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Suzanne

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Posts: 339
Reply with quote  #1 

Greetings,

 

I would love to learn from this team of very knowledgeable investors the consequences to Mestrada had she not sold her investment?

long term financial:

Short term financial:

FICO:

Psychological:

Taxes:

Responsibility to lender:

Other: 

 

I look at every house that I contemplate buying - and I think a combination of Samson, Bruce, Robert and Ronald STarr taught me this-that you make money when you buy the house and that you have to have a few backup plans in the event that plan A doesn't work out.  So I look at the house and think about possible "plan a, plan b, plan c." 

 

Interested in learning about the consequences and about the initial approach to a house.

 

Thank you

Suzanne

Jeff

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Reply with quote  #2 
Quote:
Originally Posted by Suzanne

Greetings,

 

I would love to learn from this team of very knowledgeable investors the consequences to Mestrada had she not sold her investment?

long term financial:

Short term financial:

FICO:

Psychological:

Taxes:

Responsibility to lender:

Other: 

 

I look at every house that I contemplate buying - and I think a combination of Samson, Bruce, Robert and Ronald STarr taught me this-that you make money when you buy the house and that you have to have a few backup plans in the event that plan A doesn't work out.  So I look at the house and think about possible "plan a, plan b, plan c." 

 

Interested in learning about the consequences and about the initial approach to a house.

 

Thank you

Suzanne

I consider this a very reasonable and interesting question...however, as you will note in the Mestrada thread, the topic of "not selling" got very little "traction." 

 

In contrast, the "sell at any cost" topic got a lot of "play time"--and very little, if any, critical debate...

 

Good luck!


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Suzanne

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Reply with quote  #3 

Jeff it would have been great to hear more. I see that my question did not get really discussed however, the real question remains.  Would she have taken an offer of $300,000.00?  $400,000.00?  I mean if months and months went by what would she have done?  It's a very valid question.

 

I think investors or want-to-be investors don't take action because they don't know the full downside.  What's so hard about talking about it?

 

Suzanne

john3232

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Reply with quote  #4 

She was in a tight spot. The plan was to fix up the place and unload it as soon as possible. The market turned and she found herself in a hole: Sell now for a $50,000-60,000 loss or rent it out and take a hit each month since rents don't cover costs.

 

I don't know enough about her financial situation to offer much advice but if that were me I would have thought a bit longer about the possible advantages of keeping the property. The home is in good location and my guess is within five years the value would have rebounded enough to at least get the woman her money back.

 

However that's the dilemma isn't? How far do you believe home prices will fall and how long before they begin to creep upward again? Although the sq. footage is small the home in question does look nice and I like the location. So my feeling is within five years the owner would have at least broken even.

 

hessj

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Reply with quote  #5 

1.      I would say that if they did not sell they would have to let it go back to the bank and eat the 77k borrowed against their primary residence since you can't walk away from that. 

 

2.      Short sale but still needs to find a buyer to buy though

 

3.      Rent and lose ~$1500-$2000 a month bleeding till market comes up in a long time (depends on what loan).

 

That's all you can really do at this time.

 

Speculators buy for short term without any dividend up front and pray for appreciation while an investor puts down 20% and makes a profit off rent and holds till ~year 2004 to sell (05 if you can really know but 04 was the Buffet timeline).  I’d rather be the investor and make money right off the bat and does not need a “need to sell” attitude.

 

dantheman

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Reply with quote  #6 
She didn't sell her house; it just went into escrow.  Don't count your chickens...
chatterweb

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Reply with quote  #7 
No one can tell us but her, people and their financial sceanero's are unique.
If you have $70K in cash reserves and can hold out, then OK.
However if you just cashed out all equity and credit cards are maxed, it is likely better to cut loose.
It seems like an individual decision to me.


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Suzanne

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Reply with quote  #8 

Okay, thank you!

