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john92592

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Persuing this (and many other) boards, I've come to understand (and agree) that we will be facing a time when the numbers of borrowers foreclosed on will be huge. To some this will be tragic - some say to others it will be a time of opportunity.

Therein lies my concern/frustration. I have come across a few "deals" on properties in my neighborhood that should have been snapped up.

Example: a SFR, 2600sqft, Appraised value $425K, offered at $327K, only minor cosmetic repairs required, days on market 87.
Seems to me that there was plenty of room to make a decent profit (I stumbled across this one late ).

According to the Listing Agent, less than 10 "buyers" looked at this property. This is just one example of many in similar situations (although the spreads are a bit smaller).

Many RE Agents/Brokers in my area continue to ask "where are the buyers". They see many lookers, but few buyers. I realize we have turned the corner into a buyer's market. That leads to my main question: If we are able to put together good, or even great deals - then what?

I see a lot of "sell it now" on this (and other) board(s). My question is to who?

((BTW, the resolution of the above: sold to Beneficiary for ~$330K. Bene has down *nothing* with the property for ~45 days, and has refused multiple requests to review offers (mine and others). ))

Any insight is appreciated.

RobertCampbell

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Reply with quote  #2 

 

Interesting story.  Thanks.  It jives with the feedback I'm getting from the street as well.

 

My explanation is that market psychology, which is the real force that runs the show, is clearly changing.

 

With sellers still greedy ... and buyers becoming more and more fearful ... the spread between the bid and the ask prices seems to be getting bigger and bigger.  That's why sales activity is falling fast. 

 

Buyer's don't have to buy.  That's why $2 trillion worth of resetting loans in 2007 should resolve these discrepancies. 

 

Robert Campbell

taddyangle

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Reply with quote  #3 

Resetting loans?

 

What is that all about?  Does this have something to do with my pay option loan?

 

I have a $500k pay option loan and the payment is only $1,875 per month.

 

Yes I know it will reset, but I will refinance when it does.  If it should reset the cost goes to $3,020.  But since I am going to refi to a 30 year fixed the monthly payment will be $2,700.  Did I mention I got 100% finacing?

 

I make $67k a year and just barly qualified for the loan.  Do you think I am going to have a problem refiing since I am still making the same salary?  I did the math and I think I need to be making $97k to qualify for the new loan since the rates are now higher.  I think however, my loan broker will figure out a way to take care of me. 

 

 

We have got serious problems coming in so Cal.


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biophase

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Reply with quote  #4 
He means that the the 3 and 5 yr ARM that were taken out back in 2001-2003 will come out of their fixed period and been adjusting to whatever index they are based on.  Most (if not all) of these loans will increase the max adjustment cap.
rlc

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Your income shouldn't be a problem since you can always qualify with "stated income". 

 

Things you need to prepare for: 1. cash reserves. 2. fico score. Talk to your mortgage guy now for planning.

 

Thing to be concerned about is the LTV when you refinance. If you have equity now you should watch the market. If you wait to long before refinancing your home value may drop. At that point you might be stuck. 

manatee

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Reply with quote  #6 
Buyers are waiting for prices to go back to 2001 levels, since 30 year mortgages are almost at 7% like they were in late 2001.

I would buy a house with positive cashflow from rent any time.  Also when the ARMs reset, there could be more people selling and going back to rent, driving the rents up and vacancies down, so rental houses might be the way to go. 

Suzanne

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Reply with quote  #7 

This is a great question!  If I snag what I think is a great deal, how low do I have to buy it in order to make $$ when I sell it?  How low does the sell price have to be in order to draw out the buyers?

Suzanne

john92592

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Reply with quote  #8 

To answer Suzanne's question, the way I am looking at things, obviously there is no hard and fast rule for "how low".

 

When looking at potential *buy and hold* opportunities, I'll be looking for props in which I can (going back to the old standard) of adding value.

 

 

Suzanne

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Reply with quote  #9 

John, I actually meant that your question was a great question!  Not mine...but thanks for a response.

Suzanne

taddyangle

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Reply with quote  #10 
Quote:
Originally Posted by rlc

Your income shouldn't be a problem since you can always qualify with "stated income". 

 

Things you need to prepare for: 1. cash reserves. 2. fico score. Talk to your mortgage guy now for planning.

 

Thing to be concerned about is the LTV when you refinance. If you have equity now you should watch the market. If you wait to long before refinancing your home value may drop. At that point you might be stuck. 

