Great info, IR.
——-

Irvine Renter,

Oh My, that is some ruthless negotiating tactics.  Don’t quiver, don’t second guess and don’t hesitate!  I like!

Bravo!

Beautiful!
That bit about the letter is a bit much, do you want them driving by their old place polishing their guns?

IR,

You really are a sadistic bastard with that bit about the emotional letter.  ha ha.  The aspect of the real-estate mania I found the most distasteful was the amazingly high number of sellers making their buyers jump through meaningless hoops such as emotional love letters to their home, or promises to keep the apple tree or the white rose bush. 

There is one thing I think it behooves us to keep in mind lest we become what we most despise:  the bastard sellers that made us write emotional notes are most likely not the same people as the desperate sellers from whom we would demand said notes.  In point of fact, they are much more likely to be the poor people from whom letters were required in the first place!

I pity a poor, naive young couple that bought more house then they could afford in 2004, and were forced to write a demeaning note praising the kitchen wallpaper and promising to keep “Bir-Schnif-Schnif” the lawn gnome in his place of honor.  Now it’s late 2007, they are teetering towards bankruptcy, and some SOB is demanding them to write an emotional letter thanking them for removing the anvil from around their necks.  That thought makes a shy boy like me contemplate mass murder…

On a more serious note, I concur that playing hardball is the right thing to do.  The last house I bought my wife and I played serious hardball concerning the repairs, and I think Mahmoud Ahmadinejad learned some of his brinkmanship techniques from my wife!  When it comes to repairs in a down market, DO NOT COMPROMISE.  If they don’t get the house into top condition before you move in, then you will have to spend more.  Make sure they uphold their end of the contract, because once money changes hands they will not do a damned thing.

Carl

It’s interesting that all the online rent vs. buy calculators are automatically figuring 30% depreciation into current house prices.

If the financial types are figuring this much depreciation in prices over the next couple of years, should I pay more?

If a place has been on the market for 9 months, is an offer of 10% beneath ask price not a little too generous? Especially if the rent/buy comparision shows that the place is priced at 40% more than it should be to cash-flow and/or be at parity with local rents?

I have a number of places I like in my sights, but I am figuring a 30% discount from current offering prices AT LEAST. For not only do they need to be that much cheaper to be at rent-parity, but I also want to buy at a price at which I could hope to sell quickly should some personal disaster (illness, accident, unemployment) necessitate a quick sale. I also want to buy at a price at which I could make necessary improvements and still not be overpaying for the place.

Another consideration, is that even with a large downstroke, you will not get financing if the place is 30% or more overpriced. Lenders are very scared right now.

I was hoping people would remember the stories about the letters sellers were demanding. IMO, it was the worst degradation of the bubble rally. When I added the line about the letter, I was being tongue-in-cheek, but you never know how lopsided the balance of power can get. I would not have imagined the possibility of sellers demanding letters from buyers, but it actually occurred.

Huzzah!  Bravo!

Doug, it was a tactic used on the way up.  When multiple offers went in, it was suggested that maybe a personal letter would get you to the front.  This is going the other way - the part about not sappy enough, well, I think that’s IR’s touch.

Thanks as always for the invaluable info!  I’m filing this away for 2010.

Found this hilarious panicked-seller story in the Chicago Sun-Times—guess things are getting a little more desperate in the Heartland.  Check out the title of the film!

“With high-rise condo projects suddenly sprouting up downtown, each of the real estate development companies involved in these projects inevitably has been forced to become more creative about how it makes a particular building seem more inviting than a competitor’s.

“Chicago-based developer Related Midwest (formerly LR Development Co.) is going in a different direction as it tries to market a new 57-story condo project, the Peshtigo, set for completion at 515 N. Peshtigo Court in River East in 2010. The developer commissioned Venice, Calif.-based Backyard Productions and Chicago-based Syinc to produce a 30-minute film adapted from a short story by Chicago author Elizabeth Crane.

The comedic short film called “Bubble-Rama” looks at the world of a female artist who works in a laundromat but suddenly finds herself exploring the pleasures of luxurious city living. The screenplay was written by local scribes Rick Shaughnessy and Jeff Walker, and the film was shot on location in Chicago using primarily local actors.

The Peshtigo developers obviously hope that some of what the artist in the film discovers about living the good life will rub off on the movie’s viewers, and entice them to explore further its condo development, where units are priced from $430,000 to more than $2 million. “Bubble-Rama” will have its world premiere tonight at the Museum of Contemporary Art at a benefit screening for the John G. Shedd Aquarium.

The public can register at www.bubblerama.com for a free public screening of the film at the AMC River East 21 Theatres on Oct.18.“

“Write a letter to the sellers praising their taste etc.“  Hoo-Boy.  I had almost forgotten that period of ridiculousness until that “lawn gnome,“ comment above.  Although I live in flyover country,  I remember the first time I had heard of such a thing was an article in the WSJ and I thought it was an April Fool’s Joke.  Not only were (Bay Area) people eager to enter a bidding war (never, never, never get into a bidding war for something so common as real estate), but we writing gushing letters to give themselves an edge in the process (An edge in addition to overbidding by tens of thousands of dollars btw).  Anybody that did this to “win,“ their property must feel like a cheap prostitute these days. And shame on the realtors who encouraged this nonsense.

