Comments on: Sneak Peek: 1 in 3 King County Home Sales are All-Cash

By: sotocapo

sotocapo — Thu, 22 Mar 2012 12:12:03 +0000

We sold our house in downtown Kirkland to an all cash buyer from China in 2009. A friend sold her house in Sammamish to an all cash buyer from China in 2010. I would be interested to see how many of these purchases were by foreign buyers and in which neighborhoods. The two purchases mentioned were very nice homes in popular neighborhoods.

When I mentioned it on Seattle Bubble at the time there was total silence in response. Our buyers had also just bought a condo in Bellevue for over a million dollars the month before (our real estate agent checked out the offer to make sure it was legit).

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By: Kary L. Krismer

Kary L. Krismer — Wed, 21 Mar 2012 03:04:03 +0000

By kfhoz @ 63:

By Kary L. Krismer @ 32:

By Condoseeker @ 26:

Has anyone thought that there might be those folks out there that pay all cash just to get the deal done and then refinance after the transaction closes? Why wait 4 months + for the bank to underwrite, etc..

It only takes 20-45 days to finance a purchase transaction.

What you’re describing might happen where the property has some issues which prevent financing at all. I have a client doing that right now (hopefully).

We found that our lender regarded getting a mortgage later as a whole different thing. It wasn’t a “real” mortgage, but a cash-out-refinance. The actual look on the face of the BOA person went from friendly to distressed when we suggested it.

Anyone thinking of getting a mortgage later better talk to their lender now. If anyone out there did get a mortgage later, after paying cash, I would love to hear how it went.

My understanding is even a normal refinance would take longer than a purchase loan. Those apparently get priority. (Note I’m not involved in any refinance activities, so that’s just what I’ve heard.)

Reply – kfhoz @ 63<\/a>:

By Kary L. Krismer @ 32<\/a>:
By Condoseeker @ 26<\/a>:
Has anyone thought that there might be those folks out there that pay all cash just to get the deal done and then refinance after the transaction closes? Why wait 4 months + for the bank to underwrite, etc..<\/blockquote>\r\n\r\nIt only takes 20-45 days to finance a purchase transaction.\r\n\r\nWhat you\'re describing might happen where the property has some issues which prevent financing at all. I have a client doing that right now (hopefully).<\/blockquote>\r\nWe found that our lender regarded getting a mortgage later as a whole different thing. It wasn\'t a \"real\" mortgage, but a cash-out-refinance. The actual look on the face of the BOA person went from friendly to distressed when we suggested it.\r\n\r\nAnyone thinking of getting a mortgage later better talk to their lender now. If anyone out there did get a mortgage later, after paying cash, I would love to hear how it went.<\/blockquote>\r\n\r\nMy understanding is even a normal refinance would take longer than a purchase loan. Those apparently get priority. (Note I\'m not involved in any refinance activities, so that\'s just what I\'ve heard.)',''); return false;">Quote

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By: Kary L. Krismer

Kary L. Krismer — Wed, 21 Mar 2012 03:02:19 +0000

RE: S-Crow @ 60 – Realist has the information for individual properties, so I would assume they could report it collectively too. I don’t have access to that.

Reply – S-Crow @ 60<\/a> - Realist has the information for individual properties, so I would assume they could report it collectively too. I don\'t have access to that.',''); return false;">Quote

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By: Kary L. Krismer

Kary L. Krismer — Wed, 21 Mar 2012 03:00:43 +0000

By grumble @ 52:

How can people still get 0 down, or is that 0-19.99% down?

VA loans are still 0% down. Low closing costs too if you’re a disabled vet (to some standard).

Reply – grumble @ 52<\/a>:

How can people still get 0 down, or is that 0-19.99% down?<\/blockquote>\r\n\r\nVA loans are still 0% down. Low closing costs too if you\'re a disabled vet (to some standard).',''); return false;">Quote

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By: Kary L. Krismer

Kary L. Krismer — Wed, 21 Mar 2012 02:59:34 +0000

By softwarengineer @ 36:

RE: Haybaler @ 33 – The Tim Used % Figures

Your point is moot.

Wrong. If 300 people were cash buyers when there were 2500 sales a month, and 300 cash buyers when there were 1500 sales a month, the percentage increases without the number of cash buyers changing. That was the point.

Reply – softwarengineer @ 36<\/a>:

RE:<\/b> Haybaler @ 33<\/a> - The Tim Used % Figures\r\n\r\nYour point is moot.<\/blockquote>\r\n\r\nWrong. If 300 people were cash buyers when there were 2500 sales a month, and 300 cash buyers when there were 1500 sales a month, the percentage increases without the number of cash buyers changing. That was the point.',''); return false;">Quote

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By: No Name Guy

No Name Guy — Tue, 20 Mar 2012 23:04:39 +0000

RE: The Tim @ 51 –

Thanks for the add on data. Sure brings an additional perspective to things.

