The price I offered on the house would, in my mind hedged me against another reasonable drop..

Being a short sale I wasn’t even sure I was going to get the bank to approve the offer, but it’s crazy that someone would offer 20% more than me.

RE: TJ_98370 @ 35 – That’s Liz, and if I remember right she’s in Florida, and she has said that she is a lawyer.

.
Wow! There has got to be fraud involved somewhere in that situation she described.

lawyerliz (profile) wrote on Wed, 10/14/2009 – 3:30 pm
•
I think the market is totally insane, I know everyone has already discussed
this ad nausean, but still. . .
My latest client is buying back his house. It sounds too good to be true. He
owed the lender about 170k, and a 3rd party bid hardly anything, about 15%
of the amount owed. He’s buying it back from the 3rd party lender for about
30% of what he formerly owed (there was a 2nd, too)
He can’t put it back in his own name, cause the mtg liens would hop back
on.
I find this totally bizarre. Does that lender know something ish I
don’t know? I mean, at that price, I would have advised the lender to
keep on bidding. You are talking about a 1973-4 price and he is buying
it back for a 1985 price. from last thread, but relevant to this
post.
My client eliminated, ummm, about 150k worth of debt.
.
.

What happened to after his home burned to the ground?

The insurance company paid the value, including contents, to partially pay off the mortgage. He was left with nothing out of what was once an $800k home, plus contents.

I can hear it now, “There is nothing for you, only cash for your lender. Oh, you still owe $XXX,XXX!”

So now he has nothing–no clothes, no other possessions.

Oh, he has something-the leftover debt and scorched land. I guess he could pitch a tent on the ground for a few days, maybe? He better not get too cozy, as the lender will probably foreclose on what’s left.

It sucks when you have a loss and the value is below the debt.

http://www.businessinsider.com/detroits-mortgage-mod-plan-well-just-burn-down-our-homes-2009-10

http://www.cnbc.com/id/33310096

1. DOW 10,000. Your DOW is going down below 10,000 today, besides, who cares? The more important thing to watch is oil at $75/bbl and gold at $1070/OZ; the commodity increases hit you at Safeway and the gold lure drives investors away from treasury auctions, potentially driving interest rates way up or at least scaring us to death. Stocks are psychologically driven by a media too, assuring us the Q3 GDP modest increase means the recession is over, with depression level unemployment/underemployment and a dead American consumer. LOL

2. Dave’s desparate realitors. I’m a great potential salesperson and believe me; I could talk a skin-flint out of his/her money to buy a worthless investment in a lot of cases…that’s why I’m not in sales….I have a conscious, like Dave., albeit the temptation to bring in personal wealth might bite me, that’s why I’m a scientist/manager type instead. Dave [Ira too] is doing well in ethics areas it appears. I applaud them.

3. Kary’s Insurance Scams. Good advice, listen to him. I’d add too, your car insurance is worthless too. One accident and/or a ticket; and/or higher rates to pay for acident forgiveness means why do we have it? LOL If you get in a small fender dender I’d settle it without the CARFAX Report, Accident Reporting and Insurance rate increases….use a cash machine….LOL…BTW, car insurance companies in Canada are recommending exactly what I just recommended. I have a contract background, so if its your fault, you should get a contract signed before you hand over the cash….I’m sure guys like Kary can help you with the wording…LOL

One key point to make on these rent/buy calculations is that the historical data used to determine what is “normal” may itself be flawed. As Tim pointed out, Forbes only went back 15 years to determine what the normal rent to buy ratio should be.

This reminds me so much of the way investment bankers and ratings agencies assed mortgage securities during the boom years. Moody’s would look at housing data over the last 40 years and assume that default rates would never exceed a certain average. As well all know, this was a wildly optimistic assumption, and the decades of “data” proved to be worthless in evaluating risk.

To a huge extent I believe that most of the data we have in the post world-war II era is anomalous, and largely the result of government manipulation of the economy (e.g. Fed with interest rates, mortgage tax deductions, GSEs, etc). On top of that, we were in a multi-generational cycle of bullishness (look at Kondratieff theory to see what I mean).

Thus, the very data, and life experiences of most Americans, are not relevant in helping us assess future trends, and what the risk of owning real-estate might be. If we are entering a long-term deflationary depression (as I believe), then there is a new reality altogether, and we will see things happen to prices/earnings/unemployment, that few alive have any experience with.

http://bit.ly/YlmXD

Another bottom caller today

“We’re down 30 or 40 percent, but I think we’re at or near the bottom,” said Hurme, whose firm marketed Ashworth Cottages previously.

http://seattletimes.nwsource.com/html/businesstechnology/2010066396_ashworth15.html

buystocks that was a great video, nice music to go with it.

I was wondering what would happen to this development. When I moved to Seattle, in Spring 2006, they were just breaking ground on this project across the street from the 800 sq. ft. apartment I was renting for less than $700 a month.

At first, I thought that these row houses looked really nice and that I might like to buy one, but when I saw the $700K-$800K price tag my jaw dropped. Not really surprising that they are now in foreclosure. Even with the reductions, though, I’m still not sure if I would pay over $450K.

Man, I wonder how those people who bought the first three feel, they must be in the hole at least $250K at this point.

Read the story and get a feel for how people are going to work through this market. A failed developer is finishing the project of another failed developer. The one failed marketing company is saying the new company is right to have lowered the price as far as they did.

The bank is conspicuously absent from the article. Had the bank simply gone ahead and approved any sale at market price to begin with and actually done something, rather than nothing, to help, it would be business. The way it is now it’s news.

The agent is saying these sales prices are the new low for the area. How does that impact the surrounding properties? Are those properties listed at bottom prices, or do the residential sellers take the hit for a foreclosure project?

