Nothing but the plasma TVs and 25’ boat?  Can’t say about the boat, but the TV’s not very big.  I wonder if some of the cash-out refi went towards actual mortgage payments?  If your home is an investment, why not do that?

Do you think some of these sales are people trying to refi again and the appraisal comes in so far below their existing debt, they just try to sell?

There’s nothing more important than understanding the market value for properties, and it’s something you only really get over time by actually visiting some houses and seeing the comps to see why one sells better and one sells worse. You can use this information to your advantage as a buyer or seller.

I’ve bought a few houses that just didn’t show well because of the paint colors and furniture. Both languished on the market, and ultimately sold for four to five per cent off the market.  and both were easy to change with a week’s work.

Without disparaging realtors unduly, let me also emphasize that the realtor is really, more than anything, representing the close of a deal.

Thanks IR!!!

This post is so timely for me. Price where I’m looking in the DC area (on the lowish end, just above the investor only grade) are meeting up with rents, so we’re thinking about taking the plunge this year. This post had some really great reminders, cogently and concisely presented.

The one for me that I had been forgetting was:
“Many buyers will not even bid on a property unless they are “in love” with it. This behavior almost guarantees overpaying for a house.”

I had been saying that there’s no point in bidding on a property unless you really want it, because prices may go down further (and our DP is still rapidly accumulating). But it’s so important to keep your other housing options in the front of your mind when deciding how to set your max price.

We looked at one this past weekend that is going to have bidding wars, and probably go for over asking. There was no way I was as motivated as the other buyers on that place, so no reason to bother with a bid.

Anyway, thanks for this extremely timely post.

Hi, Thanks I enjoyed your blog . You have a lot of good information that I can share and emplement into my realestate investment business. I also have a wholesale real estate website I will book mark your site.Thank you for the great info. Clint Mello www.myrockrealestate.com

Perhaps, you should stay in watching and waiting mode because you believe the DC market is still declining.

emplement?

Just what I need; a fly-by-night real estate investment company.

The bubble still has a long way to deflate.

Do you think some of these sales are people trying to refi again and the appraisal comes in so far below their existing debt, they just try to sell?

I believe a bad listing can seriously harm the final sale price of a property.  If nobody is looking at the place in the first place, it won’t sell.  The house I’m in escrow for had a listing that showed one fewer bedroom and 40% less square footage than it really had (there was an addition that had a building permit but the extra square footage never made it to the tax rolls, and they just went with that for the square footage).  The listing also had a grand total of one picture.  The price it was listed for was significantly overpriced for the stated square footage, but significantly underpriced for the real square footage.  I got it for list with only one other bidder, even though it had been on the market for two weeks when I bid.  Nobody was even looking at it.

If the listing agent would have looked up the permits on-line on the city’s website, measured the house for an approximate square footage, and taken six or eight photos, she would have increase the sale price by tens of thousands of dollars for half an hour’s work.  Now, this was a fairly low-end Riverside REO, but, come on, 30 minutes worth of work.  Oh well, her loss is my gain.

I should probably add the caveat that this is advice for a normal market, which we don’t have in Orange County. I still think prices have a long way to fall here.

LOL

Any halfway intelligent listing agent would have looked at the house, looked at the listing, and realized that it was wrong. 40% is a huge difference. What experienced person could miss a bedroom or not be able to tell the difference between a 2000 square foot house and a 1200 square foot house?

Now, there was a comment in the listing along the lines of “large family room not included in listed square footage”.  But if you read that, it sounds like it’s unpermitted, right?  Plus, you have no idea how large is “large”.  Plus, she still missed the new master, which was part of the same addition (although she counted the bath).

Just to clarify the rule,

Even if the work to perform the square footage increase was permitted, unless it has been recorded, it is not allowed to be included in advertised (MLS entry) living area of the home. 

Good luck,
IR2

I keep trying to tell people here that, but they don’t believe me. Personally, I think this is a side effect of too many section 8 rent coverages which cover up to $1000/month. Yes, $1000/month. Kinda makes it hard for normal people to get a good rental price if the minimum anyone pays is set at $1000.