I know of buyers who went hyper-aggro on their negociations, and when they ultimately took possession, they later found many problems likely created by the departing sellers.  Things like fish/meat stuffed into the roof eaves (summertime smell, bug/animal attractor), loosened plumbing fixtures,  missing bulbs, loosened hardware on bathroom mirrors,  bent plugs in existing appliances, rocks in the hot water heater,  half-sawed out wood struts under their deck, etc.  Yeah, nickel and dime stuff from scumbags, but it added up to a lot of problems early on.  You never know how the other side will react to this sort of thing, and as mentioned, once the check clears, it’s very difficult to get even.

I’d advise buyers to play hardball, but don’t push somebody too far who is likely already on the edge, financially and emotionally.  No point in tweaking somebody for shits and giggles, because they might react poorly towards something you might ultimately be stuck with fixing.

I don’t know.  If the buyers didn’t like it from the sellers and didn’t think it was fair,  why would it be fair the other way around.

I’ve never believed that crap about turnaround is fair play.  I’ve always believed in turning the other cheek.

So, just as I would never pull tricks as a seller, I never pulled tricks as a buyer.

Back in early 87, there was the beginning of another bubble.  Since the builders were playing games, we found ourselves a run down home and made an offer “as is”.  As the market was moving up, the seller tried to pull out, but with my 5000 bucks in (yep.. that was then) we just sat and went through what we promised.  We didn’t play games, nor did we ask for crazy things, we just delivered the money on time on a fair offer.  And we worked around the seller’s last minute delays by renting back the house ( it cost us an extra month’s of rent…. but then it made our move more relaxed).

IMHO, when I shake hands on a deal I put my word of honor.

Perhaps I’m anachronism,. who knows, but I know I’m ethical and I make sure that my deals are fair and happy for everyone.

If this means to leave a little bit on the table, so be it.  When I die I want to be remember as a nice guy who did finish in the top 5%.

Of course, I’m not selling nor buying.  I’m happy by the park with the flowers, and as a matter of fact our showers are tiled. 

Good lyrics, btw.

For sellers to ask for such a letter was narcisistic and sadistic.

For buyers to do so today is the same.

I don’t think that’s a good idea.  It’s completely unnecesary either way.

I think the the letter signifies the existence of both a market top and bottom.  If and when you see buyers demand letters then you’ll know a bottom has been reached.

I just wish people could conduct their RE transactions in a business like manner.  I don’t expect anyone to realize that my taste is impeccable, I just want them to know that I put 30 AMP romex where most others have 15 amp and that I have brand new copper pipes and a Viking range.

After all, if I were to sell my house, I wouldn’t expect people to keep the paint colors, but surely they’ll enjoy the benefits of the quality that went into the 4 zone, dual furnace HVAC, the rather expensive plumbing fixtures, the 1600 feet of CAT5e, the new plumbing, the two 1HP garbage disposals, the many dedicated AC lines and homeruns for the stereo, HT and computer servers…. you know, that stuff is FAR r more expensive that crown molding!!!

Check this out:

http://www.youtube.com/watch?v=_TuYWzjXiDU

I don’t think I will buy that REO…

Well, I was with you until the section “If You Are Really Tough”.  What you are suggesting is 100% unethical and a breach of contract.  Do whatever you want, but if you choose to follow the suggestions, you’re NO different than the lying fraudsters constantly roasted in this blog.  It’s just a matter of the extent of the unethical behavior…

Ugh. 

This sort of thing goes on all the time with rental property to varying degrees.  Once the tenants go, it seems almost random the condition they leave the place in.  That’s part of the game (and the main reason I’d never be a landlord)

IR, do you think we’ll see more of this sort of thing going forward with the thousands of helpless, angry, and hopeless foreclosed owners about to lose it all.  When you are forced to walk away, or jingle mail, I would think the frustration of having to restart your life again would cause you to do strange and terrible things to the property.  Because, after all, the bank “caused” the problem and the bank “stole” your property from underneath you.

Pigs though? An excavator? And signing your name on the outside.  That’s an ugly and expensive mess for somebody to clean up to just get back to par.

Tony,

You seem to talk a lot about your home remodel.  Do you mind me asking if you live in OC?  Just curious.

“If and when you see buyers demand letters then you’ll know a bottom has been reached.“

I believe IR was using this example as a metaphor.  However, every other tactic illustrated by IR should be used.  I’m definitely in favor of the buyer taking a hands on approach when dealing with sellers and their contracted agents.  Hard Ball is the name of the Game.

BTW, I remember reading an interview in the WSJ a couple of years ago, were Robert Toll (CEO Toll Brothers), bragged about raising prices $10,000 a week.  The banks and the RE market facilitated the greedy bastard’s demands then ... now it’s time for the buyers to rule these transactions.

I imagine we will see many stories like this one. Losing a home is very emotional.