Stated income, how so if I am only making $67k?  Do I state I wish I was making $100k so therefore I want a refi?

 

Anyway, I was making up that scenario, of which I believe to be typical.  Do you think people actually have cash reserves, and are talking with their loan guy to plan for what to do when their loan resets?

 

Lets see how that goes over.  Mr. loan broker calls me an says, hey Bernard your loan is about to reset in 12 months, and when it does your payment will increase by $500 a month (or $700 or whatever), I was thinking that you may want to consider refinancing.  If you do it today, I can keep it so your payment only goes up $300 a month.  He adds, I will even do the ref at no cost to you.  Hmm. I think I will wait, $500 a month in 12 months sounds better than $300 a month tomorrow.

 

This is what all the hype is about, and I am not so sure there is a work around for this.  If you stretched to get into your home (assuming you recently purchased), and you add the increase in fuel, let alone other living expenses, and considering wage have remained steady...can you see the problem?

 

 


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RobertCampbell

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Reply with quote  #11 

 

Taddy,

 

Question ...

 

As a homeowner with an ARM that is going to be repriced, would you rather be alive with a new Neg-Am loan or dead without one?

 

People could be digging themselves into an even deeper financial hole, but didn't Maslow teach us the "survival" was the highest human priority?

 

Robert Campbell

rog56

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Reply with quote  #12 
I realize we have turned the corner into a buyer's market.

I think this misunderstanding is causing a lot of puzzlement at present.

In my area (AZ), there is most definitely not a "buyer's market". There is such a strong likelihood of a decline in prices that buying now would be madness, in many local housing markets. So, not a "buyer's market" at all.

It's still a sellers' market, 'cos anyone who manages to sell now is getting back some of their bubble-profits from the mug who buys from them. Someone who buys now is buying an asset that is likely to depreciate in value like a car - as soon as they drive it out of the showroom.

Buyers have absolutely no need to be fearful, although Robert Campbell suggests that they are. The only reason for being fearful is if you actually buy! Would-be buyers just need to rent somewhere, and wait. Then wait some more. Before they know it, it will be 2009 or 2010, and it might be time to look at properties and consider buying. Then will be the time of the "buyer's market", in all likelihood.

That's what I'm doing, anyway. No fear at all.
Subcranium

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Reply with quote  #13 
It is a buyer's market. But that doesn't mean it's a good time to buy. Buyer's market is defined as there being more sellers than buyers. And there certainly are.

I wish it was just called a bull or a bear market in housing. I think the seller's/buyer's terminology is dreadfully confusing.

rog56

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Reply with quote  #14 
Buyer's market is defined as there being more sellers than buyers.

Says who? And how do you count the buyers and sellers?

There are currently plenty of would-be sellers, but they aren't selling (because their offer prices above those that buyers are willing to bid). As far as we know, there are also plenty of would-be buyers, but they aren't buying (because their judgement of value - their bid prices - are below the sellers' offer prices.

My definition:

A buyers' market is a market in which conditions are favorable to buyers. A sellers' market is one in which conditions are favorable to sellers.
hessj

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Reply with quote  #15 
Where are the buyers?  I sold and waiting on the fence.  Most buyers in the form of speculation are waiting or getting burned atm.  Other buyers have already bought and hassling with their ARM.  Other buyers are priced out.  Thats where they all are.
Subcranium

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Reply with quote  #16 
>>My definition: A buyers' market is a market in which conditions are favorable to buyers. A sellers' market is one in which conditions are favorable to sellers.

It's nice that you have your own definition.

I have a new definition of "red." It's blue.
Subcranium

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Reply with quote  #17 
>>A condition of the real estate market where there are more properties for sale than people interested in buying them. Buyer's have more choice and less competition for the available properties, resulting in lower prices.

Seems like that's where we're at. We're just waiting for the "result."
HiddenMarket

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Reply with quote  #18 

Want buyers? 

 

Try lowering the price to get them over to see your property. 

If the value is truly there, you'll be able to negotiate a good price. 


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rog56

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Reply with quote  #19 
A condition of the real estate market where there are more properties for sale than people interested in buying them.

Hi Subcranium, I'm interested in buying a house. But I'm not going to buy, because in my areas sellers are asking similar prices to 2005, which are, in my view, much too high. So, I'm not even viewing houses. How do you count people like me, on this definition?
michaelr

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Reply with quote  #20 

Im a buyer but only at my price.   I am constantly looking in the area I want to live/own long-term.  I continue to look and bid at homes at my price.  As of now Im a renter...