 

So, If one cannot sell a house and the bank takes over trying to sell it etc... what happens to the FICO score?  What happens to ones ability to obtain another loan?  What happens to someone tax wise-the inevitable date with the IRS? 

 

I'm talking about all the time before the auction? 

 

Also, what happens to a property that doesn't get picked up at or after auction?  Does it just sit with the bank? does it ever show back up on the County Foreclosures list?  Does it ever get listed again?

 

Thanks

Suzanne

chatterweb

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Reply with quote  #9 
Quote:

So, If one cannot sell a house and the bank takes over trying to sell it etc... what happens to the FICO score?  What happens to ones ability to obtain another loan?  What happens to someone tax wise-the inevitable date with the IRS? 

 

I'm talking about all the time before the auction? 

 

Also, what happens to a property that doesn't get picked up at or after auction?  Does it just sit with the bank? does it ever show back up on the County Foreclosures list?  Does it ever get listed again?

 



The Fico score goes to $#@%^& or below 700-650? Again, depends on the scenario.
Without a good Fico, one has to work to get another loan- To get a loan, fico must come up again, right?
Not sure about the IRS...shown as a loss??
I assume properties not getting picked up at or after auction are just held by the bank? Not an expert, just excersing my good old common sense here!


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Subcranium

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Reply with quote  #10 
>>The home is in good location and my guess is within five years the value would have rebounded enough to at least get the woman her money back.

Are you speaking of inflation-adjusted numbers or not? People often strive to get back their nominal dollars and end up losing to inflation.
Suzanne

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Reply with quote  #11 

Subcranium,

 

How do you "lose to inflation" and how does that relate/impact the buy and hold investment strategy?  How do you calculate a deal to beat inflation?

 

Thanks!

Subcranium

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Reply with quote  #12 
I think of a programmer I worked with. He was Polish, so it works better with his accent, which I can't provide on a bulletin board.

He owned some crummy stock. Every time it dropped he said, "I will sell when it gets back to what I bought it at."

Then it dropped to 25% of what he bought. "I will sell when it gets back to half what I bought it at."

It never stopped dropping until it got bought out for pennies.

He thought he hadn't lost the money yet, because he hadn't sold. This is a game people play for the sake of their egos. Here's the news: The money was already lost.

Mestrada lost her money before she sold. She bought a house at the top and it almost immediately started to tumble. My guess is the tumbling is not done. If you wouldn't buy the house today (and I wouldn't--she's lucky to have found a sucker that is too eager to wait for a genuine bargain), you should sell it. Of course, transaction costs and the bid/ask spread is the only thing that should moderate that daily decision.

"Getting back to even" is a meaningless idea. Do you want to stay in a crummy investment, or move into a good one?

People compound the problem by judging their cost basis without accounting for inflation. Inflation is easy to account for. Or don't look at inflation, look what you can get in a risk-free investment. To judge whether you're doing OK, you don't just see whether you got back to even--you have to make sure you do better than if you had sold the house and put the money in guaranteed paper.

The right time to buy real estate is when people hate it. Mestrada bought at a ridiculous time--when everyone loved it. (No offense, Mestrada.)
hessj

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Reply with quote  #13 

Quote:
Originally Posted by Subcranium
>>The home is in good location and my guess is within five years the value would have rebounded enough to at least get the woman her money back.

And all the holding cost during those 5 years? Doubt it.

Suzanne

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Posts: 339
Reply with quote  #14 

 

Does everyone believe in the statement "you make your money when you purchase the deal."  How low would Mestrada or any of us have to offer in order to profit at this stage of the market cycle.  I feel as if we are at the top of a rollercoster and our carriage is two or three pegs after the balance point at the top.  So it's starting to head down.  The ratio of 70% BMV minus repairs may be too high! 

 

If you come across a deal and you think it's worth it at this time-like Mestrada- then in order to beat inflation and not get caught in the downturn you may have to offer a bank 60% BMV minus repairs/rehab costs.  They might laugh at the offer today but next year might be a different story.