I love the great tips by IrvineRenter (as usual).  I also agree with Don from the Tanning Salon - be careful when you get too aggressive.  I’ve known sellers to sabotage houses as well when the buyers got too agressive - drilled holes in roofs that you wouldn’t notice until it rained, sabotaged plumming, etc.  The $1,000 they may have gotten out of the seller ended up costing them a lot more to fix in the end.

You my friend are WAY too talented for us!  .  Anyway I’ve always said cash is king.  Now lets talk about weither that would be the Dollar or the Euro…

I have told my story of selling in 1991-2 on these blogs before…here it is again.

I owned a house that was bank appraised for refinancing(bank of america) and the value was $750,000 in 1990. I moved out of the area in mid to late 1990 and had to sell the house. On the advice for a Real Estate Professional we put it on the market for $730,000. After about 15 months and reducing the price 10K every other month there were no buyers. I started to realize that my Real Estate Professional was an complete idiot. I interviewed several alternative Real Estate Professionals and asked one question: What will it take to sell my home. I got one honest answer, reduce the price to $550,000 and offer an 8% decommission to the Real Estate Professionals. Six months later the home sold for $480,000. The buyer did every single tactic listed above. I had to finance his mortgage by taking back 10%. The buyer had about 3 home inspectors look at the place and I ended up spending about $30,000 on repairs…...including replacing all of the insulation on the heating ducts because cats had caused some damage.

I felt like someone was pulling my fingernails out as I was selling this property. In the end I was happy to get rid of it and move on with my life.

Yep, i always stick by my promise.  Too bad people always use that as a tool.

Biggest O.C. real estate/finance job cuts since ‘93

http://lansner.freedomblogging.com/2007/09/24/biggest-oc-real-estatefinance-job-cuts-since-93/

There are so few that remember those days. Part of this post was tongue-in-cheek, and part was not. Where you draw the line depends as much on market conditions as it does not the individuals sense of morality. Thank you for reminding all of us that the balance of power in the market really can be that much in favor of buyers. I suspect those who don’t remember the early 90s simply don’t believe it.

Hmm… those hedge fund #s at the end are interesting…

PURSUING A NEW BEGINNING

http://www.heraldtribune.com/article/20070923/REALESTATE/709230484

ORADELL, N.J.—When Joseph Long conceived the idea of buying homes and condominiums in Southwest Florida at 70 cents on the dollar, he was thinking in terms of tens of millions rather than hundreds of millions of dollars.

But as the former elevator company executive from Queens, N.Y., put his feelers out through local real estate agents a few months ago, he discovered that 10 times as many builders and developers wanted to participate as he had anticipated.
...
Both Zalewski, the vulture investor, and Jack McCabe, a Deerfield Beach real estate consultant, said they hope that Long succeeds, but they say there is a lot working against him.

The main impediment is price.

“He’s overpaying,“ Zalewski said. “That is why he has been able to sign up so many people.“

McCabe agreed: “Most hedge funds are looking at buying at 40 to—at most—55 cents on the dollar. That’s the only way these hedge funds have an opportunity to make true hedge fund profits.“

At the very least, if I were the foreclosees, I would take out every
valuable improvement I had added (chandeliers, cabinets, ceiling fans,
appliances of course) and replace them with the cheapest available stuff.
Or, nothing.

A S & L I represented had a borrower remove EVERYTHING from the inside, leaving only a shell.  No drywall, even.  (This was a long time ago.)

A disgrunted seller removed all the copper wiring from the inside of the
house. 

Another foreclosee took the toilets and the plastic light switch covers.

I had a client who had some pretty hand painted knobs on the bathroom cabinets replacing them with plain ones.  I told her I wasn’t going to defend her at closing if they got mad about it, but the buyers didn’t say anything.

In re: your forum on One homeless guy.  Yikes, we would be thrilled in
Miami to be obsessing over One homeless guy.  Can’t Irvine take care
of one guy?  Isn’t there a putatively religious person or institution who
can take care of one guy?

You are truly living in paradise.

I know it’s completely different markets (Florida vs. Irvine), but just for kicks, if you applied that hedge fund formula to the current Avenue One prices, it’d be like

Residence 1, building C, 4th floor
1 bed, 1 bath, 846 sq. ft.
$457,990
would become $182,880 at 40 cents on the dollar
or $251,894.50 at 55 cents on the dollar

For those with more real estate experience than I - does that seem like a reasonable floor?

Given that the seller I’m thinking of is a real estate agent and the property is a high rise condo, I’m thinking she wants to unload this neg cashflow property that needs lots of cosmetic work- beautiful architecture but lots of bad renos were done in kitchen and bath.

I like the place, but I’m in no mood to get screwed. I’m figuring rent parity plus another $10K for the psychological benefit of ownership (important to me) and the tax benefit.

This would mean about 25% off the current offering price, and given that the place has sat unsold since the last reduction for about 4 months now, I don’t figure I am asking too much, especially since the price I will agree to pay is about the 2002 price.

I figure 2002 prices is where things should be, and I don’t figure a decent lender will approve any more than that.

Wow!  I am surprised at the serious reaction to the letters part of the post.  Yes, we all remember the letters, but when I read this piece I laughed at IrvineRenter providing some comic relief.