Cash talks and zero down male bovine prairie patties walks……
Reply – The Tim @ 51<\/a> - \r\n\r\nThanks for the add on data. Sure brings an additional perspective to things. \r\n\r\nCash talks and zero down male bovine prairie patties walks......',''); return false;">Quote

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By: ARDELL

ARDELL — Tue, 20 Mar 2012 22:18:22 +0000

RE: kfhoz @ 63 –

Definitely one of these “easier said than done” propositions. A “purchase money” mortgage is never the same as an after the fact financing. It used to be easy…back in the easy money days. Today it can be near impossible except on a “home equity loan” type basis. You can clearly get some of that money back, but not nearly as much usually as you could have financed at time of purchase. Not a good idea, unless your original game plan was to put at least 50% down in the first place when you did all cash. Max is usually 75% back and the rate and terms are usually not nearly as favorable as they might have been if you financed the purchase vs buying cash and trying to reconstruct the same scenario after the fact.

The lender people know better than I, but often there is also a waiting period before you can do it. If the appraisal value goes down during that time, you could be very SOL.
Reply – kfhoz @ 63<\/a> - \n\nDefinitely one of these \"easier said than done\" propositions. A \"purchase money\" mortgage is never the same as an after the fact financing. It used to be easy...back in the easy money days. Today it can be near impossible except on a \"home equity loan\" type basis. You can clearly get some of that money back, but not nearly as much usually as you could have financed at time of purchase. Not a good idea, unless your original game plan was to put at least 50% down in the first place when you did all cash. Max is usually 75% back and the rate and terms are usually not nearly as favorable as they might have been if you financed the purchase vs buying cash and trying to reconstruct the same scenario after the fact.\n\nThe lender people know better than I, but often there is also a waiting period before you can do it. If the appraisal value goes down during that time, you could be very SOL.',''); return false;">Quote

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By: kfhoz

kfhoz — Tue, 20 Mar 2012 20:54:12 +0000

By Kary L. Krismer @ 32:

By Condoseeker @ 26:

Has anyone thought that there might be those folks out there that pay all cash just to get the deal done and then refinance after the transaction closes? Why wait 4 months + for the bank to underwrite, etc..

It only takes 20-45 days to finance a purchase transaction.

What you’re describing might happen where the property has some issues which prevent financing at all. I have a client doing that right now (hopefully).

We found that our lender regarded getting a mortgage later as a whole different thing. It wasn’t a “real” mortgage, but a cash-out-refinance. The actual look on the face of the BOA person went from friendly to distressed when we suggested it.

Anyone thinking of getting a mortgage later better talk to their lender now. If anyone out there did get a mortgage later, after paying cash, I would love to hear how it went.
Reply – Kary L. Krismer @ 32<\/a>:
By Condoseeker @ 26<\/a>:
Has anyone thought that there might be those folks out there that pay all cash just to get the deal done and then refinance after the transaction closes? Why wait 4 months + for the bank to underwrite, etc..<\/blockquote>\r\n\r\nIt only takes 20-45 days to finance a purchase transaction.\r\n\r\nWhat you\'re describing might happen where the property has some issues which prevent financing at all. I have a client doing that right now (hopefully).<\/blockquote>\r\nWe found that our lender regarded getting a mortgage later as a whole different thing. It wasn\'t a \"real\" mortgage, but a cash-out-refinance. The actual look on the face of the BOA person went from friendly to distressed when we suggested it.\r\n\r\nAnyone thinking of getting a mortgage later better talk to their lender now. If anyone out there did get a mortgage later, after paying cash, I would love to hear how it went.',''); return false;">Quote

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By: The Tim

The Tim — Tue, 20 Mar 2012 20:03:28 +0000

RE: S-Crow @ 60 – Collecting all of the raw data is a massive operation that often literally involves sending people down in person to county offices to scan documents. It’s certainly not a simple “run a query with the county, get the requested data” type of thing.
Reply – S-Crow @ 60<\/a> - Collecting all of the raw data is a massive operation that often literally involves sending people down in person to county offices to scan documents. It\'s certainly not a simple \"run a query with the county, get the requested data\" type of thing.',''); return false;">Quote

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By: Lily

Lily — Tue, 20 Mar 2012 19:57:06 +0000

Yes there are a lot of investors. Some investors can’t get loans even with 50% down payment, others don’t want to go through the hassle for small (<$100k) purchases.
There are non investors as well. Look up the data on the luxury condo Bellevue Towers, HALF the buyers paid cash. I'm guessing some of these people are not super rich, but just relocated from somewhere more expensive like California, Vancouver, or Shanghai.
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By: S-Crow

