left alive, mostly HBBers, and of course cute bartenders and cute fire-fighters and of course frogs as well.
It would be much much worse a situation than that brought on by even the most zealous and hard-working of your average HOA’s.
Hmmm. There’s a moral in here somewhere, but dang if I can see what it is….
HAHAHAHA!
Ahhh… I kill myself sometimes.
I think the moral of your story is that you like frogs.
I think the moral of your story is that you like frogs.
Why, I think you must be right!
How wise you are.
But I still wish I could blast just a few smoking craters. Just a few. And only where it was deserved, of course.
Gosh Oly,
As I decoupled from the fear of freedom of expression, and the “purple house” phobia, I’ve become aware of the pretense of false security the HOA gave me. You nailed the illusion well.
That was never really me. I’m a round peg, that didn’t fit in a square box.
I never have either trusted or liked the French.Except some of the women I’ve run into walking down the street.
I don’t know what the French have to do with any of this, but your comment is right on topic, as I myself was just talking smack about French people last night. I wanted to make sure my confidant undersood that French people drink too much, smoke too much, do not use deodorant, do not brush their teeth, and are typically WAY TOO SKINNY.
Do you feel the same way, Pismo?
I just got to visit Paris for the first time, and I liked it. The few people I came in contact with (waiters, waitresses, saleswomen, tourguide) were very nice. Food incredible.
Sights amazing. But I liked London more.
Big V,
You can really smack them down
“I have to agree on the HOA part as well. Clients give me horror stories all the time of HOA dues going from something reasonable around $60 or $70 per month to $200 per month to compensate for all of the people not paying. I don’t know about you but $130 added to my budget would be pretty severe these days.”
Tell me about it. My HOA fees were $66 when I moved in back in 2003, now they’re $135. We’ve had endless fights over the deadbeats and special assessments to cover repairs to the roads and storm drainage pipes.
My advice: Don’t buy a place with an HOA.
That was a good reply Oly.
Thanks, 8.
I agree with Oly and several posts…Rent, save your
money. Things have a long way to go before bottom is reached. And…that does not mean things
have stabilized, two different issues. I’d wait until
things start to settle out.
“and look for a place with a big lot and no HOA where I can install a grey water system, plant vegetables and raise rabbits, chickens, and ducks to my heart’s content.”
I gardened in Phoenix and fought mosquitos most of the year as well. Mosquitos in the Desert haven’t figured that one out yet.
here in humid San Diego I don’t see many mosquitos or grass hoopers or red spider mite or root mealy bug or various kinds of ants. And the birds don’t seem to eat the lizards here either.
Lots of spiders here few in Phoenix.
It might be worth investigating how the area you’re living in might change as a result of the foreclosures. For instance, a major draw for you seems to be proximity to schools, but living in an area with declining population may force one or both to close and be combined with other schools.
As for recommending whether or not you buy it, I couldn’t possibly. I’d feel bad if you ended up hating the results of a decision based on some retarded thing that I said.
Definately hire a real estate lawyer if you are serious about buying. You must understand everything involved and your situation is complicated. Since there is a home owners association, other owners’ problems can become your problems. But at $60 per month, I don’t suppose the HOA does a lot. You should check into the foreclosure situation in you community. People in trouble with their mortgages stop paying their HOA fees and other owners will have to pay the diffenence if the HOA runs out of money.
Funny thing about this story. Back in 2001 my company was going to relocate me to Phoenix. At that time you could buy brand new construction for about $65 per square foot to start. I saw a lot of signs that said new homes from the $90’s as this was just before Glendale’s explosion in new homes. I had my eye on a very nice home in the Glendale area. It was 2100 square feet, 4 Bedrooms with a den and 2.5 baths. Builder wanted $149,900 at that time which was about $71 per square foot. The relocation never happened.
The bottom line is if you’re paying more than what the market was in 2001 I think you’re over paying. Good luck to you regardless.
Funny some might say if you’re paying more than 1999-2000 prices you’re paying too much in the Phoenix metro area.