 

 

RobertCampbell

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Reply with quote  #21 

 

Michael,

 

It's none of my business but what are you offering?  40% off the old peak values - so that we can get this downcycle overwith and get the new upcycle started up again?  LOL. 

 

Good luck.

 

Robert Campbell

Subcranium

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Reply with quote  #22 
>>Hi Subcranium, I'm interested in buying a house. But I'm not going to buy, because in my areas sellers are asking similar prices to 2005, which are, in my view, much too high. So, I'm not even viewing houses. How do you count people like me, on this definition?

Well, it's not my definition. As I've said a few times in a few places, I wish they'd just call it a bull market or bear market. A bull for when sellers are getting multiple offers. A bear when they are getting lame or no offers.
Gekko

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Reply with quote  #23 

-

 

1. take 1997 prices and calc a 3.5% annual rate of return and make your offer.

OR

2. calculate how low the price would be for you to have truly positive cash flow via rental and make your offer.

 

http://www.files.bz/files/11251/RealEstateValuationMethods.xls

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Reply with quote  #24 

Michael,

 

It's none of my business but what are you offering?  40% off the old peak values - so that we can get this downcycle overwith and get the new upcycle started up again?  LOL. 

 

Good luck.

 

Robert Campbell

 

 

 

Im usually about 20%-30% of todays fmv for detached.  And 25-35 for attached.  I go rather low on condos because I really want a sfr. 

 

 I dress the offer up all pretty like: all cash, no contingencies, 21 days, blah blah. 

 

Im in no hurry so i just keep offering, someone will say yes (i think).

 

mike

RobertCampbell

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Reply with quote  #25 

 

Mike,

 

Im usually about 20%-30% of todays fmv for detached.  And 25-35 for attached. 

 

You must be making lots of new friends lately.  LOL  If you don't mind, I have a some questions for you ...

 

1.  What city are you making these offers in?

 

2.  How many offers have you made?

 

3.  Are you getting counters to your offers?  If so, what are they?  ("Drop dead, azzhole.  I wouldn't sell to you at that price if you were the only buyer on earth")

 

4.  Are you represented by an agent?  If so, how's that relationship coming along?   Is he/she ready to kill you yet?

 

I hope you don't mind me asking these questions.  I find your quest extremely interesting, and I'm confident that you'll eventually get what you want at the price you want.

 

I tip my hat to you, Mikey Boy.

 

Robert Campbell

 

PS:  This would be a good reality TV show, one to replace "Flip that House" that I'm sure will soon go off the air as the housing market downcycle starts to speed up.

 

 

RobertCampbell

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Reply with quote  #26 

 

Thanks for the details, Mike.

 

As you and I talked about before, you're too early in this market downcycle with these offers you're making.

 

Keep swinging the bat.  That's the only way anyone ever hits a home run.

 

Robert Campbell

 

 

taddyangle

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Reply with quote  #27 
Quote:
Originally Posted by RobertCampbell

 

Taddy,

 

Question ...

 

As a homeowner with an ARM that is going to be repriced, would you rather be alive with a new Neg-Am loan or dead without one?

 

People could be digging themselves into an even deeper financial hole, but didn't Maslow teach us the "survival" was the highest human priority?

 

Robert Campbell

And that is why I have a 15 year fixed amortized loan (4.875%) and the second is also fixed at a 20 year fully amortized loan (7.x%).  I don't have the stomach to deal with the issues of rates adjusting or loans resetting.  I suppose the biggest issue will be to see how I react to our primary residence falling in price.  So far we are down about 6% from the peak, in my estimation. 

 

Although I do have a couple of investments properties that I will need to address, and the sooner I sell the SFH in Mesa, the sooner I will have one less headache loan to deal with.  We actually used a pay option three times, two properties with those loans we already sold and the other is on the market now.  It has adjusted however, the loan is pretty low (125k) so I am not so concerned.  However, it does come as a shock when your use to paying $450 a month and it adjusts to $575.

 

 


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sdlocal619

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Reply with quote  #28 
Robert phrased it perfectly:  No one ever hits a home run from the dugout!  Keep it up Micheal, you'll get that grand slam, if not now, in the coming years.  Getting uglier by the day.
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