S-Crow — Tue, 20 Mar 2012 19:45:23 +0000

Hmmm .Ok. I’m guessing, but I would imagine the data is not ALL being pulled from recorded documents but provided by lenders to the data aggregators like Corelogic or Metroscan or similar. From a technical standpoint I don’t know how they would pull a scanned recorded DOT with the beneficiary and loan amount on it and compare it to a scanned Deed or Excise Tax Affidavit for the purchase price amount. I certainly was unaware of the local recording offices having queries that you can pull solely based upon loan amount, lender and sales price. But maybe they do? Pretty valuable information if it is accurate.
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By: wreckingbull

wreckingbull — Tue, 20 Mar 2012 19:37:27 +0000

Even though there were twice as many all-cash purchases in 2011, as compared to 2006, it would be interesting to compare cash purchases measured in total dollar amount for the two years. Maybe that was done and I missed it.
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By: The Tim

The Tim — Tue, 20 Mar 2012 19:26:11 +0000

RE: S-Crow @ 57 – Redfin has a third-party data provider that pulls all public record docs. This includes whatever documents indicate the loan amounts and lender. I just add up the total loan amounts (there are often two loans) and compare it to the recorded purchase price.
Reply – S-Crow @ 57<\/a> - Redfin has a third-party data provider that pulls all public record docs. This includes whatever documents indicate the loan amounts and lender. I just add up the total loan amounts (there are often two loans) and compare it to the recorded purchase price.',''); return false;">Quote

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By: S-Crow

S-Crow — Tue, 20 Mar 2012 19:08:58 +0000

Tim – how are you pulling data to know exactly the amount of down payment on purchases?
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By: ARDELL

ARDELL — Tue, 20 Mar 2012 18:58:36 +0000

I just checked on a bank-owned “all offers must be received by 3/12″ that is still Active. They have several cash offers…and one “public funds” offer. Apparently the “public funds” offer jumped to the front of the line and is causing a log jam of sorts while the bank owner tries to figure out what to do with it. Apparently the County buys it for someone, that someone pays the County vs having a mortgage, and there are restrictions on who that person can later sell it to.

Sounds a bit like a mix between Habitat for Humanity and the ARCH properties. Maybe Jillayne knows more about this program. It seems bank sellers are often going out of their way NOT to sell to investors. Had another last week that said “no investor offers for 16 days”. I used to see that be more like 7 days. There seems to be some discrimination against investor buyers, and a system that favors owner occupant buyers, even when those owner occupants are getting the money to purchase from “public funds”.

Not sure how my clients who are buying cash for their parents to live in would be treated. They are not owner occupant buyers…nor are they investors. Some people fall between the cracks.
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By: Jill Schlicke

Jill Schlicke — Tue, 20 Mar 2012 18:18:18 +0000

Zero down: VA, USDA, or other programs.
And what about the “Get rich quick in real estate with no money down” investor programs being advertised on the radio?
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By: The Tim

The Tim — Tue, 20 Mar 2012 17:49:13 +0000

RE: grumble @ 52 – Yes, what FenceSitter @ 53 said is correct. That’s purchases where the total loan amount at time of purchase = the purchase price. I have not plotted the volume of 1% – 19% down purchases.
Reply – grumble @ 52<\/a> - Yes, what FenceSitter @ 53<\/a> said is correct. That\'s purchases where the total loan amount at time of purchase = the purchase price. I have not plotted the volume of 1% - 19% down purchases.',''); return false;">Quote

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By: FenceSitter

FenceSitter — Tue, 20 Mar 2012 17:47:02 +0000

RE: grumble @ 52 –
Must be 0 down; there is still 29.6% and 24.1% unaccounted for on the 2006 and 2011 graphs, respectively. That must be the 1-19% down.
Reply – grumble @ 52<\/a> - \r\nMust be 0 down; there is still 29.6% and 24.1% unaccounted for on the 2006 and 2011 graphs, respectively. That must be the 1-19% down.',''); return false;">Quote

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By: grumble

grumble — Tue, 20 Mar 2012 17:42:29 +0000

How can people still get 0 down, or is that 0-19.99% down?
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By: The Tim

The Tim — Tue, 20 Mar 2012 17:33:37 +0000

For those interested in the volume of sales in each category instead of the percentages of total volume, here you go:

Reply – <\/a>',''); return false;">Quote

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By: kfhoz

kfhoz — Tue, 20 Mar 2012 17:01:51 +0000

By Basho @ 4:

Cash purchases are generally investor purchases. Goes to show you how weak final demand is. Look for most of these houses to be back on the market within five years.

I know quite a few individuals who are looking for their first or next home and have cash. Maybe there are far more investors paying with cash, but don’t discount DINKs who sat out the bubble or older folks whose kids are gone.
Reply – Basho @ 4<\/a>:
Cash purchases are generally investor purchases. Goes to show you how weak final demand is. Look for most of these houses to be back on the market within five years.<\/blockquote>\r\nI know quite a few individuals who are looking for their first or next home and have cash. Maybe there are far more investors paying with cash, but don\'t discount DINKs who sat out the bubble or older folks whose kids are gone.',''); return false;">Quote

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By: David Losh

David Losh — Tue, 20 Mar 2012 16:57:15 +0000

RE: Jill Schlicke @ 48 –

The other part is the number of people willing to pay way too much for properties, with multiple offers, and offers above list price.