I’m using that range as my litmus test to purchase or not.
1999-2001 is when AZ became attractive to people who were relocating from CA for the lower cost of living. From what I understand 2001 to 2005 is when the insanity happened…about a year before the bubble started to form in Florida where I did finally end up.
I also need to consult the HBB brain trust today. My apologies for being OT, but the crash is coming home to roost for me as well.
I have been offered a 2 year position within a county school system to assist in bringing a school in correction up to speed (my specialty). My current state position is annual, but I suspect this organization is going to get slashed by the budget grim reaper this spring.
I have no idea where all of this will end, but my gut is telling me to take the 2 year contact. My opinion is that state cuts will be more drastic than county — any advice?
Go with your gut. Had I gone with mine I wouldn’t have ended up being one of the FB’s.
I worry about local and state government jobs in general.
Andy… Good to see you on here again; I’ve only been here sporadically, and our thread’s haven’t crossed recently!
I didn’t know you took the plunge?! I’m still out in the market, just looked at a few homes up in Palm Beach Gardens/Jupiter this weekend. Prices were still stupid high (200-300/sq/ft, nowhere special, no water, etc); I’m still trying to wait this out. Seems like the only people who are at all interested in selling are the banks. I just laugh when I pull up to a “750K” home that has 2 1995 Corollas in the parking lot and not a stick of decent furniture inside; of all the homes I look at in this area, probably 1 in 5 are actually people who “belong” in homes costing what was paid for them.
Reality seems to be setting in, but it’s maddeningly slow (and the government “cash for crap homes” isn’t helping one bit). Realtors are still managing to get people in WAY over their heads (mine was telling me about a young couple she just got a 450K loan; and then mentioned that they were both school teachers… That’s nuts; there’s no way that 2 “young” teachers should think about 450K homes homes).
So, status quo remains, still renting in PBG for 1/sq/ft per month. Rentals seem relatively stable at that price for 1000-2500 sq/ft homes, and then fall from 3000-5000 sq/ft (I’ve seen 5000 sq/ft homes renting for 3K a month).
Good to see (?) you again… Hope the home isn’t hurting you too badly!
I bought quite a while ago Mike. I bought a distressed home at early 2000’s pricing. The distressed price wasn’t distressed enough. The whole neighborhood has gone to s**t and my “great deal” is about $100,000 (more?) underwater. Worse yet I’ve had business problems essentially having to start over because of a bad business relationship.
That said, the house is likely to go back to the bank and I’ll get through it. They’re so backed up right now it’s highly unlikely they’ll ever get to sue me for the difference (12 months in FL).
Glad to hear you haven’t taken the plunge yet. Even if you find a deal, be very wary of the neighborhood. Those that aren’t established or in extremely desirable areas will fail. Olympia (and the other developments of the like) is a ghost town. If you get a chance you should take a drive in there.
Be very careful. The banks doing business in Florida are aggressively seeking deficiency judgments.
You might consider seeking legal advice on granting the bank a deed in lieu of foreclosure or getting a waiver from a deficiency judgment on a short sale.
Muggy,
I know in CA the state can take money from the county coffers. So the state takes the money from the county then the county has to make cuts because the state took their money.
Can Florida do the same?
Do you have any connections in your current job that can tell you if your job is on the chopping block?
The contract being offered, is it iron clad? If the county school system loses any money does your contract guarantee you will be paid for those two years?
“Do you have any connections in your current job that can tell you if your job is on the chopping block?”
Yes, I am massively connected (known and respected) within my county.
“The contract being offered, is it iron clad? If the county school system loses any money does your contract guarantee you will be paid for those two years?”
Yes, iron-clad.
Sorry, I misread your post — in my current job there is an air of paranoia and distorted speculation. Nobody knows what’s up.
In my old position, I am a go-to guy that is privy to most information (good and bad).
“I know in CA the state can take money from the county coffers.”
