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$1,000 Grand

Sep 26th, 2007 by IrvineRenter 

Barenaked Ladies If I Had a Million Dollars

If I had a million dollars (If I had a million dollars)
Well I’d buy you a house (I’d buy you a house)
And if I had a million dollars (If I had a million dollars)
I’d buy you furniture for your house (maybe a nice chesterfield or an ottoman)
And if I had a million dollars (If I had a million dollars)
Well I’d buy you a K-Car (a nice reliant automobile)
And if I had a million dollars, I’d buy your love

If I had a million dollars I’d build a tree-fort in our yard
If I had a million dollars you could help, it wouldn’t be that hard

If I had a million dollars -- Barenaked Ladies

Link to Music Video

Million Dollar Bill

$1,000 Grand: a million dollars. Today's WTF award winner thinks his house has appreciated $1,108,000 in the last year -- a year in which we have shown rollbacks of 10%-20%. We even documented a neighbor who went into foreclosure and sold at a 20% loss, but somehow this house has appreciated 25%. WTF?

25 Grandview Front 25 Grandview Kitchen

Asking Price: $4,495,000IrvineRenter

Income Requirement: $1,123,750

Downpayment Needed: $899,000

Purchase Price: $3,387,000

Purchase Date: 5/19/2006

Address: 25 Grandview, Irvine, CA 92603

Beds: 5WTF
Baths: 5.5
Sq. Ft.: 5,900
$/Sq. Ft.: $762
Lot Size: 0.32 acres
Type: Single Family Residence
Style: French, Traditional
Year Built: 2006
Stories: Two Levels25 Grandview View
View(s): City Lights, Hills, Mountain, Panoramic, Trees/Woods, Valley, Has View
Area: Turtle Ridge
County: Orange
MLS#: U7003538
Status: Active
On Redfin: 37 days

From Redfin, "Beautiful La Cima estate in Turtle Ridge. 5 Bed, 5.5 bath with exceptional panoramic views of hills and city lights. Built in 2006 by Laing Luxury, enjoy an upstaris Master and a downstairs Jr Suite, downstairs playroom, and upstairs bonus room. 4-car garage, 1,200 bottle climate-controlled wine cellar, pre-wired for custom sound in and out. Approved plans for custom pool and spa."

Approved plans? You mean you want a million dollars more than you paid, and you didn't even bother building the pool? WTF?

Maybe this seller put a million dollars worth of wine in the cellar? He must have added some value...

This appears to have been purchased new from the builder. Nice to know the builder found their bagholder.

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Kool Aid Man

Weren't the bubble years great? You could just buy a property, hold it for a year, and make a million dollars. Isn't that the way it works? Everyone is making 25% more money each year, right?

When you see a listing like this, do you get a sense of what a Ponzi Scheme this whole bubble really was? When does it all end? Will this house be worth $6,000,000 next year, and $8,000,000 the year after that?

This seller is certifiably crazy in my opinion. Do you think kool aid intoxication a disease? I wonder if there is a treatment? I suppose this seller could be made to read the Irvine Housing Blog every day. A few weeks of reading here should cure almost anyone.

 


Posted in House Flips

A Buyer’s Market

Sep 24th, 2007 by IrvineRenter 

IrvineRenter One of the most poignant songs about the frustration and disappointment of unrequited love is Bonnie Raitt's "I Can't Make You Love Me." With a little retooling of the lyrics, it could be equally expressive of the frustration and disappointment of failing to sell a home.

Bonnie Raitt on Video

Bring down the price, bring down the rent
Let me pay back, the money I was lent
Forclose on me, for all of my buys
Just help me close, please qualify -- please qualify for me

Cause I can't make you buy me if you don't
I can't make a good deal, I owe too much on my note
I'm near a park, with beautiful flowers
I'll go way down on price, I'll re-tile the shower
Bonnie Raitt
but you won't, no you won't
Cause I can't make you buy me if you don't

I'll close my eyes, then I won't see
The fall of the market all around me
Foreclosure will come and I'll do what's right
I'll borrow 'til then, to the very last night
And I will give up this fight

Cause I can't make you buy me if you don't
I can't make a good deal, I owe too much on my note
I'm near a park, with beautiful flowers
I'll go way down on price, I'll re-tile the shower
but you won't, no you won't
Cause I can't make you buy me if you don't

I Can't Make You Buy Me -- IrvineRenter

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When the market turned up in the late 1990's the balance of power in the market shifted. During the last decline, the buyers had an advantage. During the bubble the advantage went to the sellers. The seller's market went on for so long and became so feverish that people have forgotten (or may never have known) what it was like to see buyers in control of the action. The purpose of this post is to re-educate buyers on how to behave in a buyer's market.