I personally think the market is more screwed up now than it ever has been. A part of that is the government interference, but a lot of that is banks now own the market place we have today.

What buyers should start to realize, once again, is the bank is the enemy. No good will ever come out of bank financing. That should be the lesson in all of this.
Reply – Jill Schlicke @ 48<\/a> - \r\n\r\nThe other part is the number of people willing to pay way too much for properties, with multiple offers, and offers above list price. \r\n\r\nI personally think the market is more screwed up now than it ever has been. A part of that is the government interference, but a lot of that is banks now own the market place we have today.\r\n\r\nWhat buyers should start to realize, once again, is the bank is the enemy. No good will ever come out of bank financing. That should be the lesson in all of this.',''); return false;">Quote

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By: Pegasus

Pegasus — Tue, 20 Mar 2012 16:45:18 +0000

RE: David Losh @ 46 – The foreclosure system is broken because the homes being offered now are too far underwater in relationship to the outstanding mortgages. Either the banks allow it to become a real marketplace again by allowing fair market bidding way below the outstanding debt or they end up owning every home in foreclosure. The system worked fine while there was equity above and beyond the outstanding debt but 30 plus percent declines in property values have destroyed that possibility for most sales.
Reply – David Losh @ 46<\/a> - The foreclosure system is broken because the homes being offered now are too far underwater in relationship to the outstanding mortgages. Either the banks allow it to become a real marketplace again by allowing fair market bidding way below the outstanding debt or they end up owning every home in foreclosure. The system worked fine while there was equity above and beyond the outstanding debt but 30 plus percent declines in property values have destroyed that possibility for most sales.',''); return false;">Quote

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By: Jill Schlicke

Jill Schlicke — Tue, 20 Mar 2012 16:45:18 +0000

Software engineer:

http://northwesttrustee.com/

Follow the little link shown at the upper left hand corner “properties for auction”

It will open an new window. Click WA State….and then the county of your choice. My fav drop down is “Select Sale Date”

For the next several weeks in King County there are typically less than 100 homes up for auction via the largest trustee in WA State, NW Trustee Services. This is far too low compared to the number of delinquent loans.

As Ray will tell us, the homes that are selling at auction are the homes with a first and a second lien where the first lender is foreclosing. Since the second lien is stripped off title at auction, the opening bid on the first can sometimes be below market value and these are the homes where people are buying the home at auction all cash….yet sometimes they’re using a temporary hard money bridge loan for their “cash.”

However, since inventory like this at the auctions is now slim pickings, the “cash” investors are probably moving to MLS inventory with their “cash.” That’s my take, FWIW.
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By: David Losh

David Losh — Tue, 20 Mar 2012 16:34:36 +0000

RE: Jill Schlicke @ 42 –

I refer past clients to other agents. One in is a veteran with VA financing. He was told by a listing agent that HomePath won’t take a VA financing offer, because the bank will do no work orders. I objected because he should be allowed to make an offer. He did offer over list price, but sure enough the bank took an all cash offer.

I’m talking about REOs, and short sales. Many are better off with a cash offer then refinanced into owner occupied.

The auctions are a thing of the past economy. Even if they ramp up the auctions there is a small select group of buyers. They will never get much out of the buyer pool as time goes on. I could go on about that, but the foreclosure system is broken.
Reply – Jill Schlicke @ 42<\/a> - \r\n\r\nI refer past clients to other agents. One in is a veteran with VA financing. He was told by a listing agent that HomePath won\'t take a VA financing offer, because the bank will do no work orders. I objected because he should be allowed to make an offer. He did offer over list price, but sure enough the bank took an all cash offer. \r\n\r\nI\'m talking about REOs, and short sales. Many are better off with a cash offer then refinanced into owner occupied. \r\n\r\nThe auctions are a thing of the past economy. Even if they ramp up the auctions there is a small select group of buyers. They will never get much out of the buyer pool as time goes on. I could go on about that, but the foreclosure system is broken.',''); return false;">Quote

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By: softwarengineer

softwarengineer — Tue, 20 Mar 2012 16:06:09 +0000

RE: Jill Schlicke @ 42 –

The Cash Payments at FC Auctions Down?

Interesting, I wonder if the minimum bids are way too high? Time for the banks to lower the minimum bids if they want cash bites.