This is true in FL as well. However, my position would be federally funded through NCLB.
Some unicorn crapped candy and I will likely be eating it
well Muggy you have da kidz and da wife, so 2 years of a guaranteed income right now is a gift on a silver platter.
Plus its your specialty…..
I hope you will take my advice, and really force the kids to read, write and speak English and without swearing or using the N word.
Oh and don’t forget the penmanship, we really have to get kids up to the standards of your old HS.
Some unicorn crapped candy and I will likely be eating it
Just make sure to at least rinse it off first, k?
Just make sure to at least rinse it off first, k?
Hahahahaah!
*snort *
It’s true, though, once I stopped with the snorting giggles over drumminj’s ‘rinsing off’ comment.
Hahah! That’s still funny!
We must have had the same mom…
Anyway, Muggy, if you’ve got security in these times, with a mini-man and a mini-gal soon to arrive, that is nothing to sneeze at. I know a LOT of people who would be delighted with such terms as these.
Yeah, things will be looking up in 2 years. Take the contract; it sounds more stable.
Two-year contract sounds good. Benefits and pay comparable?
In the current climate, a 2-year job security is much better than no job security in a shaky organization.
It’s your specialty, which is good - but what would be a next good move for you? Take the contract, but start laying foundation now for your next move in 2 years.
Apply the time-honored rules of thumb in home pricing — if the price is below about 120 times the monthly rent, it’s a reasonably priced home. If the price is less than or equal to 2.5 times your annual gross pay, you can afford it.
Truer words never have been spoken. People want to think (or want you to think) that it takes a PhD in math to figure out home prices. It’s so simple a drooling idiot (realtor?) could do it. I typically (for FL, because of the insane carrying costs) use 100X monthly rent, but, other than that, I totally agree with you.
Those numbers should be on the TOP and in BOLD on every form you have to sign to buy a home!
Do a title search on the house to find out what liens are on the property. Bid no more at the trustee’s sale to where your PITI and HOA dues would be at least 15% less than your monthly rent. If you get outbid, then it will probably be by the bank. In that case, call the bank up after they’ve taken the house back and make your best offer (same as your old offer) on their newly acquired REO.
One thing I don’t see mentioned here yet is what this writer should do about his rent payments. Considering that the sale could be delayed for a long time, this is a considerable amount of bucks. I’m inclined to think, how about getting an attorney and seeing what routes are open as of now? And like one said, there is always the cash for keys option to weigh against the headache of not knowing what to expect, day to day.
Stiff the landlord!
Well, I think the LL took himself out of the picture. And what has he been doing with those timely rent payments if he’s getting a NOD?
The lender doesn’t have the insurance or desire to be a LL, so the question IMO is what are a renters options in this situation.
Find out who the owner is and pay the rent.
Let’s say the owner is a financial institution.
If he wants to buy, he’d be demonstrating to a lender the ability to make payments at a certain level. A mortgage and sale price might be agreed on that basis, adjusting for the additional cost an owner has relative to a renter.
And if he wants to stay put renting, the rent flow might attract an investor-purchaser who would offer a new lease.
The “Rent” may not be what the mortgage payment is and why would you pay a bank “rent” without a lease agreement ? Paying rent now is throwing money down the rathole.
I doubt the lender would cash the check, as that would imply a rental agreement which they don’t have insurance (or staff) for.
I don’t know what the law is in other states, but in Florida, the lender has to honor the rental contract with the owner of record when the rental agreement was made.
Good and hard.
Does he have a WRITTEN lease? Even a deadbeat landlord could try and sue him for non payment.
If he is month to month or the lease expired…he could take a chance on non payment and force the landlord into spending a thou or more on a lawyer, court filing fees, and admitting in court he is a deadbeat.
‘a deadbeat landlord could try and sue him’
I haven’t been in this situation, but I would say go ahead and sue me. With all the obligations being walked on these days, I could care less if my lease ended up in line at the courthouse. Plus, I sorta doubt a FB could afford to get in a lawyers door.
