Remember the old saying,
“Enjoy the victories because you know another butt-kicking is coming right around the corner”?
This is what I mean – a seven-day journey in pursuit of a hot listing:
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
- klingerealty@gmail.com
CA DRE #01527365, CA DRE #00873197
Man, you are not kidding, that’s one killer view. No unsightly obstructions whatsoever, and not even any obviously questionable looking properties below. Best view I’ve seen in your videos short of multi-million dollar customs.
Losing that one had to be heartbreaking.
Gorgeous view. If I had the money, I’d blow up that place and build a nice custom. I’d move from CV for a view like that.
What a saga that was – thanks for sharing!
if you werent chasing Melora Hardin (i mean Jan Levinson!) around the old office all day…nudge nudge, know what i mean…!?!…now get to work!
Not to point out the obvious but…
If you were stalking this house for over a month. Why didn’t you get a hard money lender involved? After the house was purchased couldn’t the buyers finance through traditional means at their leasure?
Maybe I missed something. The agent did not come back to you for a chance to make an improved offer?
I feel for your clients on this one.
You may have just made the best 10 minute documentary on the madness of being a buyer in a supply constrained marketplace where the lenders own a third of the inventory.
Excellent video Jim. Sean said what I was thinking.
Absolutely stunning ocean view! Heartbreaking for your buyers, Jim. My condolences as I still remember getting heartbreaking news from you back in 2009. It hurts, really hurts. Never easy for buyers or their Realtors, and this video proves it…
#5 – Because you don’t get a warning, and hard money is expensive.
1. They don’t come back to you and say, “You’re going to get screwed unless you make a cash offer”.
They just come back and say, “You got screwed”.
The LA told me that she thought I was the winner, because I was the highest and this lender always takes top dollar.
2. As of Sunday afternoon there were no offers. The lender is SD County Credit Union, a locally-based outfit – not the insanity of BofA. She said we’d get an answer promptly, so we took a chance.
3. Hard money costs 2 points.
If it’s come to the point where you have to make a cash offer on every house just to buy something, sales will be dropping further. Buyers aren’t going to go for that, it’s too expensive, and too uncertain.
heartbreaking…
It can be devastating the first few times, but you get used to it eventually.
JTR – Same thing on the commercial side, only exaggerated as their is effectively no purchase financing available for a semi-distressed asset. We have found that the only way to get real sellers to listen to you (i.e. accept a price that makes sense to a yield driven buyer) is to offer 100% cash an a sub 30 day close. Thus we’ve resorted to buying all cash, spend time stabilizing the deal, then finance cash out post closing when you are not under any time pressures.
We get some ‘off market’ deals presented to us just because of our offer structure.
Institutional sellers value the ‘surety of closing’ over the actual $$$. Private sellers value the $$$ over everything else.
Clearfund- on comment #12-from a residential perspective, if institutions are really interested in closing, then perhaps they wouldn’t screw with us qualified buyers so much and piss us off. 2 or more appraisals, sold as-is, no termite cert, submit ALL your financials to LS with offer, loan pre-approval from owner/lender prior to offer accepted, H&B with no need to prove it, and then and only then will they accept your offer at a trophy price. Oh that’s right, they’re the big hairy gorilla.
To Jim and clearfund:
If it was easy then everyone would be doing it! You make your money from the value you add.
Sounds like it’s time for people to start looking in South Bay or Inland North County if they are not willing to come up on their prices.
An all cash Buyer is always your best offer. If a Seller has listed their property too low you’ll get the feeding frenzy and higher odds of heartache/heartburn.
Nice house, too bad.
Just an idea but…
If you were offer a program that brings hard money lenders together with buyers I think you’d have a hit.
Say you gave up one point in your commission as a buyers agent so 2%, and brought in a hard money lender for 2% the cost to the buyer would be 4% of the sale.
If cash offers allow for lower prices to be accepted paying 4% as a buyer makes sense.
I would love to work with someone that brought everything together allowing me to put cash offers on properties.
The hard money lender could make even more money by selling your buyer a traditional mortgage after the cash price is excepted.
Looking good on the coast. Even this outstanding property is back to the price it sold for in early 2003 and down almost 30% from the 2008 sale price. Should be back to 2001 prices in North County Coastal very soon.
Shadash – One of the ‘difficulties’ in executing your plan (which is a good one, in theory, BTW) are the laws in CA.
A ‘purchase money’ loan for an owner occupant loan is full of regulatory burdens that are hyper-unfriendly to private/individual lenders. Think the major lenders have trouble following the technical guidelines, imagine a private lender. All the forms, disclosures, federal laws, state/local laws, fairness/anti-discrimination laws, etc. Attorneys would have a field day with the lender. The large institutions can spread the risk/cost of compliance over giant pools of loans, not a handful.
This is why private lenders typically stick to commercial/non-owner-occupied/investment properties. Easily quantifiable lending/regulatory risk.
Thus, it is not a very appealing investment (read a lot of risk to an individual) to earn 6%-8% annualized interest for a few short months.
Okay, One and done. But aren`t agents supposed to be there to get the most dollar for the client. No, I`m not that naive/stupid, but if you get more for the property, you get a higher comission. I have yet to sell a property and tell my agent to take the first offer he/she wants.
I would love to work with someone that brought everything together allowing me to put cash offers on properties.
As you know this has been on my radar for the last two years. As clearfund points out, there are considerable hurdles, and there’s risk for all.