Speaking of auctions, when I went with my daughter to help her buy a cheap used car with the dealers around us bidding; I noticed an interesting issue. The buyers were all waiting around for later bids to see what things were going for [I was thinking the same thing BTW]….my daughter blew that tactic out the water by bidding early before anyone could peg bids, she got a wonderful deal BTW…
Reply – Jill Schlicke @ 42<\/a> - \r\n\r\nThe Cash Payments at FC Auctions Down?\r\n\r\nInteresting, I wonder if the minimum bids are way too high? Time for the banks to lower the minimum bids if they want cash bites.\r\n\r\nSpeaking of auctions, when I went with my daughter to help her buy a cheap used car with the dealers around us bidding; I noticed an interesting issue. The buyers were all waiting around for later bids to see what things were going for [I was thinking the same thing BTW]....my daughter blew that tactic out the water by bidding early before anyone could peg bids, she got a wonderful deal BTW...',''); return false;">Quote

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By: Pegasus

Pegasus — Tue, 20 Mar 2012 15:50:36 +0000

RE: softwarengineer @ 41 – Hello? Earth to softy…what isn’t political? Splain please. I happen to think Hay has a valid point. If you typically have 100 investors buying a home with cash each year since they are running a ongoing business and the amount of sales declines then that 100 normal investors becomes a higher percentage of buyers, doesn’t it? I think that was Hay’s point and I think it is somewhat valid. If we had 14 percent cash buyers normally, the amount of cash buyers stays the same and sales decline by fifty percent then the cash buyers becomes 28 percent of the sales. I did not post anything that was political did I?
Reply – softwarengineer @ 41<\/a> - Hello? Earth to softy...what isn\'t political? Splain please. I happen to think Hay has a valid point. If you typically have 100 investors buying a home with cash each year since they are running a ongoing business and the amount of sales declines then that 100 normal investors becomes a higher percentage of buyers, doesn\'t it? I think that was Hay\'s point and I think it is somewhat valid. If we had 14 percent cash buyers normally, the amount of cash buyers stays the same and sales decline by fifty percent then the cash buyers becomes 28 percent of the sales. I did not post anything that was political did I?',''); return false;">Quote

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By: Haybaler

Haybaler — Tue, 20 Mar 2012 15:42:25 +0000

RE: softwarengineer @ 36 –
Not following you.

I think The Tim has become adept at finding titillating bits of material to give you all something to talk about.

If The Tim were to post a graph of the % of buyers in each category over a 20 yr time frame and another one of the “number” of buyers in each category then one would have an answer to the question of what this change in % of each category means. (He probably has them already up and ready to post later on).

I suspect that the %s over time would look more like today than 2006, but in any event the Headline of this story is that the First Time Homebuyer using FHA low down financing is Gone!…as opposed to Cash Buyers rush into market.
Reply – softwarengineer @ 36<\/a> - \nNot following you.\n\nI think The Tim has become adept at finding titillating bits of material to give you all something to talk about.\n\nIf The Tim were to post a graph of the % of buyers in each category over a 20 yr time frame and another one of the \"number\" of buyers in each category then one would have an answer to the question of what this change in % of each category means. (He probably has them already up and ready to post later on).\n\n I suspect that the %s over time would look more like today than 2006, but in any event the Headline of this story is that the First Time Homebuyer using FHA low down financing is Gone!...as opposed to Cash Buyers rush into market.',''); return false;">Quote

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By: Jill Schlicke

Jill Schlicke — Tue, 20 Mar 2012 15:36:41 +0000

The banks love loans, yes….they love ‘performing’ loans these days. FHA underwriting guidelines still allow pretty scary back end total debt-to-income ratios and those guidelines must continue to sloooowwwly get tighter. Slowly. We’re still using the FHA mortgage insurance program to clear out the inventory.

David, right now there are hardly ANY homes being sold at auction. I’ve been in either King, Sno, or Pierce almost every Friday over the past few years and the number of homes up for bid has slowed way, way down.

But that’s changing :)
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By: softwarengineer

softwarengineer — Tue, 20 Mar 2012 15:23:03 +0000

RE: Pegasus @ 37 – Pegasus It Isn’t Political

And anyone that down thumbed a massive % increase as a moot point to the collapse of home purchases since 2007 needs to take 9th grade math again.
Reply – Pegasus @ 37<\/a> - Pegasus It Isn\'t Political\r\n\r\nAnd anyone that down thumbed a massive % increase as a moot point to the collapse of home purchases since 2007 needs to take 9th grade math again.',''); return false;">Quote

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By: softwarengineer

softwarengineer — Tue, 20 Mar 2012 15:17:21 +0000

RE: David Losh @ 39 – The Banks Love Loans David

That’s their bread and butter. They make nothing on cash only transactions.
Reply – David Losh @ 39<\/a> - The Banks Love Loans David\r\n\r\nThat\'s their bread and butter. They make nothing on cash only transactions.',''); return false;">Quote

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By: David Losh

David Losh — Tue, 20 Mar 2012 15:11:22 +0000

There are also a great number of REOs, and short sales that won’t take financing. We looked at one that was obviously owned by a contractor who never pulled a permit. The work looks good, it’s bank owned, but it will take some patience, and skill to get it legal. We looked at another that is in good shape, good price, but needs a serious cleaning, painting, carpet, and appliances. It’s $140K in a $220K neighborhood. Banks were doing the work for a while, but I think they got overwhelmed. Another property is a short sale in great shape, great price, and listed for $300K less than what is owed. Some one will make a cash deal there to get it away from the bank.

There are also alternative financing options that look like cash. Vestus will pay cash for a buyer, but the buyer needs to refinance, or sell the property within six months.