Buyers have the Power

As a buyer, you must remember you are the one in control. You are the scarce commodity in the marketplace. The seller is one of many for you to chose from, and they are all desperate. They need you. You don't need them. No matter who you buy from, you are going to leave all the other sellers disappointed because they are going to continue to be trapped in their homedebtor's prison. You can't please everyone, so focus on pleasing yourself.Screw the Sellers

Screw the Sellers

Don't become concerned with the sellers needs, wants and problems. Does it matter to you if this house is their entire savings for retirement? Do you care if a sale below a certain price puts the seller into bankruptcy? If these issues matter to you, ask yourself this, "Would you give them money if you were not buying their home?" Unless you are running a charity, you should not care about the consequences of someone else's financial decisions. They created their own problems, it is not your responsibility to solve it by overpaying for a house.

Pay the Lowest Possible Price

This may sound like common sense, but the behavior of knife catchers over the last couple of years shows otherwise. Don't ask for or take any incentives, and pay your own closing costs. You are paying for this stuff, it is just buried in your loan. You will be paying interest on this purchase for the next 30 years, and you will be paying a 1% property tax on these costs for as long as you own the house. You are far, far better off lowering the price and foregoing the incentives and paying your own closing costs.

Use a Buyer's Brokerage Like RedfinRedfin

Redfin and other buyers brokerage typically kick back 2% to you at closing. Work out a deal with them in advance where they will agree to take a 1% commission at the closing so you can lower the price by 2%. Again, you are paying taxes on the purchase price, so you want to make this as low as possible.

Your First Offer is Your Best Offer

This is the most counter-intuitive part of buying in a buyers market. Ordinarily sellers, or more accurately the seller's realtor, try to create a sense of urgency to buy the house. They want you to think other people are looking, there is going to be a bidding war, you need to get your offer in today, etc. Remember, in a buyer's market these ploys are all lies. You are the only buyer, and you can take as long as you want to buy the house. Your task in negotiating is to create a sense of urgency and panic in the seller. This is why you make your first offer your best offer.

First offer

Start with a bid at least 10% below asking price; however, it can be less if the most you are willing to pay is less. Lower your bid as follows:

  • If you are actively bidding on the property, make your offers expire in 5 days. If you are still interested in the property resubmit a fractionally-lower offer after 7 days (make them sweat for 2 days.) Don't make is so much lower as to lose consideration, but make it enough lower that the seller gets the message that they need to come to your price before it gets any lower.
  • If the seller makes a counter offer, retract your offer and resubmit a lower one. Works the same as the time decay offer above. After you have lowered your offer a few times, the seller may panic and take your offer before it goes any lower. This is what you are after.
  • Lower your offer $500 each time you speak with the seller's realtor. Every time they communicate with you, they will pressure you to buy. Lower your bid each time they speak with you to send a message that their pressure is not working, and it is, in fact, hurting their client.
  • Lower your offer $2,000 if the realtor uses one of the standard lies I mentioned above.
  • If the realtor tells you there is another bidder on the property, immediately withdraw your offer and tell them to call you if it falls out of escrow with the other buyer. Since this statement from the realtor is almost certainly a lie, it will cause them to have to explain to their client why the only buyer around has pulled their offer.

Don't Close the GapClose the Gap

When the seller starts to counter-offer, it is very tempting to agree to their price to close the deal, particularly if they are below your original offer. Don't do it. In a buyer's market, the seller will come to you. You have the power. However, if they are below your original offer, and if you really, really want the house, you may raise your offer one time, but do not get closer than 1% to their counter-offer. The selling broker makes a 3% commission, and the realtor you have been dealing with probably makes 1.5%. By getting to within 1% of the seller's counter-offer, the realtor can choose to give up part of their commission to make the deal. Since they are desperate as well, you should go ahead and squeeze them. A 1/2% commission is better than no commission.

