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  #61  
Old August 11th, 2015, 02:45 PM
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Quote:
Originally Posted by Jackie Treehorn View Post

It's the folks who buy $1MM + homes who really belong in $500-$750k homes that go tits up when they loose 10% of a $1.5MM home when their equity evaporates.


Just buy within your means and you'll be fine no matter what.
Exactly. We had an agent who wouldn't put in an offer for us on a home because she said it was too soon to offer 8% below ask. I promptly reminded her that the market was millions of people offering what they thought a home was worth based on what they could reasonably afford (or unreasonably) and the comps. And considering she didn't know the seller, she had no idea if they'd be willing/unwilling to accept our offer. It felt artificial being told I needed to bid more than what I thought the home was actually worth...especially when the home next to it with a larger yard in superior condition and 2 add'l bedrooms had just sold the month before for what they were now asking.

In the end, based on your aversion to risk, you should get pre-approved for what you can afford, and be ready to bid on whatever you think a home is worth to you. It may be worth more to someone else and you may lose out on a few...but you may not. Just be smart about it. I will say that since your budget seems to be right around where jumbo vs. non-jumbo loans are classified, to be mindful of the differences in mortgage rates and structures, and whether it'll make sense for you to buy any points while still being able to avoid any PMI if you can.

Our offer STILL hasn't been accepted, but we're supposed to have final word tomorrow from the sellers. If not, we're pulling our offer and moving on.
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  #62  
Old August 11th, 2015, 03:17 PM
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What I would do all over again is buy small with full intention of renting it when time comes to move on. Once the tenants have paid the mortgages off the extra income stream is helpful when you have kids in college and other big ticket headaches to deal with.
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  #63  
Old August 11th, 2015, 04:43 PM
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What I would do all over again is buy small with full intention of renting it when time comes to move on. Once the tenants have paid the mortgages off the extra income stream is helpful when you have kids in college and other big ticket headaches to deal with.
X2. Great advice when it works for your personal situation.
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  #64  
Old August 12th, 2015, 08:25 PM
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I know this has nothing to do with this thread anymore, but our amended offer ($10k under ask after initially offering full ask and not receiving a prompt response) was finally accepted today.
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  #65  
Old August 12th, 2015, 09:02 PM
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Originally Posted by rijosho View Post
I know this has nothing to do with this thread anymore, but our amended offer ($10k under ask after initially offering full ask and not receiving a prompt response) was finally accepted today.
Stressful during the interim I'm sure, but sounds like a win/win for you! Nice
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  #66  
Old August 12th, 2015, 09:48 PM
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Originally Posted by rijosho View Post
I know this has nothing to do with this thread anymore, but our amended offer ($10k under ask after initially offering full ask and not receiving a prompt response) was finally accepted today.
Congrats!
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  #67  
Old August 12th, 2015, 09:50 PM
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Fantastic. Comps still good?
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  #68  
Old August 12th, 2015, 09:54 PM
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Quote:
Originally Posted by rijosho View Post
I know this has nothing to do with this thread anymore, but our amended offer ($10k under ask after initially offering full ask and not receiving a prompt response) was finally accepted today.
Nice! There definitely needs to be a penalty for sitting on a real offer and trying to use it as leverage for a better price.
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  #69  
Old August 12th, 2015, 10:02 PM
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Yeah, agreed! Serves them right for being greedy.
Pigs get fat, hogs get slaughtered!
Anyway, congrats Josh.

Also, you know it's 2007/2008 when:
Neil pulls the trigger on a new Wraith by wringing out the equity in residential single family investment properties!!!!
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  #70  
Old August 12th, 2015, 10:06 PM
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Quote:
Originally Posted by Jackie Treehorn View Post
Yeah, agreed! Serves them right for being greedy.
Pigs get fat, hogs get slaughtered!
Anyway, congrats Josh.

Also, you know it's 2007/2008 when:
Neil pulls the trigger on a new Wraith by wringing out the equity in residential single family investment properties!!!!