I guess some folks believe everything they read—hook, line, and sinker.

We had bought a house in Acadia at Oct 1990 for $440K and sold in March1994 for $360K. Guess how much I lost on that house?  It looks like we only lost $80K, but the actual totally lost is around $180K. Here is math we did, if rent for the same type of house we can save $1000 per month ($3K vs. $2K), plus the $180K down payment can earn some interest (5%) and the time mortgage rates on avg. about 9%. After the commissions, for owning a house shorter than 4 years, the totally lost can be so significant.

Fed’s Rate Cut May Give Little Relief to Homeowners (Update1)

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0NFUXaw99j4&refer=home

``Mortgage rates won’t stimulate demand,‘’ said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis. ``The Fed may be a little impotent here because what caused this housing crash was overpriced housing, not mortgages.‘’
...
``To paraphrase Will Rogers, the banks are not concerned about the return on their money, they’re concerned about the return of their money,‘’ Tucker said.

For an investor to turn a positive cashflow on these properties, they would need to go for about 120 times monthly rent. The range from 40% to 55% is probably pretty close.

Humor:  Ok, which one is the business magazine, and which one is the tabloid?  Hmm - the one who rehashed the blogger headlines?  Or the newspaper that Calculated Risk linked (did they break the Countrywide story)?

The Fed: ‘Wall Street’s Bitch’
http://www.businessweek.com/investor/content/sep2007/pi20070918_630235.htm

COUNTRYSLIDE
MORTGAGE LENDER’S SHARES PLUNGE; SEEKS 2ND BAILOUT
http://www.nypost.com/seven/09112007/business/countryslide.htm

You shouldn’t give them 5 days to ponder.  Give them 3 days to ponder and submit it on a Tuesday.  They have to bite before the weekend and the liklihood of another offer rolling in between Tuesday and Friday is pretty small. 

If they counter, withdraw let them wait until the next Tuesday.

Good advice. I should modify the post.

Yeah, 8-10X annual gross rent, provided there aren’t any exorbinant additional costs, i.e. high HOAs and Mello Roos, both of which most new Irvine developments have.

As a second note, I believe the Hedge funds in Florida are looking to pay 40-50 cents on the dollar at current prices, which for condos etc, in many areas of FL are already 30% or so down.  Which means they’re lookin at 30-40 cents on the dollar from peak.

I have been stuck on both ends of this nonsense.  We had prospective buyers tell us that if we repainted our (freshly painted) house, it would help them decide if they wanted to make an offer or not.  We passed, and ultimately sold to some idiots who insisted that we pay to have the screen porch ventilated (yeah, you read that correctly).  Our REALTOR (tm) just stood by and shrugged his shoulders.

On our most recent purchase, our REALTOR (tm), who I thought was working for us, told us point-blank that if we found a house we wanted, we needed to make an offer over full price and concede to all the seller’s demands, otherwise we would not get the house.  This was not in OC, and we were not as cooperative as she would have liked.  She gives us soap every Christmas, though, to thank us for our business.

I know IR posted mostly tongue-in-cheek (right?), but I do not see the point in jerking people around, on either end of the transaction.

U.S. Mortgage Default Rate Stabilizing
http://www.cnbc.com/id/20883613

The default rate on U.S. mortgages is stabilizing, an American housing official said Monday, adding she didn’t expect last week’s cut in U.S. interest rates to significantly affect the number of defaults.

Speaking on the sidelines of a forum in Singapore, U.S. Housing and Urban Development Assistant Secretary Darlene Williams said the U.S. Federal Reserve’s bigger-than-expected half-point cut of its key rate last week signaled that authorities were taking action to support the economy.

I think your deductions are off by a factor of 10. If you are buying an SFR in Irvine, you are readily over $500K, and if not over $1M, pushing in.  $10K is 1% at $1M, 2% at $500K.

If the RE agent uses a standard lie, the next offer should be -$20K, not $2k.  ($10K is closer to a $500K home).

The offer should move in increments of $5000 or $10,000 or more IMHO. 

If you’re quiblling over $500 on a $500,000 purchase or $800,000 purchase, you’ve lost all the power.

Agreed.  If the seller has met every deadline, you can’t arbitrarily pull out of the deal.

I would suggest avoiding a buyers agent altogether.  Everything you need to find property is right at your fingertips anyway.  I have always gone direct to the selling agent. 

Without exception, the agent has quickly gone from anticipating a double-ended deal to supporting a price reduction.  Dealing direct saves a lot of time (days over the life of an escrow)by eliminating one person to relay messages through.  This approach is not for everyone, you need to be able to submit an offer by yourself, be knowledgeable about the process and you need to meet every deadline for contingencies, etc.

No need to “screw” anybody, it is possible to drive a very had bargain while being polite and professional.  Since you will be dealing with the agent, ask how long they have been in RE.  A 20 year agent has seen this market before and will see the value in your offer, a 7 year agent will require some education.

IR is correct about avoiding incentives and pushing for a lower price, but you will meet opposition from the agent as their commission will be less.  Negotiate hard on the price, but let them win on the nickel and dime stuff.  From my own experience selling an industrial building: Even though my buyer left tens of thousands on the table during price negotiations the more he pushed for petty $500 repairs during escrow the less respect I had for him and, consequently, the less willing I was to appease him.

