1,400sf of heaven, built in 1960 and last sold in October 2005 for $430,000, and yes of course financed 100%, plus a cash-out refinance in 2006, resulting in negative skin in game.
Sold for $148,000 in 11/99:
The market can’t be any hotter than it is right now, can it?
Jim, when you are in the backyard scoping out the rest of the neighborhood I thought you were in Juarez.
Scary neighborhood indeed. But flippers are feeling good so let them roll – they are on the line at the craps table.
HOT HOT HOT
So houses are receiving 30+ offers but banks needed TARP money and forclosure morotariums to slow the number of foreclosures coming on the market.
Also I feel for the buyer with 100k and unable to buy a house because of all the 3% FHAs and money money all cash buyers.
If they listed homes in the Carlsbad/Encinitas area at ~1999 prices, they’d have hundreds, if not thousands of offers for each one.
People are looking through the lens of the 2005 market. They are thinking about how much the price has dropped from the peak, instead of thinking about how the prices compare to the pre-bubble market.
Unfortunately, this will cause people to overpay (again), especially when they have little/no skin in the game. With a 3.5% down FHA loan, and the $8,000 taxpayer give-away and ~3% seller kick-backs (or more!), it’s no wonder the market is hot — especially with listings priced at ~$1999/2000 levels.
Many buyers are effectively getting 110%+ LTV loans/gifts, oftentimes giving them more money than when they started. Ten percent of $150K is $15K, so these buyers are getting the full $8,000 gift ($8,000 or 10% of the purchase price, whichever is less). If the sellers kick back 3%, they can get another $4,500, giving them a total of $12,500 that they never had to begin with. If they put 3.5% down ($5,250), and pay ~$5,000 in closing costs/points, that totals $10,250. This leaves them ~$2,250 after all expenses, which is more than they had before they became home “owners.” Who wouldn’t sign up for such a deal?
As with all the people who were “surprised” by the “success” of the Cash-for-Clunkers program. Um, hello?…you’re **giving** people FREE money if they buy a car.
Anytime you give people “FREE” money to buy things, the market will be hot, and prices will rise or remain flat (in most cases). It’s curious why anyone would find this surprising.
Still…what happens when it reaches its climax again? Do we repeat the same mistakes (giving away “free” money and driving sales and prices to abnormal heights) over and over and over again? Does it ever stop? Do people really believe there will be no negative consequences for these actions?
All I can say is . . . What a Ghetto!! I wouldn’t risk a dime there. You got cash? Gold and Silver (miners) is the best place for any investment money now.
– I’m the realist!
Jim,
Surprised you weren’t driving the truck through there. Do you not trust it since that time it didn’t start?
“Surprised you weren’t driving the truck through there. Do you not trust it since that time it didn’t start?”
Jim needs this “special truck” for quick get aways!
http://i582.photobucket.com/albums/ss265/Downturn/hodrodicecream.jpg
“And his momma cried… cause if there’s one thing that she don’t need it’s another hungry mouth to feed in the ghetto… in the ghetto”
30 offers? -Yikes.
from Georgey:
An interesting coincidence on Wall Street on the anniversary of the terrorist attacks on Sept. 11, 2001: This past Friday, the Dow Jones industrial average closed at 9,605.41. On Sept. 10, 2001, the day before the attacks, the Dow Jones industrials closed at 9,605.51.
that is depressing.
Do you carry Pit Bull spray Jim? Seems like there is a price point for the bear minimum. Take this price point and factor in the cost to upgrade to another hood and there is your price point. If this goes for 200K then 550K/600K is the price point for Carlsbad/Encinitas/CV, etc…
Wow, just wow.
JtR–please feel free to edit the length of this ridiculously long story. But the story is in the details–which span ten years! Maybe share with it that agent with the “70 offers client”.
My BIL (and his younger brother) had decades of experience in natural food retailing, but not much money. Back in 1989, they found a 2,000 sf store in a very small town where they lived, but, alas, the owner didn’t want to sell. My BIL handed him a piece of paper with his name and phone number on it and said, “If you ever decide to sell, give me a call”. Three months later, the owner did just that.
The brothers had a written 10-year business plan and went to bank after bank– hoping to get approved for a Small Business Administration loan. They only had $15K, and their dream in hand. All seventeen (17) banks said NO! The bank guys based their decision on the tiny $15K down payment on a $172K SBA loan amount. Then they went to the 18th bank…
After a couple years, that little store was relocated to a different location in the same town. You had to literally pass right in front of the store as you entered the town. The location was perfect! The store was eventually expanded to 10K sf when two businesses on either side closed. In 1994, they opened a second store in another city that topped out at 23K sf. Two years later, they then opened another store (about 15K feet)in another town.
*Chuckle*Before they opened that second 23K sq ft store, (huge in natural food retailing) the “brothers” asked their “wifeys” one simple question: “We don’t know how this will all play out, but is it OK with you ‘cuz we may go bankrupt following our dream?”
In 1989, both Whole Foods and Wild Oats made offers to buy the 3-store chain. Whole Foods won out.
That first store only had eight employees. But ten years later, there were 360 in the three-store chain. Most of the employees had been there for years and years–some from the very beginning. Many cried when the business sale was announced one early morning in 1999 before the stores opened.
Why did my BIL decide to sell? Ten years ago, he realized that in years to come nearly all the big supermarkets chains would offer the same products he was–but at reduced prices. Look at any supermarket today (Albertson’s, Safeway, Ralphs, etc) and you’ll see my BIL had a crystal ball of sorts.