I can just see the judge; “let me get this straight, you are suing this person for rent on a house you aren’t making payments on?”
Jury trial babee…
LOL…true Ben, but just in case don’t spend the back rent money,
And here is a neat trick, don’t abandon the property either. remember IF the LL has a signed lease the tenant is responsible for upholding it. So the LL could sue for the remainder of the lease and win a judgment. So much for your credit rating.
And he can LIE in court about being current with his mortgage, you wont be there to defend yourself. And he wont need a lawyer.
Not sure about waiting until 2014. 2011/2012 seems to be a better time to position yourself for a “safe” place to live. but definitely wait until you find the ideal home (lots of land, etc). I have noticed a huge influx of properties in my favorite hunting grounds of California. I’m shocked at some of the prices, so low, big lots, I feel like a kid in a candy store. But I feel it is not time yet, mid 2011 seems better for many reasons.
HOA fess of $60/month seems very low. Besides basic serives the HOA have to make capital improvements such as road repair, sewer and water pipe replacement and tree replacement. If the HOA doesn’t have enough reserves you could get hit for Special Assessments. That will get expensive and drive a lot of neighbors out. Ask for a copy of the HOA’s annual audit from a CPA. If there isn’t one, maybe you shouldn’t buy. Ask for the schedule of the Reserve Fund. It will have a line for each capital project thing the HOA spent money on, projections for future expenditures by year and amount, and the dues the HOA will collect each year to fund it. If there is no such schedule, you are possibly taking on an large unknown risk.
Most HOA’s DO NOT own the streets, utilities, etc. I’ve seen HOA dues as low as $20 a year because they just needed money for liability insurance on small parcels of common ground, and bucks for flowers, fertilizer and spotlighting of the obligatory entrance wall.
We deeded our roads to the county so they have to take care of them. Our HOA dues are presently $250 a YEAR ($21 per month). With 400 houses, we cover the landscape costs for the commons area, the pump operations for the irrigation system, the costs of fence maintence, and other misc. costs. We’ve got about 15-20% deadbeats on dues payment but are surviving.
We plan to deed our parks to Boise city when they annex us.
Having lived throught the Great Depression in San Diego, let me tell you that much of what is being discussed means nothing.
I lived in an area fairly remote from downtown in those days, and there were abandoned subdivision, abandoned homes, unfinished homes all around the neighborhood, which may great playgrounds for we kids.
We did not think of those things as a determent to life, although our parents might have.
You live your life depending on the situation you are in, and normally you try to exist the best that you can.
I scavenged the cattle ranches pick up cow crap, bagging it and selling it for $1.00 a gunny sack, and enjoyed life.
A caveat!
We were human beings then! Little crime, no gangs as such, police enforced the law as necessary, and that made things better.
Now, with the gangs , etc., it might be worse, but, remember that everyone lives the way they have to live at the time.
If the OP makes enough money to pay the $175K and has a steady income, he can only enjoy what he has, or move again until another foreclosure forces another move!
Life will go on!
JackO
Life will go on! Did anyone eat pickled tumbleweeds in your neighborhood back then? I’m looking for a recipe.
Pickled tumbleweed is the garnish that you put on the stone soup, or stew!
But , perhaps, not everyone has learned how to make stone soup, or stew, from stones.
JackO
Pish posh. I bet my ‘Stone Soup’ recipe is more tasty than your ‘Stone Soup’ recipe.
In fact, I bet Martha Stewart would serve my ‘Stone Soup’ recipe, is how good it is. With lemon-scented serviettes and a delicate blossom on the place-card.
Yes, really.
Try ’stinging nettle’ soup. It’s in the Joy of Cooking book or you can google it.
fasty’s around. He has a stinging nettle recipe that he offered someone a few months ago.
Dear Renter:
The homeowner/landlord should have told you that the house was in foreclosure.
Your landlord tried to sell you his house, when instead he should have told you that the house was about to be foreclosed on. He withheld important information from you, up to the point when you found out about the situation only because a notice of auction was taped to your door.