After you have agreed on price

Just because you have reached agreement on the sales price does not mean you are finished making this deal the best it can be. Go through your inspection sheet and establish holdbacks for all repairs. Make the holdback amount 150% of the lowest qualified bid. Say you are doing this as an incentive for the owner to get this work done before move-in. Also, if there are decorative items you do not care for, use the same holdback procedure for these items. The time to get your granite tops is before you move in.My Way or the Highway

If you are really tough

For those of you with nerves of steel (and a desire to abuse your power,) I have a few additional suggestions for you:

  • A week before closing, tell the seller or realtor you are considering pulling out of the deal because you have found another property you like. See if they offer you an additional discount.
  • Three days before the closing, withdraw your offer and say you want an additional $1,000 off. Offer no explanation: You are only doing it because you can.The Devil
  • Ask the seller to write you an emotional letter thanking you for purchasing their home. Send back the first one they give you saying they did not praise you enough.

Conclusion

Not everyone has what it takes to implement all of these price-busting techniques. However, the more of these you put into practice, the lower the price you will pay for the home you want. You will never see the seller or the seller's realtor ever again. It does not matter if you offend them. In the end, they will be relieved you bought the house even if you made their lives hell in the process.

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As a buyer, it is time to be upbeat. There is a song that uniquely captures the joy of finding what makes you happy: Sade's "Your Love is King." If reworked, it also captures the joy of buyers in a buyer's market.

Sade on Video

Your cash is king,
Keep you in my bank.
Your cash is king,
never need to thank.
Your diamond ring,
round and round and round my head.
Sade
Wiping all the debt from me.
It's making my soul sing.
Having the very best of things.
I'm crying out for more.

Your cash is king,
Keep you in my bank.
Your cash is king.
You're the ruler of my account.
Your diamond ring,
round and round and round my head.
Wiping all the debt from me.
It's making my soul sing.
I'm crying out for more.
Your cash is king.

I'm spending more, I'm spending.
You're making me rich, inside.

King

Your cash is king,
Keep you in my bank.
Your cash is king,
never need to thank.
Your diamond ring,
round and round and round my head.
Wiping all the debt from me.
It's making my soul sing.
Having the very best of things.
I'm crying out for more.

Wiping all the debt from me.
It's making my soul sing.
I'm crying out for more.
Your cash is king.

This is no bad debt
This is no sad and sorry dream.
This is no bad debt
Your cash...
your cash is real... gotta keep you in my bank,

never, never need to part,
spend me.
Never letting go,
never letting go,
never going to give it up.
I'm spending,
you're making me rich...

Your Cash is King -- IrvineRenter


Home Sales Data thru 9-18-2007

Sep 23rd, 2007 by IrvineRenter 

Median sale price

Sales volume

ZIP

code

August

% change

from ’06

August

% change

from ’06

92602

$659,000

-16.6%

17

-58.5%

92603

$1,150,000

31.4%

23

-36.1%

92604

$593,500

-12.7%

20

-20.0%

92606

$742,500

-5.1%

13

-13.3%

92612

$603,000

-5.0%

25

-19.4%

92614

$600,000

3.4%

19

-36.7%

92618

$640,000

19.2%

15

-11.8%

92620

$815,000

-3.6%

46

-28.1%

Look at those sales volume numbers. Yikes!


Posted in News

Lowest Priced 3/2s in Irvine

Sep 22nd, 2007 by IrvineRenter 

Just so you know where the leading edge of the market is...

BriarwoodBriarwood Kitchen

Price: $425,000IrvineRenter

177 Briarwood, Irvine, CA 92604

Beds: 3
Baths: 2
Sq. Ft.: 1,150
$/Sq. Ft.: $370
Lot Size: -
Type: Condominium
Style: Other
Year Built: 1978
Stories: One Level
Area: Woodbridge
County: Orange
MLS#: S486749
Status: Active
On Redfin: 139 days
Unsold in 90+ days

From Redfin, "* * FANTASTIC BUY * * 3 BR 2 BA single level with HUGE backyard, come see the rose garden. Great Location. Everything has been upgraded, from the neutral tiled floors to the granite counters, kitchen cabinets & appliances. 3 Large bedrooms & 2 upgraded bathrooms also with granite & newer cabinets . Newer mirror closets with organizer. It is very lite and brite and definately a 10++ Newer water heater. Walk to all the fantastic amenities, pool, spa, park, tennis, basket & volleyball, schools & shopping."

HUGE backyard. It is a freakin' patio! Give me a break.

A 10++? Maybe on a scale from 1 to 100.

" lite and brite and definately" Three misspellings in 5 words, congratulations. I hope she is thankful for the word "and."

How can realtors say stupid things like this?