This is really an indication of our REO, short sale market place more than anything else.

I’m still interested in why any one would think a 20% down payment is good for anyone other than the bank?
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By: softwarengineer

softwarengineer — Tue, 20 Mar 2012 15:11:21 +0000

Rather Than Shooting from the Hip With Wild Allegations

On why The Tim’s cash only chart doesn’t mean anything, read this, from America’s last hope for low down payment home loans:

“….Getting approved for a FHA loan in 2012 may be difficult for some borrowers as HUD has made it clear with FHA guidelines. It is unlikely that 2012 FHA loan requirements will loosen up much, because the Federal Housing Administration is focused on increasing FHA reserves and decreasing FHA loan defaults. Many FHA lenders are concerned that tightening FHA requirements even more in the coming year could significantly hinder originations and the housing recovery as a whole.

It’s no secret that many FHA companies in California, New York and Virginia are fearful that the reduced government loan limits will hinder the housing market rebound. There are so many borrowers on the loan limit bubble that lowering the 2012 FHA loan limits will have a negative impact…”

http://www.fhahomeloanrefinancing.com/blog/2012-fha-loan-requirements/

Its a new paradign, get used to it, IMO it worsens for easy credit as years go by…history and actuals agree with my allegations.
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By: Pegasus

Pegasus — Tue, 20 Mar 2012 15:09:20 +0000

RE: Haybaler @ 33 – I think what you say is mainly correct but there also has been a recent increase in current homebuyers. These numbers are similar to what is happening in California and they have seen a recent increase in non-investor types buying with cash. If you can afford it and it gets you a substantial discount from normal prices, why not do it?

http://firsttuesdayjournal.com/cash-buyers-drive-down-prices/
Reply – Haybaler @ 33<\/a> - I think what you say is mainly correct but there also has been a recent increase in current homebuyers. These numbers are similar to what is happening in California and they have seen a recent increase in non-investor types buying with cash. If you can afford it and it gets you a substantial discount from normal prices, why not do it?\r\n\r\nhttp:\/\/firsttuesdayjournal.com\/cash-buyers-drive-down-prices\/',''); return false;">Quote

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By: softwarengineer

softwarengineer — Tue, 20 Mar 2012 15:01:29 +0000

RE: Haybaler @ 33 – The Tim Used % Figures

Your point is moot.
Reply – Haybaler @ 33<\/a> - The Tim Used % Figures\r\n\r\nYour point is moot.',''); return false;">Quote

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By: Kary L. Krismer

Kary L. Krismer — Tue, 20 Mar 2012 15:00:01 +0000

By Haybaler @ 33:

Whoa guys. Off the top of my head….in 2006 there were 3x as many homes sold as in 2011.
If you compare the “number” of purchases made all cash in 2006 to those in 2011 the “number” will be similar. I suspect that class of purchaser has just continued to do what they do undeterred by the waves of economic news.

Wait! You’ve forgotten that some people here don’t like explanations (e.g. change in mix) that explain changes in numbers. ;-)
Reply – Haybaler @ 33<\/a>:
Whoa guys. Off the top of my head....in 2006 there were 3x as many homes sold as in 2011.\r\nIf you compare the \"number\" of purchases made all cash in 2006 to those in 2011 the \"number\" will be similar. I suspect that class of purchaser has just continued to do what they do undeterred by the waves of economic news.<\/blockquote>\r\n\r\nWait! You\'ve forgotten that some people here don\'t like explanations (e.g. change in mix) that explain changes in numbers. ;-)',''); return false;">Quote

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By: Rumpole

Rumpole — Tue, 20 Mar 2012 14:55:30 +0000

While I may not agree with the investment strategy of those who pay all cash, rather than go for relatively cheap financing, I won’t begrudge them their lack of debt. Isn’t our nation’s addiction to debt something that many posters on this site complain about?

The question for me is, what impact might this have on the real estate market over the medium to long term? If this is mainly due to investors looking for short term gain, then I think we might see some further price reductions when they need to sell in 6 months. If this cash buying can be attributed to actual owners and long-term investors, then I would think this would bring some stability to the market. Homeowners in for 100% cash might be more apt to take care of their properties and not walk away if/when prices decline further.
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By: Haybaler

Haybaler — Tue, 20 Mar 2012 14:43:45 +0000

Whoa guys. Off the top of my head….in 2006 there were 3x as many homes sold as in 2011.
If you compare the “number” of purchases made all cash in 2006 to those in 2011 the “number” will be similar. I suspect that class of purchaser has just continued to do what they do undeterred by the waves of economic news.
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By: Kary L. Krismer

Kary L. Krismer — Tue, 20 Mar 2012 14:21:14 +0000

By Condoseeker @ 26:

Has anyone thought that there might be those folks out there that pay all cash just to get the deal done and then refinance after the transaction closes? Why wait 4 months + for the bank to underwrite, etc..

It only takes 20-45 days to finance a purchase transaction.

