Monday, July 28th, 2008 at 5:49 PM
Collision Course II
We have a contest riding on the final sales price of the REO listing at 392 Compass in Oceanside. It’s a 4 br/2.5 ba, 2,209 sf tract house built in 1979, and the list price was $359,900.
We had a handful of offers, and settled on a buyer with 20% down payment who offered $367,000.
While we are in the negotiating stage, this 4 br/2 ba, 1,672 sf one-story house down the street with a better view (and also an REO) went on the market, listed for $284,900.
Since then, the buyer of the bigger house does his inspection which verifies that it needs a new roof and other repairs. Then the appraisal comes in short – only $330,000. He says he isn’t going to pay more than appraised value, especially because of the repairs needed.
In the meantime, I find out that the smaller house got BID UP to $365,000, and is in escrow at that price.
My listing is going back on the market today, if you know anyone who wants a crack at it.
Posted on Monday, July 28th, 2008 at 5:49 PM in Foreclosures | 20 Comments » | 
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Over $200/sqft for a small house in Oceanside? Does it have an ocean view or something? It’s 2 miles from the beach, so I suppose it might.
As for your listing – do you set a new price at $330k, the appraised value, or go back to your original price?
Genius | July 28th, 2008 at 6:55 pmGetting into a bidding war as a buyer sucks. What makes it especially annoying is that there’s no way of knowing if the realtors involved are telling the truth about other buyers with higher bids or if they’re just trying to push up your offer price.
One time I was in a bidding war and I had no intention to pay more than I offered. Then my agent came back to me saying that the seller had higher bids and recommended that I offer more $$$. I told them to offer 5k lower than my initial bid and give them 2 days to accept / decline. My realtors face went white and I couldn’t tell if it was because she knew that she had lost the sale or she knew that they got caught.
In the end the realtors were able to get the other buyer’s price up over 25k.
Within a year the buyers were trying to sell for 10k over what they had purchased at.
With 6 months the buyers had gone to 80k below what they paid. After a while the listing was withdrawn.
Now I’m just waiting for the foreclosure.
shadash | July 28th, 2008 at 7:22 pmI’m still comfortable with my $374,900. We obviously haven’t flushed out all the knife catchers yet.
Rob Dawg | July 28th, 2008 at 7:37 pmOur original list price will stay the same. Notice from here on out how the one-story comps will vary greatly from the two-story.
Jim the Realtor | July 28th, 2008 at 7:50 pmI’m going to start my new business turning two- story houses in to one-story
JE | July 28th, 2008 at 8:05 pm"I told them to offer 5k lower than my initial bid and give them 2 days to accept/decline."
Two days on a counter-offer seems like a long time to me.
GeneK | July 28th, 2008 at 8:45 pmJim, my sympathies to you and your client. This is the other shoe dropping as properties that were priced right and went into contract TFT as cheaper comps hit the market a few days or weeks later. It’s part of the long, downward spiral.
Frank Jewett | July 28th, 2008 at 8:58 pm"In the end the realtors were able to get the other buyer’s price up over 25k."
Shadash, it sounds like you right at least on some level. A 25K raise indicates the other buyer was told the same thing you were told – that they were the "losing bidder". That, or they only bid in 25K increments and this was a must-buy house for them.
This and Jim’s story shows why we all need our own sense of a house’s worth, backed up by an honest appraiser. As much as you might be afraid of losing out on a deal, there are other houses out there and peace of mind and caution on a 30 year investment is worth something.
BDiego | July 28th, 2008 at 9:50 pmBDiego,
The problem with appraisals is that they use "comps" or comparable sales to estimate the value of a property.
If…
1. There haven’t been any recent sales in the area how do you put a value on the the property? Do you account for a declining market?
2. What effect does Fraud have on comps? If 6 months ago all you had to do was fog a mirror to get a mortgage and people took advantage of this. Are the sales true comparables? Should the price be lowered because mortgages might be more difficult to obtain now?
3. While "shopping" different appraisers is illegal. It happens all the time.
What this all comes down to is BUYER BEWARE when it comes to real estate. Assume the deck is stacked against you because it is.
shadash | July 28th, 2008 at 10:02 pmGeneK,
I gave the seller two days to respond just incase they were making the other bidder up. I did like the house but I wasn’t going to be stupid with money just because a realtor told me to bid higher.
In my case it turned out that realtors weren’t lieing. But I think in the end being prudent with my $$$ worked out.
shadash | July 28th, 2008 at 10:06 pmI think you’re right about being prudent. Two days is just one day longer than I would write a counter-offer for, especially if I thought the "other bidder" was made-up.
GeneK | July 28th, 2008 at 11:29 pmBut will the one story close escrow? If 2200 sf appraised at $330,000 then there better be magic in the appraiser of some undisclosed benefit of the house to rock in at $365,000 for 1600 SF. That’s a 30% premium on the $/SF pricing.
No_Such_Reality | July 29th, 2008 at 4:32 amI’m sure the participants in the $365,000 sale are shaking in their boots over the appraisal. Mine going back on the market today isn’t going to help either.
Speaking of problems, items I’m up against:
1. The pathetic Sandicor revamp has cordoned off the back-on-markets in their own corner. I don’t know many agents who are looking there, and unlike the previous version, now they wipe the slate clean every day and start over.
2. The next-door neighbor just had to tell me the other day that the house used to be owned by drug dealers who are now in jail. They owned a few houses and she didn’t think they lived in this one, but employees did, and the authorities brought out a big bag of cash when the bust went down.
3. The house needs work, and the market may be sliding into the year-end malaise already, with fixers leading the way.
No offers submitted today on it.
Jim the Realtor | July 29th, 2008 at 4:48 amOuch… does this mean a possible meth lab disclosure?
Frank Jewett | July 29th, 2008 at 5:08 amShe didn’t say anything about a meth lab, all she said was that there was a big bag of money. I will keep searching for more of that.
My disclosure to this buyer was everything described here, and I recommended that they go talk to the neighbor for more info.
Jim the Realtor | July 29th, 2008 at 5:13 amI see this new info about the previous residents vocation as a bonus. Seriously, it’s not like Oside doesn’t come with a serious convict reputation anyway. Your new house might come with a free downpayment return option if you look in the correct wall/ceiling/floor!
*Bing* add 20% to price!
Pseudo | July 29th, 2008 at 7:05 amInstant Equity!
Jim the Realtor | July 29th, 2008 at 1:35 pmBe sure to sell before the convicts are let out and start looking for their "instant equity"
shadash | July 29th, 2008 at 2:35 pmThe Zillow Bird’s Eye View shows no fewer than five vehicles used to be parked in front of this abode. That could be construed to match what the neighbor said.
jb | July 29th, 2008 at 2:52 pmYears back when we were looking for our first place, we toured a house that had the charming feature of a heavily armor-plated mail drop on the garage door. Not to mention shocking pink carpets that reeked of … something. I bet the neighbors were praying for some nice family to come in and rejuvenate the place.
Dwip | July 29th, 2008 at 4:17 pm