Why would you think the former landlord is a good guy? Why would you trust the former landlord to tell you if back taxes or other charges apply to the house?
Don’t play this game. Just go.
Sincerely,
Danger
Buy the house.
First, life isnt all $$$. I am currently building a house (having it buit, actually, I can’t even drive a nail) at a cost above alternate properties. Why? I want it to be the way I like it. That is worth something.
Second, moving is a pain in the ass. If you have much furniture, figure $3k to $5k. Plus grammas heirloom table will probably get scratched. And as a tenant, forced moves occur when they are most inconvenient.
Third, insurance, taxes and maintenance costs are not as high as have been posted here. Arizona is reasonable…if you live in New Jersey for example, its a different story. I currently pay less then $3600/year tax and insurance on a value (recent appraisal) of $565k.
Maintenance in Arizona is less then average, as there is no winter to kick the hell out of the place.
Fourth, stability for your family. There is great comfort in living i9n the same house for a child. It becomes home.
I have lurked since Ben’s early days, and this is maybe my second or third post. Lately the doom and gloom has been a bit much. This country has many issues, for sure, including possibly a funding crisis for federal debt. The current echo bubble in equity markets may evaporate. Hell may freeze over. But if you have a steady, reasonable job, even a cookie cutter home for $164k is a no brainer. This should be PITI for less than $1500/month, and some of that will be equity and some will be tax deductible, so the cost is really maybe $1200. But not just $1200 in 2009, or 2012, but even in 2028.
My dollars worth
A quick check reveals that this is the first time you’ve ever posted.
But if you have a steady, reasonable job, even a cookie cutter home for $164k is a no brainer.
No, it ISN’T. $164K?!
That’s still a lot of money, and it’s even more money when it’s just a house. It isn’t even a dream house. It’s just some accidental POS.
How many accidental POS’s are there in AZ right now? Jeeze, I can’t even count that high!
Your logic sucks.
And this comes from a person who hangs out of trees a lot of the time and boats around in a kayak painted to look like a giant banana. That makes your logic look even more stup*id.
Sorry $99K would be a fair price…
at $164k you need to make $55K year or over $1K a week or over $25 hour ………
at $99K ….$33K yr or $650 wek..more like $16 hour…
THAT is affordable housing
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even a cookie cutter home for $164k is a no brainer
My free advice (worth as much as it costs
is this:
1) A bird in the hand is worth two in the bush. You have this thing that is working for you now, near (I believe) decent schools.
2) The price is 60% off the wishing price (probably closer to the actual value). If the price allows you to buy the place and not have to devastate your standard of living, that’s a plus.
Now, I can’t speak to the trustee angles and such. But if that works out, and your instinct plus logic think it’s the right thing to do, go for it.
Hi Everyone,
Thank you for all of the helpful advice. I plan to follow up on the advice. I definitely get a lawyer to find out what are my rights and obligations as the foreclosure proceeds.
I will also look into the liens and other obligations charged to this property.
My wife and I are sitting here reading the blogs. We have decided to stick with our current plan. We will not try to buy this house.
My tally of the comments that addressed the question revealed strong position of the “Nays”. The “Nays” had it in greater numbers and were categorical. The “Yays” were fewer and tepid.
The depth of advice was almost uncanny in the accuracy of addressing the main features of the housing development.
Yes, my wife has a visceral reaction to the thought of moving. Partly because she will be the one changing the addresses on the various accounts. Moving is a pain, but I have moved so many times, I enjoy it. I actually volunteer to help acquaintances move.
The housing development is fairly new. It seems to have been built in 2003. There are lots of For Sale signs. I zillowed my address and looked at the recent sales (2 years to present). Of 17 purchases since 2004, all but one is under water. The average difference was -20% between the Sale price and the zestimate. They went from -36% to -6%. The prices were quite high. One of my neighbors (a really nice family with a three year-old) paid $435K and the zestimate is $295,500.
