Support NeoGAF

[AlexMogil]

Now the fun part.

 

[Magilla]

Yeah I got pre-approved and all my supporting evidence was verified.

Owner finally accepted. We ended at 765. Not bad I would say.

Grats! Good luck with the closing.

 

[RukusProvider]

Get your inspections scheduled along with an appraisal (2 if you're concerned)

You can go redfin.com to see comps as a guesstimate in the meantime.

Bargaining isn't done yet.

Let's say your inspection comes back with 10k worth of fixes and your appraisal comes back at or around your purchase price. You can now use this as a bargaining tool. You can ask a few things of the seller: do the repairs to lift the contingency or credit you that amount in closing costs.

They will counter that too so be ready for another round of bargaining.

Most buyers are pretty bad at this part because they are so excited/anxious to close and they lose concept of money when bundled within a large figure. It's hard to keep perspective of 10-15k when you're purchase amount is 800k.

However, use this mentality instead. If you gave away 15k tomorrow, would you miss it? if yes, then fight for it.

Also, watch out for loans with Mortgage Insurance attached. It's a waste of money and does NOTHING for you. It's simply to protect the lender but you are paying for it. MI is usually a product of too low of a down (FHA loans come to mind). What the lender is saying is that you're not bringing enough of a down so their confidence is low and you're going to pay an insurance fee to cover their risk. You can refi out of MI down the road but anytime you refi, you amortization schedule starts again.

Feel free to ask questions and good luck!

 

[BankaiZaraki]

Jeezus 791k?! That's absurd! I'm looking into buying a house as well.

 

[BankaiZaraki]

You misread this. I said "Same thing" meaning the same explanation as in I will need to do it after the offer.

I am getting a mortgage. Not sure which product yet and until I have a signed contract I probably will not decide.


Anyway I made the offer at 750, with seller paying closing cost up to 10k. Got back counter at 779 with no closing and a close date of july!

What do you guys think? Doesn't seem too good to me but now we have the ball rolling.

July closing is terrible though as I have interest rate and price risk.

Try to meet in the middle of 779 and 750. Ask for 770 and 5k of CC and see what he/she says

 

[PistolGrip]

Get your inspections scheduled along with an appraisal (2 if you're concerned)

You can go redfin.com to see comps as a guesstimate in the meantime.

Bargaining isn't done yet.

Let's say your inspection comes back with 10k worth of fixes and your appraisal comes back at or around your purchase price. You can now use this as a bargaining tool. You can ask a few things of the seller: do the repairs to lift the contingency or credit you that amount in closing costs.

They will counter that too so be ready for another round of bargaining.

Most buyers are pretty bad at this part because they are so excited/anxious to close and they lose concept of money when bundled within a large figure. It's hard to keep perspective of 10-15k when you're purchase amount is 800k.

However, use this mentality instead. If you gave away 15k tomorrow, would you miss it? if yes, then fight for it.

Also, watch out for loans with Mortgage Insurance attached. It's a waste of money and does NOTHING for you. It's simply to protect the lender but you are paying for it. MI is usually a product of too low of a down (FHA loans come to mind). What the lender is saying is that you're not bringing enough of a down so their confidence is low and you're going to pay an insurance fee to cover their risk. You can refi out of MI down the road but anytime you refi, you amortization schedule starts again.

Feel free to ask questions and good luck!

Great advice. Thank you sir. I cant believe I have to keep negotiating. The negotiations on the price were brutal. I almost went as far as saying their house was shit and I was a gift to them from god just to get them to reduce the price now I have to do it all over again. fckkkk!!!


I have another problem now.

Tenants! The owners don't want to kick them out and they are asking me for a closing in July!! Or I can take the tenants. NYC tenant rights are pretty hardcore and It may be difficult kicking them out down the line. The tenants are in the second floor though which is good.

 

[Bboy AJ]

Just once I wish we could have a real estate thread without all the poors coming out talking about what a rip off it is to live somewhere where people want to live. No one wants to live in your shithole, middle of nowhere, bumblefuck town. That's why it's $15k to buy your property.