Do exactly what you say you will do.  Make it clear to the seller in the offer that you offer is firm and make it very clear to their agent that you will hold them to every deadline.

“If the realtor tells you there is another bidder on the property”... Ask for proof immediately; if the agent wont fax you the other offer, have a conference call with the agent and sellers and politely let them know that you expect nothing less than integrity and professionalism from all of them.

Lastly, put a value on your time.  A last minute agreement to signoff on a water heater that needs replacement will save you time on the phone, only cost you about $400, but will go along way in keeping rotten meat out of your attic.

Suddenly a Good Bear Is Hard to Find as Stocks Rise (Update1)

http://www.bloomberg.com/apps/news?pid=20601109&sid=aWu8b4y2Ixs0&refer=home

`End of Story’

``Housing just doesn’t matter for the S&P,‘’ said Bianco, the New York-based strategist for UBS. ``End of story. The concern about the spillover and what it means for energy companies, tech companies, industrial companies’‘ is overblown because they benefit from global growth.

Is it just me or do other readers of this bog see a constant amount of hate on a daily basis here.

I believe that a minority of those here are so full of rage that they would like to see our entire county, state and even nation, completely disintegrate to satisfy their bottomless pool of schadenfreude.

I believe some want the market to come down so they can jump in – and I have no issues with them.

It is the ones who go beyond this – way beyond this – that are so disturbing.

So, to those of general goodwill who merely want to find a home they can afford: I wish you the very best – sincerely.

Adam,

I was fully aware that IrvineRenter was being humorous.  However, the fact of the matter is that sellers’ demands for these letters was dead serious, and it made me sick.

The fact that I called IrvineRenter a sadistic bastard should have tipped you off that I didn’t miss the joke.  We all know IR isn’t sadistic.  Enjoying a little schadenfreud with your morning coffee doesn’t make you a sadist.

OT, but did anyone see Family Guy last night?  LMAO.  The Los Angeles real estate market turns up everywhere.

Good post IR.  I wonder how long it will take for this to be reality, hopefully not too long.

Hate or humor. I suppose it depends on the individual.

http://www.irvinehousingblog.com/2007/06/11/the-reservoir-of-schadenfreude/

Lenders do little for strapped subprime homeowners

http://www.reuters.com/article/bankingfinancial-SP-A/idUSN2126672920070921?pageNumber=1

Moody’s Investors Service said banks eased borrowing terms on just 1 percent of subprime mortgages with interest rates that reset higher in January, April and July.
...
It said that “only recently” have servicers begun to modify more loans to help homeowners avoid foreclosures, “despite much industry dialogue and heavy press attention” on the problem.

As much as I love this blog, I disagree with this posting. It’s too complicated. Here’s what I think would suffice, and by the way it worked for me when I bought in places where there were so-called bidding wars.

1. Never fall in love with a house, and make sure the seller’s agent knows it. Be polite, and if you’re interested then say so. But no emotionalism, either interally or externally. If you’re not prepared to walk away, then you’ll pay too much.

2. Have a firm budget before you start looking, and stick with it. This means getting pre-qualified for a mortgage, with all the financial calculating that this entails. Think in terms of a 30-year fixed rate mortgage, and a monthly payment no more than 35% of your gross monthly income, and preferably much less. Along those lines: Do not fall for the old chestnut about a big mortgage being good because of the tax deduction for interest. Uncle Sucker might have 30% of your interest, but guess who pays the other 70%? A smaller mortgage is a better mortgage.

3. Make your sweet spot about 10% below budget. That way, you can have some flexibility. To the seller’s agent, represent your sweet spot as your budget ceiling, the reason being that a realtor will ALWAYS try to bump you upwards.

4. Aggressively check comparable sales prices and the ratio between asking and selling prices. Realtors play around with these by concealing whether a particular property has gone off the market and back on, so you’ll need to do a lot of homework, especially in a falling market.

5. These days, whatever you see for sale today is probably going to be much cheaper in another year, so if you can rent rather than buy for the time being, that’s the way to go.

6. Negotiations are a bunch of b.s. In rising markets, I never once fell for the bidding wars. I remember twice literally turning on my heel and walking away, and in one case having a realtor chase me begging me to come back. The only negotiations I ever did, either as a buyer or a seller, involved correcting issues revealed by inspections. On either side of those transactions, the rule is simple: The seller pays 100% of the cost of fixing inspection issues not disclosed up front. Period.

Two things.

One, am I the only that actually inspected immediately before the closing meeting?  Is that unusual?  It didn’t seem so to me but this was the first home I’ve purchased.  I met the seller at the home, we walked through it and then went to the closing.

Two, while I think perhaps some people are reacting to IR’s hilarious “tough” suggestions let me put this forward.  It is true that two wrongs don’t make a right however, I think all of IR’s serious suggestion are far from wrong in any way.  It’s not a matter of retribution it’s balance.  The balance has, for years, been far out of whack.  That prices are where they are is evidence of this.  Until and unless prices and commissions get to a point where are reasonable then the least you can do, for yourself as buyer, it take some of IR’s serious suggestions and run with them.  As I said, I don’t know much about real estate but those suggestions are just business.  The seller always has the option of saying no to you if they feel you aren’t the type of buyer they want to deal with.