But I am onto a good source right now, here are their terms:
2% up front, monthly payments based on 8% to 10% annual interest.
Take your hand off my wallet for a moment, because I’m not sure splitting the upfront vig is enough to make a difference – or would it?
For those who have a CAR purchase contract handy, note paragraph 3K. Even if you say that you are making a cash offer, you are allowed to pursue alternative financing – but the seller doesn’t have to cooperate.
So if you can get by with a 30-day escrow, and can get the appraiser into the house, this is preferred to paying cash, and refinancing.
It’s because the refinancing would be seen as a “cash-out refi”, and require six months seasoning to be able to get a decent rate.
Would you take 8% to 10% now, knowing you couldn’t refinance for six months?
Not only are you paying 6-months worth of payments at the high rate, but you don’t know what the eventual rate will be.
Willing to take a chance?
What LTC is this lender’s target…usually much lower than people expect…
Great video and commentary.
Agreed about the nice view, but I wouldn’t want to tear that one down and rebuild — the rest of the homes on the street look extremely dated. What a shame those ugly houses were built there originally rather than something with at least a trace of style. Man, that ’50s-’70s era just ruined California.
The subject house is also an architectural mess (note the garage door oddly shifted off-center to the right, from under the garage peak!).
Still sucks to lose, especially when you’ve invested a lot of time/prep and rolled in the highest bid (not offer!) to boot.
Deb – Agreed, lenders are 100% PITA. We hate that we’re forced into all cash purchases instead of buying with purchase financing.
However, the possible upside in 10 years is very attractive so the added work seems worthwhile.
Today, most of our clients view real estate as a ‘high yield CD’ (6%+) with an option on future growth. Most are more interested in ‘batting for average’ than ‘swinging for the fences’.
The people that offer all cash, 7 day close will get the sellers attention. Cash is king right now. It is hard to get a killer deal without it.
Does the 6-month seasoning also apply to a regular purchase loan? I’m wondering if the hard-money lender could buy the home, and then turnaround and sell to the actual buyer with traditional financing.
Travis,
It would work on a regular listing, as long as the appraisal came in. On REO listings, both Fannie Mae and BofA have instituted a new no-flip rule for 60 days.
Here’s what came in yesterday:
Bank of America is notifying agents of a new policy that will help stabilize communities impacted by foreclosure. Effective immediately, the actions a buyer may take within 60 days following the purchase of an REO property are restricted.
REO agents are asked to inform all cash buyers that the following verbiage will now appear on purchase contracts and deeds:
The Grantee(s), or purchaser(s), of the Property may not re-sell, record an additional conveyance document, or otherwise transfer title to the Property within 60 days following the Grantor’s execution of this Deed.
Action Required:
In the comments section of the Multiple Listing Service (MLS), REO agents must indicate that all cash offers will have re-conveyance restriction verbiage on the deed. Agents should include verbiage such as, “Cash transactions are subject to special deed restrictions.”
Set proper expectations with buyers and their agents regarding the deed restriction for cash purchase. This policy does not impact buyers using financing to purchase an REO property.
I am in Vista Pacific, I know this listing. I always keep an eye on spinnaker hill.
2 bedroom is the deal breaker at least for me. Need min 3. Well the kids haven’t grown up yet. And there is no land to put another extra bedroom.
That could be the reason it’s not going.
Would you take 8% to 10% now, knowing you couldn’t refinance for six months?
Not only are you paying 6-months worth of payments at the high rate, but you don’t know what the eventual rate will be.
—
At this stage of the game, things look good. If the buyer wants the home that badly and the cash offer could drastically increase their chance…
Unfortunately (and even I’ve been looking), there hasn’t been a “cut and dry” solution yet that would benefit almost every J6P that walked through the door for this kind of theoretical solution.
But, the steps and ideas do bring things a bit closer to something working out at some point.
It’s because the refinancing would be seen as a “cash-out refi”
And refi’s are recourse, too.
p.s.: I thought shadash’s description pretty much matched your proposed trustee sale endeavor.
Dealing with the banks is frustrating, no doubt. It takes forever to get answers and everybody is taking their sweet time. We first lost our offer on an REO to somebody else, but at closing time the bank found out that he had a bankruptcy about three years ago and they cancelled escrow and contacted us again. We got the home after all, I have no idea why they didn’t find out about the problems with the other buyer sooner. Anyway – turns out escrow with a BoA appointed escrow company it as close to a nightmare as it gets – but we made it through. 😉 Good luck with the next one, Jim – I’m sure your buyers are disappointed.
Saw this one in person … Its the ONE for your money… but may not work for families with Kids. Very very Niche for old and wealthy.
To annonymous at #17 … my offer for this is 900k … I just dont have it all cash. Also remember its 1970s built 2 room for close to a Million in CASH. Do you really think “its Looking Good” on Coast?
$680K at the court house steps and no takers? Excuse me while I dab my eyes.
Kishan…How was Jim’s 825K bid the highest yet you are claiming to have offered 900K? Maybe you looked at another property?
From the data I see the coast is slowly trending back to 2001 prices. I have seen many that have sold recently at there 2002-2003 price. This one sold in Feb 2003 for 775K, so if it went for 825K or less as Jim stated, it is close the that point.
I am sure the guy thought he was getting a deal in 2008 when he paid 1.1M for this one, it was listed for 1.275M.