Tenants! The owners don't want to kick them out and they are asking me for a closing in July!! Or I can take the tenants. NYC tenant rights are pretty hardcore and It may be difficult kicking them out down the line. The tenants are in the second floor though which is good.

What are the terms in their current leasing agreement?

 

[Oxn]

Great advice. Thank you sir. I cant believe I have to keep negotiating. The negotiations on the price were brutal. I almost went as far as saying their house was shit and I was a gift to them from god just to get them to reduce the price now I have to do it all over again. fckkkk!!!


I have another problem now.

Tenants! The owners don't want to kick them out and they are asking me for a closing in July!! Or I can take the tenants. NYC tenant rights are pretty hardcore and It may be difficult kicking them out down the line. The tenants are in the second floor though which is good.

My sister use to rent in astoria a one bedroom apt for like 1200 or so

She was jus like 2 blocks from the train

An end stop on the N line

Pretty good neighborhood

 

[RukusProvider]

Great advice. Thank you sir. I cant believe I have to keep negotiating. The negotiations on the price were brutal. I almost went as far as saying their house was shit and I was a gift to them from god just to get them to reduce the price now I have to do it all over again. fckkkk!!!


I have another problem now.

Tenants! The owners don't want to kick them out and they are asking me for a closing in July!! Or I can take the tenants. NYC tenant rights are pretty hardcore and It may be difficult kicking them out down the line. The tenants are in the second floor though which is good.

Tell them you need to close early on your end due to rates. Say you're willing to do a rent back. This means you close and take possession but they stay in there and pay you rent. The money would go into escrow and you'd be paid out of that so no chance in you getting stiffed on this.

btw, you will get better rates with a quicker close on a purchase so don't drag it out for their sake.

Rentbacks are perfectly normal so nothing you're suggesting is out of left field.

 

[PistolGrip]

Just once I wish we could have a real estate thread without all the poors coming out talking about what a rip off it is to live somewhere where people want to live. No one wants to live in your shithole, middle of nowhere, bumblefuck town. That's why it's $15k to buy your property.



What are the terms in their current leasing agreement?

no lease.

Tell them you need to close early on your end due to rates. Say you're willing to do a rent back. This means you close and take possession but they stay in there and pay you rent. The money would go into escrow and you'd be paid out of that so no chance in you getting stiffed on this.

btw, you will get better rates with a quicker close on a purchase so don't drag it out for their sake.

Rentbacks are perfectly normal so nothing you're suggesting is out of left field.

Sounds good but why not just take the money instead of putting into escrow? Not sure I understand the way this works.

Just read all about rent back. Sounds exactly like what I want to do.

 

[RukusProvider]

no lease.


Sounds good but why not just take the money instead of putting into escrow? Not sure I understand the way this works.

That's an option but most common method is to withhold that amount in escrow and do a payout each month like you would with a tenant.

If they're willing to pay all the rent upto July upfront, more power to you!

Edit: saw your edit. Cool!

 

[AstroNut325]

The market in Southern California is terrible right now. It looks like it's 2005/2006 all over again.

My wife and I placed offers on many homes over the past 2-3 months. No luck whatsoever. EVERY single home sold for ABOVE asking price and several with all cash! To make matters worse... the people offering above Asking Price also excluded contingencies and other buyer protections... yes that included appraisals!

I feel screwed when it comes to the housing market. In our affordable range ($350-400K) range... there is nothing in the San Gabriel Valley. 800 sq. ft. homes going for $450K! Want good public schools? Same home for $650K!

 

[rkn]

The market in Southern California is terrible right now. It looks like it's 2005/2006 all over again.

My wife and I placed offers on many homes over the past 2-3 months. No luck whatsoever. EVERY single home sold for ABOVE asking price and several with all cash! To make matters worse... the people offering above Asking Price also excluded contingencies and other buyer protections... yes that included appraisals!