Haha!!!
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  #71  
Old August 13th, 2015, 12:01 AM
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Congrats Josh !
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  #72  
Old August 13th, 2015, 01:22 AM
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Originally Posted by rijosho View Post
I know this has nothing to do with this thread anymore, but our amended offer ($10k under ask after initially offering full ask and not receiving a prompt response) was finally accepted today.
Good deal!
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  #73  
Old August 13th, 2015, 01:35 AM
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Fantastic! That's the way to play! Congrats!
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  #74  
Old August 13th, 2015, 07:39 AM
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Originally Posted by rijosho View Post
I know this has nothing to do with this thread anymore, but our amended offer ($10k under ask after initially offering full ask and not receiving a prompt response) was finally accepted today.


I have stories like this for days and days and they never get old. I love hearing about how shortsightedness costs people. I see this on both commercial and residential transactions, but it's most astounding at an institutional level. For example when a bank owns a property. There is such a real-time disconnect when the market is dynamic. I've seen Special Servicers for bad commercial loans unload office buildings for millions less than they should because they f*cked around with real buyers at the beginning.


Now, I'm a small fish, but my own personal story involves a small office condominium I purchased in late 2010. The story unfolds over nearly a year so I'll just give a brief chronology:


-2/2009: office offered for sale as a "short sale" at $160,000 (amount owed on principal was $180***)
-4/2009: I take a look at it and figure there is no way it's worth even $140,000, or $130,000 so why even bother with an offer.
-6/2009: they lower the asking price to $140,000 and now they have my attention, sorta
-8/2009: they lower the asking price again to $130,000 and I look at it more closely but still am apprehensive given the crazy market conditions, but eventually realize that I need some office space and just make a damn offer.
9/2009: I submit a cash offer for $90,000 (no contingencies, no due diligence period, no inspection) and tell them I can close in as little time as their lawyers can get their act together, a week, 2-weeks whatever. The offer expires in 48 hours without even a response. Okay, I get it. I move on.
-11/2009 - the broker calls me saying that the bank (special servicer) wants me to submit a new offer of $90,000 and they'll accept it. "Sorry, that was 2 months ago and I'm interested in other things now" I say. (I really had moved on). The broker explains that they were working with an old appraisal that had a value of $130,000 and they weren't allowed to accept an offer less than 10% of that number. Who knows what the effective date of the appraisal was, or if there even was one for $130,000 at all. So, being a little pissed off, I submit an offer of $75,000 same terms as last offer. No response.
12/2009 - broker calls saying they want me to resubmit and they'll accept it (like 3-weeks after the offer expired). Sorry pal! No my offer is $65,000 (same cash terms), because at this point I don't even want the fucking thing and I'm just messing with them. Again, radio silence for another month.
-1/2010 - broker wants another offer and he promises he will get it approved. Okay, but the DJIA is now at like a 7-handle (if my memory serves me) and I'm thinking about stockpiling cat food and ammunition at this point!!!!, not buying property, but what the heck, since I really don't care and these jokers deserve everything they get, I offer $55,000. At this point everyone HATES me! I'm laughing (I would have paid $90,000 less than 6 months ago). Broker tries telling me that my $65,000 offer is still open and that I'll lose my $5,000 deposit if I don't sing a purchase and sale at $65,000. At this point, now I'm pissed because I know my offer expired and they are talking out of their asses. Now, I want to teach them a lesson to spite them. My $55,000 offer expires and immediately the next day I submit an Offer for $45,000. By law, the broker MUST present all offers and I sort of wanted to embarrass him for wasting my time throughout this process. Broker apologizes saying he's under a lot pressure and he understands my frustration but if I just resubmit the offer at $55,000 we've got a deal. I agree but made them agree to pay ME a broker's commission because I was representing myself and I'm a licensed broker (which I stated from the beginning).


So, net result is that I ended up paying $52,*** for something that was on the loan books for $180,*** and at one time was completely fine with paying $90,000.


