How do you respond to record low inventory as a buyer?
- Be more aggressive; bid high & strong when you find a home you like. (15%, 31 Votes)
- No change; it does not affect my strategy. (8%, 17 Votes)
- Be more cautious; avoid bidding wars and be conservative on price. (28%, 57 Votes)
- Back off; I am putting my search on hold until inventory improves. (49%, 96 Votes)
Total Voters: 201
This poll was be active 02.24.2013 sidebar through 03.02.2013
Rate this post:
+4-1
It astounds me Tim that more is not presented here on The Bubble about Trustee Sales that are having 50+ properties each Friday changing hands. Considering the great difficulty people are having in the “RETAIL ARENA” finding properties. I keep finding an ENDLESS SUPPLY coming back at over 50% off retail prices each and every week.
With so much money waiting to be loaned at The Auctions a competent Seattle Bubble reader will do quite well.
Brokerages like 500 Realty, Red Fin, Wa Law, Remax, JLS, and Keller Williams stand to make SQUAT when buyers engage at The Trustee Sales but with so much difficulty I believe you owe it as a real estate “professional” to educate people there is another way. A FAR BETTER, QUICKER, and EFFICIENT way to buy real estate.
I’m hoping you get some Trustee Sales Professionals on here soon due to all the difficulties these buyers are having. BTW, Buyers…………If you are asked for highest and best, or your offer meets other offers, don’t raise your offer price. Don’t be stupid. There are so many homes coming on the market down the road, while new ones will be built, you will just become another bag holder.
Rate this comment:
0 
0
RE: ray pepper @ 1 –
Absolutely, people should be smarter when they purchase, and by all means look at the auctions. Everyone should be looking at the auctions right now because there will be some dumping going on from banks.
You have to be careful, you need to buy well, you need to know what you are getting into, but you can also buy from the people who bid at the auctions. A lot of these people are buying to resell. If you buy from an investor before they start woriking on a flip you can have an inspection, you can figure your over all costs, set money aside to “fix” the place up the way you want it, but you are buying in at less than flipper pricing.
There are strategies for buying property in a fast market. Look at everyhting, even the stale listings, expireds, delisted.
Rate this comment:
0 
0
We’d like to buy sometime this year, and financially are relatively well-positioned to do so at any time, but we’ll keep renting and saving until supply and demand are reasonably balanced.
Rate this comment:
0 
0
In line with sniffy. We have a budget and will have to stick with it. Especially in this economy. May mean we lose out on some bids, but what else can we do?
Rate this comment:
0 
0
If my income goes up by CPI and my down payment sitting in a mix of investments can’t buy the same house next year because prices have gone up. We are headed for another bubble.
Well that’s what keep telling myself…
If housing pricing outpaces my downpayment and my income…. What could go wrong?
Rate this comment:
0 
0
Any idea where you can see actual listings for trustee sales?
Rate this comment:
0 
0
RE: ray pepper @ 1 –
Ray. Thanks for the current trustee sale info that you have been providing…So how are these current sales compared to the past? Are the numbers still low compare to one or two year ago? Are banks able to sale more instead of taking back? More big real estate players?
You make buying at trustee sale sound so tempting…Do you, or know who, can assist average buyers at these sale?
Rate this comment:
0 
0
Yes I have many people you can speak with but I’m hoping Tim does provide more information to all of you from other professionals in the field. Possibly the greatest thing that came out of this Real Estate collapse is the sheer number of homes returning to Trustee Sale this decade.
To not educate his readers in this arena is amazing.
Rate this comment:
0 
0
By Ray pepper @ 8:
Ray, didn’t you used to say that the greatest thing to come out of this Real Estate collapse is the sheer numbers who live payment free in their houses, and never get foreclosed?
Rate this comment:
0 
0
That too. But , I suspect “forever” maybe too long. I believe time will be up for a majority of these eventually. But, with mediation now in this State, time just keeps ticking on and on.
Rate this comment:
0 
0
RE: ray pepper @ 1 –
Ray, I would be interested in reading what you would post, maybe a “Trustee Sales 101.”
Fel Temp Reparatio
Rate this comment:
0 
0
RE: Ray pepper @ 10 – RE: Ray pepper @ 10 –
Buying trustee sales is great if you have 20% down and $15k to fix it up. Assuming a house is purchased for $200k, I would need $55k just to buy a trustee sale at an auction and sell it for a profit. The next step will be to sell my condo and rent so that I can have enough money to do what you are doing.