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Oval FrontOval Kitchen

Price: $429,000IrvineRenter

133 Oval RD #2, Irvine, CA 92604

Beds: 3
Baths: 2
Sq. Ft.: 1,110
$/Sq. Ft.: $386
Lot Size: -
Type: Condominium
Style: Other
Year Built: 1972
Stories: Two Levels
Area: El Camino Real
County: Orange
MLS#: S495498
Status: Active
On Redfin: 78 days

From Redfin, "BEST PRICED & MOST REMODELLED UNIT ON THE MARKET. BRAZILIAN CHERRY WOOD FLOORS, RECESSED LIGHTING, REFURBISHED CABINETS, NEW APPLIANCES, MAYTAG STOVE, SCRAPED CEILINGS, NEW PAINT, BRAND NEW GORGEOUS DECORATIVE BATHROOM HAS TILES/BORDER ON WALLS & GRANITE SINK. SURROUND SYSTEM IN LIVING ROOM, MASTER WITH WALK IN CLOSET & CLOSET ORGANIZERS. SPACIOUS LAUNDRY ROOM. EXTRA STORAGE OUTSIDE. BEAUTIFUL SLATE FLOORS IN LARGE BACK PATIO. OPEN FLOORPLAN. SEE THE VIRTUAL TOUR!! PRICE REDUCED"

WHY THE ALL CAPS? I find all caps to be very hard on my eyes. It is painful to read that description.

Are any of you impressed by Brazilian Cherry Wood floors? Sounds rare and exotic, doesn't it?


Posted in Uncategorized

Happy

Sep 21st, 2007 by IrvineRenter 

Smiley FaceHere is a little song I wrote
You might want to sing it note for note
Don't worry be happy
In every life we have some trouble
When you worry you make it double
Don't worry, be happy......

Ain't got no place to lay your head
Somebody came and took your bed
Don't worry, be happy
The land lord say your rent is late
He may have to litigate
Don't worry, be happy
Look at me I am happy
Don't worry, be happy

Don't Worry, Be Happy -- Bob Marley / Bobby McFerrin

Link to Music Video

Whether you are a renter or a homeowner, we all have our problems. Don't worry, be happy.

Taquitz Front Taquitz Kitchen

Asking Price: $498,900IrvineRenter

Income Requirement: $124,725

Downpayment Needed: $99,780

Purchase Price: $509,000

Purchase Date: 8/18/2004

Address: 20 Taquitz #38, Irvine, CA 92602

Beds: 2
Baths: 2
Sq. Ft.: 1,400
$/Sq. Ft.: $356
Lot Size: -
Type: Condominium
Style: ContemporaryRollback
Year Built: 2002
Stories: Two Levels
View(s): Mountain
Area: Northpark
County: Orange
MLS#: S501493
Status: Active
On Redfin: 34 days

From Redfin, "MISSION IMPOSSIBLE TO SELL THIS FABULOUS NEWER CONDO IN 5 DAYS! Premier Location. Very Inviting Floor Plan w/ Formal Dining Area, Gourmet Kitchen Open to Entertainers Great Room. Decorator Paint, Lighting, Designer Carpet Throughout!Private Master Retreat w/ Walk-in Closet. Close to Freeways, Irvine Marketplace, New Schools. .Voted Best Neighborhood in Irvine. .. .Fabulous Value!"

THE CAPS LOCK IS BACK, AND MISSION IMPOSSIBLE IS RIGHT.Taquitz Table

So are the exclamation points! Yippee!!!

Why the "w/"? A "w/" saves 2 characters over typing "with."

A gourmet kitchen, of course.

You think we would have embarrassed enough of these realtors to quit doing this.

BTW, I really like that dining room table. Do you think they would throw it in to close the deal? (They can keep that awful painting.) I have never seen pill bottles used as a centerpiece before. Have you? Great staging. That should help is sell in 5 days... Not.

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Another day, another 2004 rollback. Is this making you happy?

If this seller gets their asking price, they stand to lose $40,034 assuming a 6% commission. I have to imagine when this property sells, they will be able to quit worrying and be happy...Smiley Face

On a personal note, I imagine all of you can look back on different periods in your life when you were relatively free of worries and very happy. I am enjoying one of those periods right now. Life is good. My family life is great, and I look forward to coming home each evening. I have no debts and any of the worries that go along with it. I enjoy my work and my other productive hobbies. I have a creative outlet on this blog and the sense of community and social contact that comes with it. What more can anyone ask of life?

And so concludes another week at the Irvine Housing Blog. Come join us next week as we continue to chronicle ‘the seventh circle of real estate hell.’