I feel screwed when it comes to the housing market. In our affordable range ($350-400K) range... there is nothing in the San Gabriel Valley. 800 sq. ft. homes going for $450K! Want good public schools? Same home for $650K!

Wow, sounds horrible, I was going to start seriously looking within the next few months.

 

[Sanky Panky]

Do the owners have a mortgage in place? Why do they want to stay until July?

Are you going to make the tenants sign leases? Of course they would be trespassing if not. I hope by now you are working with a lawyer/buyer agent (sorry if I missed that).

I would agree that the lease-back to the current owners until July would be fair, but could have complications. Can your bank do a forward rate agreement (even if it's for a small ammount).

The market in Southern California is terrible right now. It looks like it's 2005/2006 all over again.

My wife and I placed offers on many homes over the past 2-3 months. No luck whatsoever. EVERY single home sold for ABOVE asking price and several with all cash! To make matters worse... the people offering above Asking Price also excluded contingencies and other buyer protections... yes that included appraisals!

I feel screwed when it comes to the housing market. In our affordable range ($350-400K) range... there is nothing in the San Gabriel Valley. 800 sq. ft. homes going for $450K! Want good public schools? Same home for $650K!

You are not only competing against local investors, but institutional players like REITS are in the market for single-family properties that they can rent out and earn income on... by the billions nationally. Couple that with banks trickling properties back into the market slowly/halting foreclosures, and you have a nice mix to inflate home prices pre-maturely.

 

[AstroNut325]

You are not only competing against local investors, but institutional players like REITS are in the market for single-family properties that they can rent out and earn income on... by the billions nationally. Couple that with banks trickling properties back into the market slowly/halting foreclosures, and you have a nice mix to inflate home prices pre-maturely.

WHOA... didn't realize that! How the F*** am I suppose to buy a home with competition like that? Bidding wars???

 

[RukusProvider]

WHOA... didn't realize that! How the F*** am I suppose to buy a home with competition like that? Bidding wars???

Wait a bit to see if inventory picks up. Lots of cash buyers and investors out there.

In the bAy area prices are bubbling in desirable areas at an alarming rate.

 

[Tapiozona]

.

 

[AstroNut325]

Wait a bit to see if inventory picks up. Lots of cash buyers and investors out there.

In the bAy area prices are bubbling in desirable areas at an alarming rate.

Yeah... that's the other thing. Inventory is really low!

Duarte: OK neighborhood

Monrovia: Good neighborhood

Altadena: Some parts are good, other parts are downright crappy

 

[RukusProvider]

Yeah... that's the other thing. Inventory is really low!

Duarte: OK neighborhood

Monrovia: Good neighborhood

Altadena: Some parts are good, other parts are downright crappy

Low inventory + cash buyers/investors = high prices.

Wait it out. Locally, just in the past 2 weeks inventory has picked up.

Sellers will see prices go up and start putting their homes for sales ESP in spring and summer when most sales are done. That inventory in flux will hopefully stabilize the prices.

I have a much darker theory but let's hope that isn't the case.

 

[AstroNut325]

Low inventory + cash buyers/investors = high prices.

Wait it out. Locally, just in the past 2 weeks inventory has picked up.

Sellers will see prices go up and start putting their homes for sales ESP in spring and summer when most sales are done. That inventory in flux will hopefully stabilize the prices.

I have a much darker theory but let's hope that isn't the case.

Do you mind sharing your "darker theory"? Via PM if you don't want to share broadly.

 

[jstevenson]

The market in Southern California is terrible right now. It looks like it's 2005/2006 all over again.

My wife and I placed offers on many homes over the past 2-3 months. No luck whatsoever. EVERY single home sold for ABOVE asking price and several with all cash! To make matters worse... the people offering above Asking Price also excluded contingencies and other buyer protections... yes that included appraisals!

I feel screwed when it comes to the housing market. In our affordable range ($350-400K) range... there is nothing in the San Gabriel Valley. 800 sq. ft. homes going for $450K! Want good public schools? Same home for $650K!

yeah, it's brutal right now in the San Fernando Valley too.