What you’re describing might happen where the property has some issues which prevent financing at all. I have a client doing that right now (hopefully).
Reply – Condoseeker @ 26<\/a>:
Has anyone thought that there might be those folks out there that pay all cash just to get the deal done and then refinance after the transaction closes? Why wait 4 months + for the bank to underwrite, etc..<\/blockquote>\r\n\r\nIt only takes 20-45 days to finance a purchase transaction.\r\n\r\nWhat you\'re describing might happen where the property has some issues which prevent financing at all. I have a client doing that right now (hopefully).',''); return false;">Quote

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By: softwarengineer

softwarengineer — Tue, 20 Mar 2012 14:19:07 +0000

Trends for the Future?

Back in the 50s ma and pa banks wouldn’t lend more than your yearly salary and that was if you had collateral to back up the loan too.

After the recent barrage of toxic loans, welfare to the rich and upper middle incomes, a bankrupt US treasury as a result…..we’re about to enter the 1950s Twilight Zone again?

Thank God women are catching up and surpassing men in yearly wages now [see a recent Times magazine for the story]….we’re gonna need their pay to start saving for a Seattle house?
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By: John Bailo

John Bailo — Tue, 20 Mar 2012 14:18:57 +0000

RE: Dweezil @ 9 –

My question is what happens to all these landlords when demand really drops, and they have unrented units that they have to pay taxes on?
Reply – Dweezil @ 9<\/a> - \r\n\r\nMy question is what happens to all these landlords when demand really drops, and they have unrented units that they have to pay taxes on?',''); return false;">Quote

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By: mukoh

mukoh — Tue, 20 Mar 2012 13:29:06 +0000

RE: David Losh @ 16 – Down, I ment by big that there were 300+ people in one conference hall.
Reply – David Losh @ 16<\/a> - Down, I ment by big that there were 300+ people in one conference hall.',''); return false;">Quote

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By: Hugh Dominic

Hugh Dominic — Tue, 20 Mar 2012 07:26:25 +0000

By patient @ 21:

RE: Hugh Dominic @ 18 –
Investors want to put their cash to work and probably expect well above bond returns on a flip or new construction after tear down. I’m also not sure what kind of rates you get for a corporate investment purchase but it’s likely higher than a private mortgage. Cash probably makes sense for a professional “flip”, especially when buying distressed property.

I can see that for investors becaus they think they’ll have their cash back in 6 months. What I’m talking about is Ardell’s clients. We have years of interest rate hikes ahead of us. Why tie up your cash for 30 years?
Reply – patient @ 21<\/a>:
RE:<\/b> Hugh Dominic @ 18<\/a> - \r\nInvestors want to put their cash to work and probably expect well above bond returns on a flip or new construction after tear down. I\'m also not sure what kind of rates you get for a corporate investment purchase but it\'s likely higher than a private mortgage. Cash probably makes sense for a professional \"flip\", especially when buying distressed property.<\/blockquote>\r\n\r\nI can see that for investors becaus they think they\'ll have their cash back in 6 months. What I\'m talking about is Ardell\'s clients. We have years of interest rate hikes ahead of us. Why tie up your cash for 30 years?',''); return false;">Quote

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By: Hugh Dominic

Hugh Dominic — Tue, 20 Mar 2012 07:23:18 +0000

RE: Condoseeker @ 26 – It’s possible but I think in that case the mortgage interest is not tax deductible above $100k.
Reply – Condoseeker @ 26<\/a> - It\'s possible but I think in that case the mortgage interest is not tax deductible above $100k.',''); return false;">Quote

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By: Condoseeker

Condoseeker — Tue, 20 Mar 2012 05:18:36 +0000

Has anyone thought that there might be those folks out there that pay all cash just to get the deal done and then refinance after the transaction closes? Why wait 4 months + for the bank to underwrite, etc. I think one contingent might be those folks who, in a low inventory environment OR dealing with a REO, offer all cash just to get a deal closed quickly and then finance 50-70% of it afterwards with cheap cash from a bank.
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By: Jonness

Jonness — Tue, 20 Mar 2012 04:59:41 +0000

RE: Scotsman @ 24 – And the FHA’s also tend to have a bit lower rate, which helps to offset the higher cost of the insurance fees. I’m such a miser though that I prefer to put 30% down and get the rock bottom conventional rate with $0 PMI.

http://1.bp.blogspot.com/-DkDrbQqpP90/Tlu1uR_BLtI/AAAAAAAAALI/WSUxpA8wDeo/s1600/cartoon.gif
Reply – Scotsman @ 24<\/a> - And the FHA\'s also tend to have a bit lower rate, which helps to offset the higher cost of the insurance fees. I\'m such a miser though that I prefer to put 30% down and get the rock bottom conventional rate with $0 PMI.\n\nhttp:\/\/1.bp.blogspot.com\/-DkDrbQqpP90\/Tlu1uR_BLtI\/AAAAAAAAALI\/WSUxpA8wDeo\/s1600\/cartoon.gif',''); return false;">Quote