Have a great weekend. smile


Posted in Price Rollback

Run Away

Sep 20th, 2007 by IrvineRenter 

Basement JaxxEverybody's all gone
Everybody's had enough
It's gettin' ugly out
I'm so tired so tired so tired so take me home

It's getting late (getting late)
Come here and wait for me
Let's get out of this place
It never changes, it just stays the same
So take me home

(Come on, let's go)
I just wanna run away, I've had it here
I just gotta get out of here, I've had it here
I just wanna run away, I'm done with this...

Take Me Back To Your House -- Basement Jaxx

Link to Music Video

The market is getting pretty ugly right now. Do you get the feeling some of these sellers have just had enough? Over 100 days on the market after rolling prices back to 2004 levels? If I were them, I would want to run away and just be done with it.

213 Huntington Inside 213 Huntington Kitchen

Asking Price: $399,000IrvineRenter

Income Requirement: $99,750

Downpayment Needed: $79,800

Purchase Price: $399,000

Purchase Date: 7/15/2004

Address: 213 Huntington, Irvine, CA 92620

Beds: 2
Baths: 2
Sq. Ft.: 987
$/Sq. Ft.: $404Rollback
Lot Size: -
Type: Condominium
Style: Contemporary
Year Built: 1986
Stories: One Level
Area: Northwood
County: Orange
MLS#: S487213
Status: Active
On Redfin: 133 days
Unsold in 90+ days

From Redfin, "Nice floor plan 2 Bedroom 2 Bath, with new laminate floors, master bathroom upgraded. Well kept unit. Close to UC Irvine, Close to shopping malls, restaurants, church and easy access to Hi-way 5"

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You have to make almost $100K to own a small, twenty year old, two-bedroom apartment in Irvine. Does that feel right to you?

Another 2004 rollback at the low end of the market. At 133 days on the market, they are not done lowering their price. I think we have seen enough of these to conclude the low end of the market is now at 2004 pricing and still declining. The dreams of later buyers hoping to get out at breakeven are starting to look like sad fantasies which will never come true.

If this seller gets their asking price (which seems unlikely), and they pay a 6% commission, they stand to lose $23,940. Doesn't sound like much, but this is a summer 2004 purchase. Those weren't supposed to lose money...


Posted in Price Rollback

Catch a Wave

Sep 19th, 2007 by IrvineRenter 

Beach Boys Catch a wave and you're sitting on top of the world
Don't be afraid to try the greatest sport around
Everybody tries it once
Those who don't just have to put it down
You paddle out turn around and raise
And baby thats all there is to the coastline craze
You gotta catch a wave and you're sittin' on top of the world

Catch a Wave -- The Beach Boys

Link to Video

Isn't flipping houses a bit like surfing? Just catch a wave and ride it to financial prosperity. Today's flipper who bought a Pacific Crest home certainly hopes so.

Pacific Crest Front Pacific Crest Kitchen

Asking Price: $979,900IrvineRenter

Income Requirement: $244,975

Downpayment Needed: $195,980

Purchase Price: $791,000

Purchase Date: 8/15/2007

Address: 15 Pacific Crest, Irvine, CA 92602

Knife Catcher Award

Beds: 4
Baths: 3.5
Sq. Ft.: 2,557
$/Sq. Ft.: $383
Lot Size: -
Type: Single Family Residence
Style: Modern
Year Built: 2002
Stories: Three or More Levels
Area: Northpark
County: Orange
MLS#: S504923
Status: Active
On Redfin: 6 days

From Redfin, "4 Bedroom plus 3rd floor bonus room or master suite with full bath, 2nd floor bonus room for games/den, ground floor living/kitchen open floor plan with office or additional family room. Seperate laundry room on 2nd floor. Upgraded tiles on ground floor, fireplace, built-in entertainment center, huge kitchen with center island and lots of cabinet space."

Only 1 misspelled word. Not bad...

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So all of you making $250K, is this your dream home? Do you like the white tile kitchen? Is this an estate worthy of someone with such a high income, or is this a nondescript tract home more suited to someone making $150K? The market will decide.

Kool Aid Man

I have to give this flipper credit for nerve. To drop $791K on a house in this market environment takes courage. I think it is remarkably foolish, but the market may prove me wrong.

In today's market, this does seem to be a good purchase price at $791K. You would think a buyer would see this as reflective of the overall market, but if you are drinking the kool aid, this is a steal. Of course, this sale went through before our most recent round of credit tightening, so this flipper may regret the purchase, but this regret certainly isn't reflected in the asking price.

Surfing is fun, but sometimes it does not go as planned.


Posted in House Flips
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