I probably wasn't entirely ready yet, but with prices starting to go back up, interest rates inching up, and the marketing time dropping to basically escrow period on most properties (ie, on market Thursday, signed contract Monday) - I felt like it was time to move.

Even then it was tough, with the exception of the property I bought (and should be closing on in a week and a half) - every property I offered on had at least 5 offers, and all of them were on the market for four days or less. One property I really wanted ended up going for 100k over list price because of the bidding war on it. Some of the properties I missed I offered 5% over ask too.

The property I'm under contract for I had a signed contract before it was listed.

And as you said, lots of cash buyers. Lots of buyers with seller protection such as no appraisal contigency (which actually was fun for me with a shit appraisal and a whole lender change after that... good times there)

The inventory is wiped out right now - look at the Westside and there's nothing even in that price range. Looking in a big area of the valley and even out to Glendale/Eagle Rock, on any given weekend open house report, there might be as little as 2-3 places I wanted to see, and at most 7-8. They would then either suck, or would be sold that weekend.

I think out here you have the institutional guys, a bunch of folks who have been saving since restrictions got tighter, and lots of folks trying to buy before interest rates go up.

Bummer to have missed the bottom last year, but I still feel like I got a fair price for the amount of space I'll have.

Do you mind sharing your "darker theory"? Via PM if you don't want to share broadly.

+1

 

[Zoe]

The market in Southern California is terrible right now. It looks like it's 2005/2006 all over again.

My wife and I placed offers on many homes over the past 2-3 months. No luck whatsoever. EVERY single home sold for ABOVE asking price and several with all cash! To make matters worse... the people offering above Asking Price also excluded contingencies and other buyer protections... yes that included appraisals!

The exact same thing is happening in Austin. Also by California buyers.

 

[RukusProvider]

Do you mind sharing your "darker theory"? Via PM if you don't want to share broadly.

+1

Sure. While the world was "suffering" the rich still had a lot of their money. Real estate is always a good long term investment esp in a highly emotional market.

I have a few clients/companies that are solely focused on real estate investments. We're talking $600mil+ portfolios.

They're buying what are considered average households in desirable areas. Because of their collective buying power they're buying notes directly from the banks that are holding foreclosure and not letting them hit the market. These properties never hit "inventory" are scooped up behind the scenes. Tons of them.

They're also competing directly with consumers for properties. A cash offer will often win out in a bidding war.

In the Bay Area for example, a SFR in a desirable area can range from 350k - 700k. That becomes their target market.

Instead of flipping them for immediate gains as historically has been the case, they now want to rent them out right back tot he consumers that are hoping to buy a home in that range. The goal is to find the range where majority of the transactions take place and buy out that range. Then rent it out at high prices because people need somewhere to live.

This doesn't really effect the high end market because the buyer type for 1.5mil+ homes is simply different and they risk the chance a large investment with a negative cash flow.

So for the inventors, its a win-win. They buy out these properties in bulk while the market is low and recovering. Their asset value goes up and renters are paying for it on top of that!

To sum it all up, the "dark theory" is that these types of investors will starve out the average consumer and force them into a rental situation or deal with a mega commute as they search for home far away from desirable areas.

 

[jstevenson]

Sure. While the world was "suffering" the rich still had a lot of their money. Real estate is always a good long term investment esp in a highly emotional market.

I have a few clients/companies that are solely focused on real estate investments. We're talking $600mil+ portfolios.

They're buying what are considered average households in desirable areas. Because of their collective buying power they're buying notes directly from the banks that are holding foreclosure and not letting them hit the market. These properties never hit "inventory" are scooped up behind the scenes. Tons of them.

They're also competing directly with consumers for properties. A cash offer will often win out in a bidding war.

In the Bay Area for example, a SFR in a desirable area can range from 350k - 700k. That becomes their target market.

Instead of flipping them for immediate gains as historically has been the case, they now want to rent them out right back tot he consumers that are hoping to buy a home in that range. The goal is to find the range where majority of the transactions take place and buy out that range. Then rent it out at high prices because people need somewhere to live.