This is all because the seller was disconnected from reality and the dynamic market conditions. People get their heels dug in over a number they get stuck in their heads and it costs them dearly if they cannot see reality.


Josh, your seller could have heard that the property was worth "X" at a cocktail party from one of his/her real estate buddies, now.....forever, that property is worth "X" in their eyes. Forget about the fact that that real estate buddy could be a moron, or the market changes all the time (weekly in some cases).


I've purchased a lot of THINGS and bought high in some cases and stole some others, but one thing I've learned is that when you truly DON'T CARE if you buy or sell, you will usually do the very best.
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  #75  
Old August 13th, 2015, 08:14 AM
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Quote:
Originally Posted by Jackie Treehorn View Post
I have stories like this for days and days and they never get old. I love hearing about how shortsightedness costs people. I see this on both commercial and residential transactions, but it's most astounding at an institutional level. For example when a bank owns a property. There is such a real-time disconnect when the market is dynamic. I've seen Special Servicers for bad commercial loans unload office buildings for millions less than they should because they f*cked around with real buyers at the beginning. Now, I'm a small fish, but my own personal story involves a small office condominium I purchased in late 2010. The story unfolds over nearly a year so I'll just give a brief chronology: -2/2009: office offered for sale as a "short sale" at $160,000 (amount owed on principal was $180***) -4/2009: I take a look at it and figure there is no way it's worth even $140,000, or $130,000 so why even bother with an offer. -6/2009: they lower the asking price to $140,000 and now they have my attention, sorta -8/2009: they lower the asking price again to $130,000 and I look at it more closely but still am apprehensive given the crazy market conditions, but eventually realize that I need some office space and just make a damn offer. 9/2009: I submit a cash offer for $90,000 (no contingencies, no due diligence period, no inspection) and tell them I can close in as little time as their lawyers can get their act together, a week, 2-weeks whatever. The offer expires in 48 hours without even a response. Okay, I get it. I move on. -11/2009 - the broker calls me saying that the bank (special servicer) wants me to submit a new offer of $90,000 and they'll accept it. "Sorry, that was 2 months ago and I'm interested in other things now" I say. (I really had moved on). The broker explains that they were working with an old appraisal that had a value of $130,000 and they weren't allowed to accept an offer less than 10% of that number. Who knows what the effective date of the appraisal was, or if there even was one for $130,000 at all. So, being a little pissed off, I submit an offer of $75,000 same terms as last offer. No response. 12/2009 - broker calls saying they want me to resubmit and they'll accept it (like 3-weeks after the offer expired). Sorry pal! No my offer is $65,000 (same cash terms), because at this point I don't even want the fucking thing and I'm just messing with them. Again, radio silence for another month. -1/2010 - broker wants another offer and he promises he will get it approved. Okay, but the DJIA is now at like a 7-handle (if my memory serves me) and I'm thinking about stockpiling cat food and ammunition at this point!!!!, not buying property, but what the heck, since I really don't care and these jokers deserve everything they get, I offer $55,000. At this point everyone HATES me! I'm laughing (I would have paid $90,000 less than 6 months ago). Broker tries telling me that my $65,000 offer is still open and that I'll lose my $5,000 deposit if I don't sing a purchase and sale at $65,000. At this point, now I'm pissed because I know my offer expired and they are talking out of their asses. Now, I want to teach them a lesson to spite them. My $55,000 offer expires and immediately the next day I submit an Offer for $45,000. By law, the broker MUST present all offers and I sort of wanted to embarrass him for wasting my time throughout this process. Broker apologizes saying he's under a lot pressure and he understands my frustration but if I just resubmit the offer at $55,000 we've got a deal. I agree but made them agree to pay ME a broker's commission because I was representing myself and I'm a licensed broker (which I stated from the beginning). So, net result is that I ended up paying $52,*** for something that was on the loan books for $180,*** and at one time was completely fine with paying $90,000. This is all because the seller was disconnected from reality and the dynamic market conditions. People get their heels dug in over a number they get stuck in their heads and it costs them dearly if they cannot see reality. Josh, your seller could have heard that the property was worth "X" at a cocktail party from one of his/her real estate buddies, now.....forever, that property is worth "X" in their eyes. Forget about the fact that that real estate buddy could be a moron, or the market changes all the time (weekly in some cases). I've purchased a lot of THINGS and bought high in some cases and stole some others, but one thing I've learned is that when you truly DON'T CARE if you buy or sell, you will usually do the very best.
Wow - what a story!
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  #76  
Old August 13th, 2015, 08:48 AM
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Originally Posted by LostChord View Post
Wow - what a story!
I'm probably leaving out some stuff, but that is essentially what happened.