During this whole adventure, the brothers were invited to a SBA breakfast. They had won an award for “Best Use of a SBA Loan”. One of the original bankers who had said NO! all those years before came up to the microphone, simply shook his head, chuckled, and said, “Boy, did we goof!”
And a heartwarming part of this perseverance tale? When the deal was completed, each of the 360 employees found a $1,000 “bonus” in their last paychecks that the brothers had personally signed. Yep, $360,000 went back to the employees. The brothers just wanted to say: “Thanks!”
I know this isn’t a real estate story, JtR, (except for the location, location, location part) but perseverance can win out! The best part to me is that all the money didn’t change my BIL or my sister at all. They’re still the same people I’ve always loved and still live in the same house they bought right before Whole Foods called.
After the businesses were sold, some friends congratulated my BIL and his brother on their “overnight success”. “Yeah”, my BIL chuckled: “It only took us 30 years”.
Perseverance can win out! I hold on to this story–not just ‘cuz it’s about my beloved BIL, but it inspires me in my own quest to find my “last” home and be a homeowner once again after nine years as a renter.
So maybe tell that agent to share this story with his client. It may just give his “70 offers” client the heart to make one more offer on one more house. Remember, my BIL was told “NO!” by 17 banks. But then he walked into the doors of Bank # 18 with his dream…
I concur with CA Renter above. Much of the lower-end home frenzy is the free money throne at FHA buyers. They can get in with almost no money down (they often don’t have much cash anyway) because of the lower DP requirement plus the maximum seller paid closing costs.
If these subsides ever went away, prices would be much lower. Remember when most first time buyers had to save for a few years AND borrower from their parents just for the DP? It wasn’t that long ago.
One other thing. If the home they purchase has been flipped, then it probably the nicest home in the neighborhood so for the entry-level what’s not to like. (remember JtR’s OC flipper videos – those homes are nice!)
Like-new home: check
Low/no down payment: check
Low interest rate: check
Mortgage payment comparable to rent: check
Our government wouldn’t take away these incentives would they???
Depressing…I saw better homes in Albania about a dozen years ago when visiting when the first groups of “foreigners” were granted visas to enter.
Jim,
Prospective rent? I guess $1350.
That makes the ROI decent as long as there is no double dip.
I’d say $1,500, counting the extra income from tobaggan rides down the back slope in winter.
You might consider yourself lucky that you did not get that property in the video. The concrete slab looks like it is higher than the sill. The concrete slab may also be at or near the same height as the slab inside. This means that there may be water seepage back into the wall when it rains. The back slope is towards the house, directing rain to the concrete ‘patio’. There are no backyard ‘drains’ that I could see.
REO Agent Video
I’m not really sure why this agent videotapes this and then puts it on Youtube. It’s pretty painful to hear the tenant take the news (although he’s really calm).
Found this on KB blog:
At the beginning, the agent was complaining how slow it’s been with REOs and then trashes the REOs that the bank now has given him. If I was the bank, I don’t think I’d want someone representing my homes that is out talking how bad they are on a public web site. If he doesn’t want the listings…don’t take them!
http://www.youtube.com/watch?v=hk05Huz46NM
posted by Keith Byrd, Century 21 @ 3:36 PM
More of what I gotta take every day, constant criticism from people who don’t take the time to get the whole picture.
No mo: “If I was the bank, I don’t think I’d want someone representing my homes that is out talking how bad they are on a public web site.”
Jim is one of the few realtors who tells the truth in an industry crowded with charlatans. His integrity shines at a time when “Bank & Trust” no longer means anything for most Banks (nor Uncle Sam for that matter).
Perhaps you should read more of the blog before making asinine comments.
That area around Landes park is apparently one of the roughest places in Oceanside (along with the back gate). My agent and friends said there is alot of gang activity and warned me to steer clear when I was looking.
I’m thinking No Mo was just cutting and pasting. Regardless, the comments were rude and ignorant. I’d rather have Jim’s sarcasm and bite of reality than the sunshine and ponies stuff from others.
I’m happy to hear that Wells Fargo exec got fired. Was it because she gave them a PR nightmare? Or, because she proved that there is shadow inventory? ttp://www.latimes.com/business/la-fi-malibu-wells15-2009sep15,0,3886240.story
No mo: You obviously don’t get it, nor does the competition.
I’ve bought a couple of houses through Jim, and recommended him to friends and family for both sales and purchases – and every one of us has been very happy with his integrity and quality of service. I think you’d be hard-pressed to find someone who knows the NC real estate market better.
If you want platitudes, go elsewhere. If you want a straight talking skilled pro, JtR is the man.
I can’t believe that s–tbox sold for $430K at the peak of the bubble.
Now it seems high even at 50% off peak.
But you do have Nacho truck in the neighborhood.
“posted by Keith Byrd, Century 21”
Isn’t Century 21 the high class outfit that brought us the “Suzanne the Realtor” ad?
That’s what happens when Zimbabwe Ben threatens to burn the dollar to the ground. Everybody wants crappy real estate at any price as an inflation hedge.
P.S. If it flows, I’d hit it. But in these bidding wars, you’re probably better off stockpiling gold and guns.
And I thought “certain areas” of the Desert were bad………….this is definitely a Betty Davis house……..you know the line, “What a dump.” Its inconceivable that someone actually paid $450K.
Sproles rocked, why no play, LT?