How will other agents break the news to their listed property owners that the new construction down the street has lowered property values rather than raise them?

“We’re down 30 or 40 percent, but I think we’re at or near the bottom,” said Hurme, whose firm marketed Ashworth Cottages previously.

http://seattletimes.nwsource.com/html/businesstechnology/2010066396_ashworth15.html

buystocks that was a great video, nice music to go with it.

http://www.necn.com/Boston/Business/2009/10/14/Ruling-may-allow-homeowners-to/1255562400.html

http://www.hulu.com/watch/100691/million-dollar-listing-price-reduction-shock

By SeattleJo @ 15:

I was browsing the TV last night and happened to land on Bravo’s “Flipping Out”. I found it interesting that a real estate agent was advising the flipper that he could get a deal if he could hold a property for 7-10 years. The realestate agent also predicted another financial collapse in the next couple years. Besides on this site, I haven’t heard many agents talking like this.

Check out that “Million Dollar Listings” TV series. What a difference in tone from last year’s episodes. (In a couple of this year’s episodes, there’s this one 50-ish blonde client who bought a Malibu property in 2007 or 2008 for a mega-price, and is now being advised to reduce her asking price by $600,000 and she’s all freaked out. I thought she had bought the property as a home, but it’s obvious she was hoping to make a “quick buck” by selling after one or two years of buying the place.) Fun viewing these days.

I just saw that episode. It was awesome. When he suggested the $600,000 price drop, she just dropped to the ground on her knees and began whimpering.

The agent is expressing what many agents are now saying.

We’ve never discussed anything.

I was browsing the TV last night and happened to land on Bravo’s “Flipping Out”. I found it interesting that a real estate agent was advising the flipper that he could get a deal if he could hold a property for 7-10 years. The realestate agent also predicted another financial collapse in the next couple years. Besides on this site, I haven’t heard many agents talking like this.

Check out that “Million Dollar Listings” TV series. What a difference in tone from last year’s episodes. (In a couple of this year’s episodes, there’s this one 50-ish blonde client who bought a Malibu property in 2007 or 2008 for a mega-price, and is now being advised to reduce her asking price by $600,000 and she’s all freaked out. I thought she had bought the property as a home, but it’s obvious she was hoping to make a “quick buck” by selling after one or two years of buying the place.) Fun viewing these days.

Reminds me of an Owner-Operator in the trucking industry who received a notice that the IRS was going to audit him… These guys often end up paying in more ways than one, yet these costs were never were factored into the cost of transportation. It’s the classic economic trap were short-term variable costs are covered at the expense of long-term results.

One of my favorite attorney moments was working with another attorney to win a summary judgment against a local insurance company. The insured was a business that rented a space. There was a fire, that was arson, but no proof the owner did it (nor reason since it was their best location). Being suspicious, the insurance company tried to screw him.

I might have this backwards because it’s been years, but what they tried to do was claim that all the tenant fixtures were personalty. That meant he had way too little coverage on personal property items, and the “co-insurance” clause kicked in, meaning that the company only had to pay some fraction of the personal property limit. They then paid the realty coverage pro-rata to the landlord with his insurance. So on both coverages they only paid a fraction of the total policy amount.

The thing was, there was already a Washington Supreme Court decision saying that tenant fixture were personalty. And that decision involved the same insurance company! A copy of that case was sent to them, and when it came back in discovery someone had written on it: “What’s this mean?”

Anyway, we’d worked pretty hard to get that summary judgment and we were very ecstatic coming across the bridge back to the office. But not nearly as ecstatic as we were after we garnished the insurance company to recover. They had appealed the judgment, but not sought a stay pending appeal! :-D

Then to make matters worse, a few days later I get a call from the claims department regarding the judgment, and they said they were going to pay it. I told them they ‘d better call their attorney first.

Finally, that and another case involving insurance convinced me that it wasn’t an area I wanted to practice in. The insurance companies too often simply worked on delaying payment as long as possible, meaning you’d have to do way too much work to get to a successful result.

What do you do when you suffer massive losses and the insurance company doesn’t pay?

Then there was the insurance companies pointing fingers at each other: General Policy Company, “You need to get this covered under your flood policy.” Flood Policy Company, “This is, blah, blah, blah, you need to get this covered under your general policy.” I know a guy whose life was turned upside down, and then all he got was insurance companies pointing to technicalities to suggest that it was not their responsibility. In the end, he was left without recovery for years.

Clearly for these cases it’s much better to rent.

I’m not so sure about flood insurance, but I would guess that many of the homes flooded were within a flood plain, but perhaps not.

I have discussed this extensively with you.

The agents’ pay is based on total gross sales. If the commission percentage remains constant, then declining total gross sales indicates a reduction in agents’ pay. The gross sales have gone down by 50% plus or minus over the last two years. If the average commission was constant, then agent pay has gone down by 50%. I suspect that the average agent commission has gone down, so you have total agent pay going down by more than 50% over the last two years.

Of course sales are finite and discrete, so some agents may be increasing in pay while others are decreasing, but the total pie is much smaller.

There is the whole attitude of “It won’t happen here, blah, blah, blah.”

“Katrina won’t happen here, blah, blah, blah.”

Take a look at what is happening to the homes around the 410 slide. A half-mile of rock to re-route the river into your home? They probably couldn’t have purchased flood insurance in that area, and I bet every resident would have suggested it wouldn’t happen here. It is yet to be determined why the event took place, and the WSDOT has not published a good solution yet.

http://www.flickr.com/photos/wsdot/4008601585/in/set-72157622438776353/

(I hope it is obvious that being a renter in the area is far better than being an owner when an event like this happens.)

This kind of desperation, in my opinion, may be worse for the consumer than the exhuberance of the bubble.

How about a post about the impact this declining market is having on Real Estate agents?