Irvine Renter, I’m confused.  You mentioned that the buyer can tell the seller that he saw a better offer about 1 week prior to closing.  If the buyer did indeed see a better bargain, can a buyer still back out of the sale at that late in the process and still get the down payment back?

It is very difficult for a seller to keep an escrow deposit, even if you have signed a document saying they can. The escrow may get tied up in lawsuits for a while, but you will almost always get your money back.

How does one find buyer’s agents? What makes them different?

Dangerous advice.  The truth is the seller will be entitled to keep some portion or all of the deposit as liquidated damages under the standard form sales contract.  This is especially true if the buyer tells the seller the reason they are canceling is that they found a better deal elsewhere.

I don’t intend to be sadistic, I don’t care one way or the other about a seller’s emotional state.

I care only for my own financial condition, which is my problem. The seller’s emotions are HER problem, and not my concern, and neither is her financial condition.

I will just do what I did in 2003, 04, 05, and 06, which is submit offers that I believe the place is worth, based on local fundamentals: and what I am willing to pay for the place.

The only diff is that my offer is now a lot more likely to be accepted. Every other offer I made was rejected.

The caption for the picture of Darth Maul says its the devil. However, that is not the devil and merely a Sith Apprentice. But for the topic on hand, thinking like a Sith isn’t a bad way to go!

I think you are mistaken in thinking that any realtor would be embarrassed by being caught in a lie.

Why not go it without a supposed buyer’s agent?

that is too funny bc it’s too true.

I will try to reach our escrow office this afternoon and see if I can be more specific. I know on some of the deals I have seen, even if funds have been released from escrow to the seller, the buyer can usually get this money back if the deal is not closed.

You guys are taking that section way too seriously.

This was a difficult post to write because the line between the real advice and the sadistic schadenfreude is intentionally blurry. If the sellers had not been so ridiculous during the rally and asked people for letters and pulled antics like that, upon reading this post, people would have seen the clear line between right and wrong and real and funny. However, since the sellers did behave the way they did, the ridiculous advice doesn’t look quite so far fetched. Sellers blurred the line, and I have merely exposed what they did by proposing to do the same.

Thank you for all the replies to my question.  I guess the best thing to do is to sit and wait until I find the dream home + dream deal, since there is no guarantee that I will get the full deposit back.  However, I’ve looked at some of the homes in Irvine, and it seems like the prices are dropping but not by a whole lot, especially if the home in question is a nice one.  It seems like waiting may also have its setbacks if someone else comes along and buys it while I’m still waiting for the price to drop some more.  Wow, I’m just not sure what to do.  Wait a little longer, I guess, but for how long…?  My cousin is a realtor in northern california and she has done some comparables on certain homes in Irvine that my family and I may be interested in, and the comparables are still pretty pricey…  For a 30-40 year old single story home about 1500 sq ft, the price is still about $670,000-690,000 in Irvine, per my cousin.  That’s pricey.  :(

I haven’t heard any instances of Sellers demanding letters.  I’ve heard numerous of Realtors(tm) suggesting letters.

Lee

I live in TR.  We decided to stay put because it was cheaper to put the money into the remodel than to pay the realtors, fees and taxes.  Plus now we have the home we wanted and we don’t have to worry about shoddy workmanship.

My concerns with IR’s current post are that IMHO at no time should either party to a transaction act in a manner that is insulting or abusive. 

I realize that there are a lot people out there who are complete assholes… they’re not hard to meet. 

Now, I guess IR meant this to be a joke?  Still, I think that was a bit in poor taste.

Hey Roc,
Didn’t you post the exact same comment on the OCRegister site? Cut and paste your judgements about other people somewhere else. 

Great blog Irvine renter.  I will be driving and think of something posted or a picture will pop in my head and I just crack up. 

There was a lot of fraud in Fountain Valley over the last couple of years and it is great to see these houses getting foreclosed on.  Some of the houses I would have loved to of bought for my family at an affordable and logical price but fraudsters beat me to them.  The tide has turned.

I think the intent of it being a joke is obvious from the parenthesised comment about abusing your power.  It’s a colorful commentary on how out of whack the market was when it was at it’s frothy peak.

But ... once you start down the dark path, forever will you walk.

You might even wake up one day and find yourself a Realtor .

“I will be driving and think of something posted or a picture will pop in my head and I just crack up.“

When I was writing this post, I kept cracking up every time I saw the picture of the old lady giving the bird.

How interesting that they are naming their new project after a fire.  I’m sure they mean to link it to the name of the street, but the first thing that came to mind for me was fire.  Maybe people outside of Wisconsin don’t know anything about the Peshtigo fire…it’s one of those things Wisconsin kids learn about in elementary school.  If I recall correctly, it happened on the same day as the Great Chicago Fire in the 1870s.

