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A Buyer’s Market

Sep 24th, 2007 by 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

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



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

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 Redfin

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.

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 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.

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.
  • 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.


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.



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.

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.

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




% change

from ’06


% change

from ’06









































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...

Price: $425,000

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?



Price: $429,000

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


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


Sep 21st, 2007 by IrvineRenter 

Here 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.

Asking Price: $498,900

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: Contemporary
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!"


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.



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...

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.

Posted in Price Rollback

Run Away

Sep 20th, 2007 by IrvineRenter 

Everybody'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.

Asking Price: $399,000

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.: $404
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"



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 

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.

Asking Price: $979,900

Income Requirement: $244,975

Downpayment Needed: $195,980

Purchase Price: $791,000

Purchase Date: 8/15/2007

Address: 15 Pacific Crest, Irvine, CA 92602

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...



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.

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

You Ugly

Sep 18th, 2007 by IrvineRenter 

You have to sing along to this one...

Link to Music Video

U.G.L.Y you ain't got no alibi you ugly eh! Hey! You ugly
U.G.L.Y you ain't got no alibi you ugly eh! Hey! You ugly

I saw you walking down the street just the other day
I didn't see your damage from that far away
I should have got a clue when the kids started screaming
You walked up to me with your buck teeth a gleaming
Your hair was all frizzy and your face was a mess
I thought it was a sack but it's your favourite dress
You hurt the trees feelings and the birds all flew
I don't mean to insult you

Oh wait! Yes i do.

Your teeth are yellow, they're covered in mould
You're only fourteen you look a hundred years old
When looks were handed out you were last in line
Your face looks like where the sun don't shine
Did you fall off a building and land on your head
Or did a truck run over your face instead
There ain't no pill cos you ain't ill

You're ugly!
U.G.L.Y you ain't got no alibi you ugly eh! Hey! You ugly
U.G.L.Y you ain't got no alibi you ugly eh! Hey! You ugly

What you really need is to wear a mask
And book that plastic surgeon fast - (girl)
You're scary - you're hairy I heard about you
You're the main attraction at the city zoo
You're so fat and ugly with a belly full of flab
When you wear a yellow coat people shout out cab
(so funny)

You got eyes like a pig and your nose is big
And with hair like that you should be wearing a wig
Uncle fester remember him? I never knew that you had a twin
You can't disguise your googly eyes
In the miss ugly pageant you win first prize
Yo mama says you ugly -
You ugly!

Daphne & Celeste - U.G.L.Y.



When I saw this property, I couldn't help but be reminded of the song above and the picture at the bottom. This listing is the least desirable single family detached home in Irvine. Everything about this property is a negative:

  • It is 36 years old.
  • There is no back yard.
  • It only has 1 full bathroom.
  • The front elevation has no windows. It looks like a 3 car garage next to a 2 car garage. Nice...
  • The colors are awful. Check out the dark brown flooring and the blue cabinets and walls. The view of the block wall is a reminder of your prison sentence.
  • The living room has three incompatible shades of ugly.
  • The house itself is right on the 405 on ramp at Culver. A location guaranteed to have maximize noise and air pollution as people accelerate onto the freeway.
  • If that wasn't bad enough, it is adjacent to a huge power pole with enough electricity running through it to make your hair stand on end and give your children brain cancer. Perhaps the hum of the power lines drowns out the freeway noise. Who knows?

I would not live in this house.

Asking Price: $534,500

Income Requirement: $133,625

Downpayment Needed: $106,900

Bank Purchase Price: $594,915

Bank Purchase Date: 8/14/2007

FB Purchase Price: $520,000

FB Purchase Date: 8/10/2004

Address: 3922 Claremont ST, Irvine, CA 92614

Beds: 3
Baths: 1.75
Sq. Ft.: 1,222
$/Sq. Ft.: $437
Lot Size: 5,521 sq. ft.
Type: Single Family Residence
Style: Traditional
Year Built: 1971
Stories: One Level
Area: Westpark
County: Orange
MLS#: S503237
Status: Active
On Redfin: 19 days

From Redfin, "You'll love this great home in a wonderful school district. The light and bright floorplan features neutral carpet, pergo flooring and cathedral ceilings. The large yard provides lots of space for entertaining & play. This home is located just steps to the community pool and park. Plus, there are no Mello Roos! This is a bank owned property. Bring us an offer!"



This is an interesting property for many reasons:

First, this is another example of a HELOC implosion. Why would a bank foreclose at a number $75,000 over the original purchase price if this had not been refinanced to some peak value appraisal? I suspect this was purchased by the second mortgage holder hoping to avoid a complete loss. The first mortgage holder probably would not have bid this property up over 80% of the original purchase price ($416,000.) The FB doesn't care because they took their money out already.

Second, this is the first example I have seen of a bank offering a property at a cut-rate price in order to move it quickly. From the REOs we have observed to date, the banks start off at an amount over their foreclosure bid price and lower it until it sells. This pricing is a departure from that pattern.

Third, This is the first single-family detached home I have seen in Westpark rolling back to 2004 pricing. Westpark has held up pretty well to date. This property will not help the neighborhood comps.

Finally, it is one of the least desirable SFDs I have seen in a while. During the rally, quality did not matter. Now that someone who buys this may have to live there for several years to wait out the market, desirability is becoming a concern. I think they will have to lower the price further to attract a buyer to this dog.

For the record, if the bank gets its asking price and pays a 6% commission, they stand to lose $92,485.

Posted in Real Estate Owned
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