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By: Scotsman

Scotsman — Tue, 20 Mar 2012 04:37:18 +0000

RE: Jonness @ 23 – RE: wreckingbull @ 22 –

If one is wiulling to pay a bit more in interest/fees FHA would be the way to go if only because the interest rate/loan would be assumable by a qualified buyer in the future. Rates are good, the pmi equivilent adds a point or so but if rates do shoot up your assumable balance could be attractive. The downside is getting a property to qualify for FHA can be a pain and sellers don’t like it. I floated the idea when buying our REO and it went over like a lead ballon with pretty much everybody involved with the process. Rather than lose the deal we went with a conventional 5% down. I figure Benny B has comitted to low rates through 2014 so we’d have time to better anticipate what might be coming next in the macro picture.
Reply – Jonness @ 23<\/a> - RE:<\/b> wreckingbull @ 22<\/a> - \r\n\r\nIf one is wiulling to pay a bit more in interest\/fees FHA would be the way to go if only because the interest rate\/loan would be assumable by a qualified buyer in the future. Rates are good, the pmi equivilent adds a point or so but if rates do shoot up your assumable balance could be attractive. The downside is getting a property to qualify for FHA can be a pain and sellers don\'t like it. I floated the idea when buying our REO and it went over like a lead ballon with pretty much everybody involved with the process. Rather than lose the deal we went with a conventional 5% down. I figure Benny B has comitted to low rates through 2014 so we\'d have time to better anticipate what might be coming next in the macro picture.',''); return false;">Quote

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By: Jonness

Jonness — Tue, 20 Mar 2012 04:29:52 +0000

I recently made an offer on an REO. My thinking was, my girlfriend and I would live there for about 5 years in order to cut down the commute distance to our jobs.The house was one of the only great houses listed in the area and was priced less than 50% of it’s 2006 sales price.

OK, I didn’t get the house. But it got me to thinking. As much as I like not having a house payment, and as much as I like putting my paycheck in the bank every month, I tend to think the mid to longterm future will probably be inflationary. I ultimately decided it’s better to put 30% down on the house and invest the rest. I think that strategy is hands down the bigger wealth builder in the long run. I can earn more than 3.75% (price of a 30-year fixed) by investing the money, and by the time I pay back the loan, the dollar will be worthless. It’s kind of like getting a free house.

Interestingly, the median household income to median house price ratio in Seattle is back to April 2001 levels. We are at the point where the impatient early birds with decent brains start jumping off the fence. It’s not a great time to buy, but it’s not a bad time to buy if you are going to live in the home for a while or cash-flow the property as a rental.

The economy is crawling out of this mess. It’s possible that next winter will represent the bottom of the Seattle price declines. Then again, maybe not. To each there own. I see no hurry. Find the right house at the right price or stay put and continue to save your rear end off.

I’m not trying to be snobby here. 5 years ago, I didn’t have the down payment for an FHA loan. That’s why I continue to preach the power of living frugally and saving like crazy. It has changed my life forever. Call it the old fashion way, but it is a way to claw your way up from the bottom in a rapid fashion.

BTW, aapl broke out above $600 today. This stock is crazy.
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By: wreckingbull

wreckingbull — Tue, 20 Mar 2012 04:03:30 +0000

RE: Scotsman @ 20 – I really don’t see why someone would choose an ARM when you can get a 30 year fixed for a point and a half more. Not only can you lock in the low rate, but you have 30 years to decide when to pay off the note. Maybe 5 years, maybe 7 years, or maybe 30 years. Add in a high probability of inflationary times in the next three decades, and I think it is a no-brainer. I suppose if you really wanted to have things paid off in 7 years, and could always do so immediately, it could make sense.
Reply – Scotsman @ 20<\/a> - I really don\'t see why someone would choose an ARM when you can get a 30 year fixed for a point and a half more. Not only can you lock in the low rate, but you have 30 years to decide when to pay off the note. Maybe 5 years, maybe 7 years, or maybe 30 years. Add in a high probability of inflationary times in the next three decades, and I think it is a no-brainer. I suppose if you really wanted to have things paid off in 7 years, and could always do so immediately, it could make sense.',''); return false;">Quote

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By: patient

patient — Tue, 20 Mar 2012 04:02:59 +0000

RE: Hugh Dominic @ 18 –
Investors want to put their cash to work and probably expect well above bond returns on a flip or new construction after tear down. I’m also not sure what kind of rates you get for a corporate investment purchase but it’s likely higher than a private mortgage. Cash probably makes sense for a professional “flip”, especially when buying distressed property.
Reply – Hugh Dominic @ 18<\/a> - \r\nInvestors want to put their cash to work and probably expect well above bond returns on a flip or new construction after tear down. I\'m also not sure what kind of rates you get for a corporate investment purchase but it\'s likely higher than a private mortgage. Cash probably makes sense for a professional \"flip\", especially when buying distressed property.',''); return false;">Quote

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