Across from the development is a large apartment complex that has been advertising move-in specials. So far no sign welcoming section 8 tenants.
I do have a good job that is stable. But things can change.
“Apply the time-honored rules of thumb in home pricing — if the price is below about 120 times the monthly rent, it’s a reasonably priced home.” The rent is $1350 that is just shy of rule of thumb given the price we’ve seen. The obligations that we haven’t seen could blow right by that rule of thumb.
Boy, what a thicket the unwary could walk into without having the HBB community. I am delighted to follow the collective wisdom. I did recommend this site to a friend in an attempt to dissuade him from buying a house. I also recommended “Irrational Exuberance” by Schiller. He bought anyway. He is on the verge of losing townhouse. He wrecked his health and savaged his credit.
I will wait and buy the house I want.
Netball_dad (as opposed to Soccer_mom)
Thanks for sending this in NBD.
I will wait and buy the house I want.
I, for one, cannot wait to hear how your garden grows, when you do. With pretty shells and cockle-bells and all that great stuff. Like I said: Good luck, no matter what you do.
Please keep posting Netball_Dad. You got the HBBers juices rolling today. I wish you, your wife and kids all the best.
what she said
Still need to answer one question do you have a written lease and when does it end?…..or are you month to month?
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The rent is $1350 that is just shy of rule of thumb given the price we’ve seen.
The lease has lapsed and we’re now month to month.
We picked up registered mail and opened it. We thought it was “from” the LL, but it was to him. I guess in our excitement we did not read the slip carefully. It was a note from the TS announcing the coming auction.
That makes it a lot easier NOT to keep paying him the rent
You know he already SPENT your deposit…so you never going to see that unless you stop paying rent.
Maybe RioAmericaninBrasil can help you find a house down there. They’re pre-immunized, you know.
Ta-HAH.
You might consider the minor expense of a PO Box. If you ultimately stay in the same general area, you (or your spouse) will not have to fill out any address change forms for future local moves.
It is also more private. Plus, those subdivision mass mailboxes are broken into regularly, even in safe areas. PHX has no rivals when it comes to mail/identity theft. The second smallest size box can usually be checked only twice per week without filling up.
I know a little about Trustee Sales in Maricopa and in order to bid you must have a $10,000 cashier’s check and must pay for the property in cash within 24 hours. You would have to obtain a hard money loan (18% interest) for the interim period until you are able to get your VA loan done. If you were doing an FHA loan you cannot get FHA financing for 90 days after the deed is recorded. Usually investors buy at Trustee Sales and pay cash, fix the homes up and then put them on the market.
You have to really know what you are doing to bid at the courthouse steps.
Forget the rent comps, maintenance costs, etc, etc. Unless you are planning to live in a place a minimum of 10 years, do not, I say again, do not buy it. The writer states clearly that he wants to buy the farm (literally, not figuratively) in about 5 years. What is his upside potential in five years? Practically zero. Downside, huge.
The old rule of thumb is 7 years, but I think these days with the uncertainties of the real estate market, 10 yers would be an absolute minimum.
I live in a highly transient military community, and I am forever baffled why military folks who know 3 to 5 years is a long stay, buy a house anyway.
Lest anyone think that I am an anti-ownership zelot, I have owned and lived in the same house for about 21 years and would never have been happy in a rental place. That said, when I bought the place I had every expectation of staying there for a very long time.
This one has been sitting on the market over 500 + days as well but they took it off realtor.com and put it back on so people wouldn’t see it sitting so long. No interest at all!
http://www.realtor.com/realestateandhomes-detail/3425-Granada-Avenue_University-Park_TX_75205_1112129036
Finished in 2008 and NO takers at all. They are finally starting to get the clue and lower a bit but not much. Owners keep lowering their prices as they can’t sell and banks don’t want to give out jumbo loans.
http://www.realtor.com/realestateandhomes-detail/3528-Asbury-Street_University-Park_TX_75205_1101893007