It was bigger and deadlier than the Great Chicago Fire too.

http://en.wikipedia.org/wiki/Peshtigo_Fire

Insert obligatory “don’t drop the soap” comment here….

Realtor’s take on what the buyers market means

Market Time Report: Revitalizing the Financial and Housing Market

http://ochousing.blogspot.com/

Oops, linking the article directly, so link preserved over time

http://ochousing.blogspot.com/2007/09/market-time-report-revitalizing.html

American Home Mortgage Faces Inquiry

http://biz.yahoo.com/ap/070924/american_home_regulatory.html?.v=4

American Home Mortgage Investment Corp. bounced property tax checks for some Maryland homeowners, local and state officials said Monday, and they have demanded an explanation from the bankrupt mortgage lender and servicer.

The Maryland Commissioner of Financial Regulation filed an inquiry with American Home Mortgage on Friday. Melville, N.Y.-based American Home Mortgage has five days to respond to the letter, said Joseph Rooney, the deputy commissioner for Maryland’s financial regulator.

Officials in New York and Washington state are also looking into bounced checks there.

Mortgage servicers typically collect property tax payments each month with a borrower’s mortgage payment. The property taxes are then placed in an escrow account and held until property tax bills are due. Because they are placed in an escrow account, funds should always be available to make the payments.

How Mortgage Fraud Functions

http://www.voiceofsandiego.org/articles/2007/09/24/news/02mortgage092407.txt

Wow. What a snow job. Not a word about the market being overpriced. Talks up the rate drop as a “stimulus,“ then brings out this gem:

“Nobody knew that 1995 was the bottom of the last downturn either until years later. In hindsight, every living adult should have bought that year, but most everybody was fearful that the market would continue to decline. Sound familiar?“

Kool Aid anyone?

Mojo,

Great advice in this article!  As far as not too aggressive, if the seller is mad, they’ll drill holes for a $10k cut much less a $50k cut off the sales price.

I’d rather have the cash to do the repairs.  Besides, if enough damage is done, a transaction can be reversed.  Yes… reversed due to fraud/vandalism. 

I liked the tongue in cheek bit about the letter.  Oh the squirrels! 

As to Realtors (tm), one thing I’ve learned on these blogs is find out the truth for yourself.  They won’t tell you any.

Got popcorn?
Neil

It’s true. There is NOTHING to do downtown.

I was just drinking my first cup of Kona when I read it.

And trust me, it woke me up!

“Is it just me or do other readers of this bog see a constant amount of hate on a daily basis here.“
It is just you.

I agree with him, now is a good time for buyers. But next year will be even better, and the year after will be better than next year, and .....

Wolseley’s fresh alert on US housing market
The group has eliminated 3,500 jobs as income from its American building materials business fell by almost 75 per cent

http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article2520336.ece

It’s a quotation power thing.  Greenspan didn’t mean for people to take his ARM mortgage recommendation out of context either (ie. I think I read he had an interview where he said he said it in the very limited context of someone who was looking to sell their house within the next few years, and that he himself likes to go 30 year fixed for his own property).

People are taking your blog literally and will take that quote out of context on you.

raindrops, almost everyone on this blog would advise you - based on financials - to simply postpone your purchase.  Rent a nice place if you must nest.

Price drops take a while.  Why buy when there are more price drops coming?  And inventory, mortgage woes, public perceptions, historical averages etc. all point to more price drops coming, much more than the small ones this early in the downturn.

In the last downturn, it took about 6-7 years to go from the turning point in 1989-1991 to the bottom in 1996-7.  This one too will take time.  We’re just barely at this cycle’s turning point now.

Countrywide helping 35,000 avoid foreclosure

http://mortgage.freedomblogging.com/2007/09/24/countrywide-helping-35000-avoid-foreclosure/

Sorry, have to agree with IR.

I read that section and immediately laughed.  I knew it was a joke right away.

Risky Loans Help Build Ghost Town of New Homes

http://www.nytimes.com/2007/09/24/nyregion/24citywide.html?pagewanted=1&_r=4&ref=business

Appreciate the primer.I think I’d add at least one more zero to all of the negotiation numbers.

Moody’s alters its subprime rating model

http://www.ft.com/cms/s/0/be233266-6ad8-11dc-9410-0000779fd2ac.html

Well how are we supposed to know you meant it tongue-in cheek?  We take seriously everything else you write in this blog!

IR:

I’ve got to agree with Marty McFly.  Besides being a pianist, I am a CA RE Broker - that’s not what I do for a living, it’s just part of some specialty coursework I took while working for a lengthy period for a real estate developer. 

Anyway, that education, combined with some law classes, and with observing what a developer with both top in-house counsel and outside law firm on retainer will do (& is capable of)  compelled me to comment about your “really Tough” paragraph.

It’s interesting to watch what happens when the escrow company, as a fiduciary, is caught in the middle of a buyer-seller dispute and cannot release funds to a party without a mutual release of liability from all parties involved in the transaction.