(sorry, random DC rant over)

Thanks, IR.  I appreciate your work.  </brown nosing> 

Many people have been borrowing from other sources to make payments. That is the essence of a Ponzi Scheme, and it is why foreclosures continue to soar and prices are cratering. People were going back for refis every year to pay off the previous year’s debts and continue spending. That is over now.

Friend of a friend is moving to D.C right now to work for Napolitano. 

He said his rent is going to be like 1600.00 a month for a 1BR apartment and I believe his salary is in the 60K range. 

That’s just plain ridiculous.  It’s almost twice the rent I pay for a 2 BR apartment in Scottsdale and for a salary less than mine.  WTF?

Interesting.  I didn’t know that.  But sometimes I see listings that say “Sq. Ft. Source: Estimated” as opposed to “Sq. Ft. Source: Assessor’s Data”.  They are pretty rare, though-I couldn’t find an example quickly.

He needs to look harder and negotiate better or spread his search outside of the poshest nieghborhoods. I pay 1604 for a 2bed2bath walking distance to the Blue line. MD rents are even less, but the state income tax is higher.

Regarding dual agency: I realize it is legal. However, I believe that an agent representing both buyer and seller is in an untenable position. The agent knows the motivations of both parties clearly throughout the “negotiations”. How can the agent honestly and thoroughly answer any question about the other parties position without compromising it?
On the other hand, if each party is represented by their own agent but has had no time to do their own homework on the market, each is utterly dependent on someone they may not know well or at all. Yet they are trusting that individual to make/save them thousands, even tens of thousands of dollars.
I think real estate is the most inefficient market extant.
imo, the only reasonable safeguard is to do your homework to the extent that you are are as reasonably informed about the market as the agent representing you and rely on the agent for factual info you don’t have ready access to. Constantly ask yourself if the info the agent is giving you is fact or opinion.  Unfortunately, I think few people genuinely have the time or capability (often for good reason) to do this.

Both agents are making a percentage of the sale so why would anyone want you to pay less.

It makes no sense for someone who is buying not to do their own homework, obtain their own mortgage ahead of time and go out and make their own bids. Even hire a lawyer for the closing.

Hiring a agent to find you a house expecting them to do all the homework and reduce the price for you is really crazy.

If you want a home just like a stock you have to do your own due diligence.

The only problem I see with this is those homes where you can’t get into the properties but you can always call their agent and view it.

The best thing to come out of this RE breakdown is the ability for many to buy a home themselves.

Selling one can be more difficult but it can be done as well.

“Novice negotiators can benefit from using a professional real estate agent.”

Granted, many folks can use help negotiating, myself included, but why, WHY, does everyone assume that a real estate agent is necessary or desired or any more qualified to do the negotiating?

“Secondarily, they are motivated to obtain the best possible price for the party they represent; they have a fiduciary duty to serve one party to the transaction”

Actually they are motivated to obtain the best possible price for the other party they do NOT represent, so that they can close the deal and get paid.

There is no such thing as “dual agency” except as a idea in some folks mind.  The contract is between the seller and the agent.  If the buyer is not represented by an agent, the seller’s agent does not represent the buyer.  The buyer represents themselves and it is imperative to know this.

Awgee, you are spot on.  They have an inherent conflict of interest that they cannot avoid - they only get paid if you agree to a deal.  Which means that they inherently cannot be trusted, esp. with such a large purchase - -the biggest most people will ever make.  I am looking for a new rental, and I generally contact the listing agent to see the property.  I say generally b/c I have an agent that has latched on for a particular subdivision - -which is OK to a point.  But my biggest concern is dealing with MY agent - -how I will convince HER (not the lessor) that my offer is fair and reasonable and she should present it as such, and not roll her eyes and protest that it is “too low.”  This is not right - -it’s a mess.

What do you mean by recorded?

In OC if you get a permit for construction the OC assessor will pay you a visit sooner or later.

The County monitors the permits ( or maybe the City sends it to the them).

We had four permits and the assessor came by several times during our construction.

Ive met the dumb blonde bimbo that lives there… What an air head, and sooooo clueless.