 

What do you all think?

 

Suzanne

Suzanne

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Posts: 339
Reply with quote  #15 

I think I used the wrong term there but you know what I mean:  If the comp is $500,000.00, you need to get it at $350,000.00 minus repairs-say $300,000.00.  Sorry about that. Suzanne

john3232

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Reply with quote  #16 
Quote:
Originally Posted by hessj

Quote:
Originally Posted by Subcranium
>>The home is in good location and my guess is within five years the value would have rebounded enough to at least get the woman her money back.

And all the holding cost during those 5 years? Doubt it.

 

I guess my point is it seemed the woman jumped into this venture quickly and now is reacting just as fast getting out.  I know nothing of her financial situation but I would be looking at every possible scenario, getting plenty of professional advise  before taking a $60,000-70,000 bath. Maybe she has gotten such advise and this board reiterates what's she already knows. In any event I would be sure I was comfortable (or as comfortable as possible in this case) before writing off such a loss.  

john3232

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Reply with quote  #17 
Quote:
Originally Posted by Suzanne

 

Does everyone believe in the statement "you make your money when you purchase the deal."  How low would Mestrada or any of us have to offer in order to profit at this stage of the market cycle.  I feel as if we are at the top of a rollercoster and our carriage is two or three pegs after the balance point at the top.  So it's starting to head down.  The ratio of 70% BMV minus repairs may be too high! 

 

If you come across a deal and you think it's worth it at this time-like Mestrada- then in order to beat inflation and not get caught in the downturn you may have to offer a bank 60% BMV minus repairs/rehab costs.  They might laugh at the offer today but next year might be a different story.

 

What do you all think?

 

Suzanne

 

It goes without saying she bought in a poor time, Yet it was the $77,000 in expected/unexpected repair costs which really sank her. Just cut that figure in half and this financial quicksand wouldn't be looking nearly as bad.

 

HiddenMarket

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Reply with quote  #18 

What makes anyone think this home has actually been sold? 

It is showing as an active listing on Sandicor and on Realtor.com

 

You can see it on http://www.Realtor.com under MLS #066051728

or go directly to the link via http://tinyurl.com/ejks2

 


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BayPark

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Reply with quote  #19 

Hidden Market -

 

How long does it usually take for a house to come off realtor.com after an offer being accepted ?  I've seen some listings on there for several weeks even after escrow opens.   Even the timely ones are a few days after escrow opens. 

Since you are an agent, can you tell us how long it typically takes after an offer is accepted and the house is placed in pending and removed from realtor.com ?

 

So far it's been 2.5 days since we heard the offer and counter were accepted.

 

Gekko

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Reply with quote  #20 

 

 

we still have Jeff to watch.

 

Jiddy78

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Reply with quote  #21 
Quote:
Originally Posted by Jeff
Quote:
Originally Posted by Suzanne

Greetings,

I would love to learn from this team of very knowledgeable investors the consequences to Mestrada had she not sold her investment?

long term financial:

Short term financial:

FICO:

Psychological:

Taxes:

Responsibility to lender:

Other:

I look at every house that I contemplate buying - and I think a combination of Samson, Bruce, Robert and Ronald STarr taught me this-that you make money when you buy the house and that you have to have a few backup plans in the event that plan A doesn't work out. So I look at the house and think about possible "plan a, plan b, plan c."

Interested in learning about the consequences and about the initial approach to a house.

Thank you

Suzanne

I consider this a very reasonable and interesting question...however, as you will note in the Mestrada thread, the topic of "not selling" got very little "traction."

In contrast, the "sell at any cost" topic got a lot of "play time"--and very little, if any, critical debate...

Good luck!




And that fact, in and of itself, is a fairly good foreshadowing...if not a completely obnoxious and obvious one....
Jeff

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Reply with quote  #22 
Quote:
Originally Posted by Gekko

 

 

we still have Jeff to watch.

 

Jeff?


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