SO, as this relates to the thread. What happens if/when market conditions change (decelerate) or even reverse? Unlike most "preppers" and doomsday folks, I've been through a few cycles and realize that we (the US economy) is one of the most robust and stable places to invest. PERIOD. That's why we are being flooded with foreign investment right now. So, it's not just our own mistakes (QE, overleveraging etc.) that we need to consider, it is global uncertainty.


What I am saying is that as global economics change (for whatever reason), that additional foreign capital flooding the market dries up and we very quickly lose a considerable amount of qualified buyers (for lots of things; equities, real estate, vintage cars at Pebble Beach etc.) as the collective purchasing power of the market takes a ding.


I have no idea what the ultimate catalyst will be or if it will come in stages or all at once, or even when. I'm only saying that I'm seeing leverage and spending creep in all areas and it makes me nervous. I haven't seen a stat showing the average HH credit card debt vs. HH income in a while, but something tells me that it will show a steep upward trend in revolving leverage.


Being lean and without leverage helps weather these changes. On the flip side, leverage builds empires these days so it depends on how well you want to sleep at night.


For those of you entering in as first time homebuyers, congratulations! Don't try to time the market. Your home shouldn't be your sole investment, it should be a good, comfortable place to live that you can afford. You can't really go wrong if you can afford it and like where you live. I probably paid too much for my house (purchased one month before 9/11), but I wanted it and like the location. I don't care if it's worth 50% of what I paid for it (until I go to sell it). If I had to sell it 5 years later because of some 5/1-ARM, or god forbid had to refinance in 2009 because of a resetting mortgage, I'd have been in some trouble I bet. In a long-enough timeline you'll win. It's just the "house-flippers" who play that leap-frog game to try to get into a $2.0MM house by rolling equity gains in each house-flip with HH income under $200k that end up getting caught with their pants around their ankles.
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  #77  
Old August 24th, 2015, 09:17 AM
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How bad will it be today?
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  #78  
Old August 24th, 2015, 09:34 AM
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How bad will it be today?

Hold on for the ride.

I should have just gotten that other Defender...
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  #79  
Old August 24th, 2015, 10:13 AM
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Hold on for the ride.

I should have just gotten that other Defender...
Funny!
It doesn't take a Nostradamus to predict a market correction. It is bound to occur.
I'm not so worried about the equities market though. This is a natural correction or selloff. This is NOT a financial crisis. However, this is one indicator that the economy was (is) a little overheated, so maybe the equities market will expose some other weaknesses.


Let's see what happens.
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  #80  
Old August 24th, 2015, 10:17 AM
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Originally Posted by Jackie Treehorn View Post
Funny!
It doesn't take a Nostradamus to predict a market correction. It is bound to occur.
I'm not so worried about the equities market though. This is a natural correction or selloff. This is NOT a financial crisis. However, this is one indicator that the economy was (is) a little overheated, so maybe the equities market will expose some other weaknesses.


Let's see what happens.

Anything I can do to justify another one...

But seriously, let me tell you how happy I am that I got a Defender and didn't put my bonus into the markets earlier this year.

This correction is overdue. It just looks like it will be more violent then I would have guessed.
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