I loved this article. Its about time Realtors stop kicking buyers in the guts.  Rude, lying, cheating thieves.  I have been doing this procedure above to buy with NO INTENTION of buying.  I have enough ‘“subject to’s”  to fill a page.  To season the pot, I put a large refundable earnest deposit on their house to whet their appetites.  $10,000 to 15,000 deposit with the assurance that I will put 50% down and finance a small portion.  They know the high Loan to Value ratio on the COMPLETED deal is what kills a lot of offers.  Tell them mine is around 30-50%.  They change their religion and pray to me wheh I make these offers.  I do it for schadenfeude—not so much to the sellers since are already a lost case.  But I love to watch the “professional” Realtors back to their old tricks, high ball, low ball, lying, cheating.  I want to see them washing “my car” in the car wash, by hand.  And walk up and say, you missed a spot.  After they stop sweating from the detail job, I tell them that the owner of that car will be proud, and I drive away in MY CAR.

The next time I see a Realtor, I will ask “DO you want fries with that?“

I’ve noticed little change in their rat behavior once a rat, always a rat.  I watch the MLS daily and start immediately calling the LISTING agent.  They get SUPER GREEDY thinking that they are going to nick me for a full 6%, so they “cooperate” , with so many failed deals, I know they will wet their pants before they call their sellers to tell them about a “potential offer” (sucker).

What do they do?  I drop them like a rock to see how much the price drops.  When the seller gets really antsy they start having “open houses”.  Last Sunday I went to four of them.  I dropped my phoney business card ( phoney name and address of a vacant lot in a non existant town , telephone number goes to the county jail - voice mail) in their little “sucker bowl” and start asking pointed questions in front of ALL potential buyers, leaving promo sheets around for similar neighborhood houses I know have already gone to foreclosure and are bank owned.  These prices are always lower and have more amenities.

I love the a smell of the carnage.  My hatred doesn’t touch the lying and cheating of these people. Only a few years ago they were requiring buyers to write “love letters” to see who was the “best” person to live in the damn house.  Turnabout is fair play!  I think I found a new hobby!  I have even pulled this stunt on the same Realtor, they don’t care but keep kissing my tail to keep me “happy happy”.  I realize that with hundreds of Realtors in my area they are all competing for the few “last fools” who are still buying.  But I am NOT one of them, I just love to watch the pain.  Sometimes I will tack signs and bogus super low prices on the FANCY balloon festooned OPEN HOUSE SIGNS which are all over they place.  I just stick up other better deals on their signs to take the traffic away after I have had my fun.  Shhhh Don’t tell anyone.  A “friend of mine” likes to place FREE ADS in the classified houses listing houses that have been abandoned—-FOR FREE.  The paper has no clue.  But the wild goose chases, the greeedy brokers running around chasing ghosts.  More fun?  I email all listing agents and complain about their high asking prices….and give them several LOW comps of nicer houses.

I am waiting for windows to open and bodies to come flopping out on to the sidewalks.  Its to early yet.

Maybe we should start sending them free offers for pre-need mortuary services to give them the hint.  Let the telemarketers get them.

I forgot.  If you do want to buy a house BE CAREFUL completing the 1003 form.  Within seconds of this all credit bureaus sell your name for up to $65!  to Loan officers who call these “trigger leads”.  They will hound you to death with telephone calls , home visits and email.  Tell EACH bureau YOU WANT TO OPT OUT AND WANT NO “trigger leads”.

It helps to have cash in the bank—YES, and a high FICO, YES. THE ;aw requires them to SHOW ALL HOUSES and PRESENT ALL QUALIFIED BUYER OFFERS.  Thats when I get on my soapbox.  A few newbies start crying.  Get out of this crooked business and geta REAL job that helps people, not enslaves people. 

If you don’t mind the hassles of your phones ringing day and night you can have outrageous fun with these high pressure telemarketers.  Who are paid to lie lie and lie again.

Want more fun yet? I know people who see these irritating ads all over the interent 1 % down and $400 month for $799,000 mortgages.
Well my friends tell me they get white pages data or census tract data and have a ball!  You NEVER SIGN ANYTHING, but I knw these fools are running the credit reports on all these people and call them day and night hounding them to buy anything.

Ahh

What a nice hobby this can be.

,

I heart awgee.

“A “friend of mine” likes to place FREE ADS in the classified houses listing houses that have been abandoned—FOR FREE”.

Not sure what your getting at there Don, but that might not be a very smart thing to do.  If it is indeed vacant, you are just inviting vandals and squatters.  If it is still occupied and you are just messing around…it could have dangerous consequences.

Don, loved your fantasy post.  Very interesting activities.  You must be extremely busy with all your efforts.

IR I’d take this post down, could be a troll to get people to bite then get the blog taken down for criminal activity.

Charles,

Thank you for the insightful and useful comments.  I will remember your advice the next time I buy a house.

Carl

Deep breaths Brother, deep breaths.

Carl

I don’t know where you’re going to….

The sellers you force to write letters are likely to be the same ones who were the buyers who were forced to write letters.

After all, it’s unlikely that any long term owner would be in the market, and many sellers today are in a forced sell situation as they bought in the “up” market of two to four years ago….

And the sellers of two to four years ago are probably either renting or moved up to bigger homes with large down payments.. so they shouldn’t be selling either.

So, if anything, you might take some sympathy for those sellers.