This doesn't really effect the high end market because the buyer type for 1.5mil+ homes is simply different and they risk the chance a large investment with a negative cash flow.

So for the inventors, its a win-win. They buy out these properties in bulk while the market is low and recovering. Their asset value goes up and renters are paying for it on top of that!

To sum it all up, the "dark theory" is that these types of investors will starve out the average consumer and force them into a rental situation or deal with a mega commute as they search for home far away from desirable areas.

Makes sense though. Market was low, those areas are desirable and rebound. It's not as nefarious as starving people out (though it may have that effect) - it's just seeing low inventory situation which has driven rents up and such.

I'm sure I could cover my mortgage and maintenance with what it would cost to rent my place.

That also makes sense as several brokers who I put offers in with, had sight-unseen offers before their open houses. I imagine from those same type of investors

 

[Marty Chinn]

Wait a bit to see if inventory picks up. Lots of cash buyers and investors out there.

In the bAy area prices are bubbling in desirable areas at an alarming rate.

Tell me about it. We've been looking for the last six months in the South Bay Area and the prices are insane right now. You just can't win because everything is going way above listing price. A house we really liked was listed at $879k and it sold for $1.07 million. There's just no way we can keep up with people doing things like that.

 

[RukusProvider]

Tell me about it. We've been looking for the last six months in the South Bay Area and the prices are insane right now. You just can't win because everything is going way above listing price. A house we really liked was listed at $879k and it sold for $1.07 million. There's just no way we can keep up with people doing things like that.

South Bay is fucked man. Sorry to tell you. That's where a lot of the investors are buying. Infact, they're having to compete with consumers toe to toe there.

With market recovering, options maturing and cash spilling out, the techies don't care about appraisals and values. They have cash and are willing to spend it to get the house they want.

Lets hope spring/summer opens things up a little. Inventory has been shit since oct onwards.

 

[kylej]

Sure. While the world was "suffering" the rich still had a lot of their money. Real estate is always a good long term investment esp in a highly emotional market.

I have a few clients/companies that are solely focused on real estate investments. We're talking $600mil+ portfolios.

They're buying what are considered average households in desirable areas. Because of their collective buying power they're buying notes directly from the banks that are holding foreclosure and not letting them hit the market. These properties never hit "inventory" are scooped up behind the scenes. Tons of them.

They're also competing directly with consumers for properties. A cash offer will often win out in a bidding war.

In the Bay Area for example, a SFR in a desirable area can range from 350k - 700k. That becomes their target market.

Instead of flipping them for immediate gains as historically has been the case, they now want to rent them out right back tot he consumers that are hoping to buy a home in that range. The goal is to find the range where majority of the transactions take place and buy out that range. Then rent it out at high prices because people need somewhere to live.

This doesn't really effect the high end market because the buyer type for 1.5mil+ homes is simply different and they risk the chance a large investment with a negative cash flow.

So for the inventors, its a win-win. They buy out these properties in bulk while the market is low and recovering. Their asset value goes up and renters are paying for it on top of that!

To sum it all up, the "dark theory" is that these types of investors will starve out the average consumer and force them into a rental situation or deal with a mega commute as they search for home far away from desirable areas.

That's not much of a theory, that's reality. With the 10Y treasury as low as its been for years, it's been a paradise on both the commercial and residential end of investment property, and it's also been great for commercial owners to refi especially given some of the assumable programs out there. Times are good. Please keep it low, Bernanke!

 

[AstroNut325]

That's not much of a theory, that's reality. With the 10Y treasury as low as its been for years, it's been a paradise on both the commercial and residential end of investment property, and it's also been great for commercial owners to refi especially given some of the assumable programs out there. Times are good. Please keep it low, Bernanke!

WHAT? That's squeezing people like me... out of the market. It's great for commercial but it's wreaking havoc on residential/first-time (real first time, as in first home ever) buyers. That can only last so long.