My point is that there are probably other people out there like me that would like to do what you are doing but don’t have enough money to do it. Do you think it would be worth selling my house just to generate enough cash to do this?
Rate this comment:
0 
0
RE: Erik @ 12 – No!
Rate this comment:
0 
0
I know that Jillayne knows a lot about this topic as well. Maybe she would be able to offer her perspective to the blog.
Erik,you are right. If you have cash it is a lot easier to do things than if you don’t, legally at least. You would think that with interest rates so low it would be easy to borrow, but lenders are so risk averse right now they would almost rather sit on cash than loan it. Part of the reason why the recovery is stalled out.
Fel Temp Reparatio
Rate this comment:
0 
0
Thank goodness these guys haven’t got here yet.
http://www.calculatedriskblog.com/2013/02/housing-some-details-on-business-model.html
Rate this comment:
0 
0
RE: whatsmyname @ 15 – Yes. Indeed. And for the same reason, I asked Ray above if any national player is active in Seattle market. Or local player for that matter.
Rate this comment:
0 
0
I see there are some posts on here about buying property at Trustee or Trust deed auction the most important part about buying at these auctions is having your financing in place…..at these auctions your usually required to place a 10% deposit for the starting bid on the property your interested in….other auctions require a flat $5,000 or $10,000 deposit just to bid then when and if your the winning bidder your usually required to have the remaining 90% balance paid within 24 hours. There is the problem ….no conventional bank or credit union would be able to fund your loan in that little time so if you don’t have all cash to purchase you need to go with a private and/or “Hard Money ” Lender ….I personally bought over 100 properties last year the first of the year it was in California ….then when that market became too inflated I switched and now buy homes in Detroit and Chicago they have much better cap rates)
Rate this comment:
0 
0
By whatsmyname @ 15:
At $65-$75/sq ft for homes with good schools they will not be buying anything in the Seattle area. AFAIK the cheapest homes with good schools are at least double that.
Rate this comment:
0 
0
By Jeffrey Martino Young @ 17:
Washington is hard money/cash on the spot. No 24 hours.
Rate this comment:
0 
0
RE: Jeffrey Martino Young @ 17 –
Good for you, and exactly as the game is played. Moving on to greater rental income should do you well, and your investors.
For those of you buying a family home it is much different because of your own out of pocket expenses; you aren’t expensing over your broader portfolio.
You need a game play, some more cash to fix the place the way you want, but it really isn’t that difficult. If I can do it, anyone can do it.
Rate this comment:
0 
0
I have 2 open spots left in the “When will Krismer Be Back” pool.
Next topic please.
Rate this comment:
0 
0
RE: 3rd Generation @ 21 – Kary has been blistered pretty hard here the last few months. He will be gone for 2013.
Jeffery Martino. One thing is certain. You don’t know what the hell your talking about here in Washington State. Furthermore, buying in Detroit? Good luck with that one too. City on verge of bankruptcy and houses that you cannot rent have zero value and are a drag on any portfolio. Keep buying your 100 homes but give your fluff to other people who will believe it.
Rate this comment:
0 
0
Little late to this thread it seems, but my fiancee and I were aggressive in a different way. We saw a home being built by the same builder of a home we had missed out on (sold before we began looking) and had our realtor contact the builder to get us involved in the process before it was ever listed. We did not bid high, but we were close enough to get a conversation going and we are very pleased with the end result. Perhaps there is not enough new construction in the right neighborhoods for this to be a viable option for most, but thought I’d share in case someone out there might benefit.
Rate this comment:
0 
0
This is not for everyone, but another option is to reconsider your neighborhood or even city altogether. The inventory shortage is largely constrained to certain areas. I suffered from a “Ballard or bust” mentality for a long time, then I realized that living in an expensive dump does not lead to a good quality of life. I moved several counties away and have never been happier. I now have four times the house at 2/3 the cost.
Rate this comment:
0 
0
RE: 3rd Generation @ 21 – I expect he has tied his hands to his seat armrests with ratchet straps, but he will find a way to get back soon enough.
Rate this comment:
0 
0
RE: Ray pepper @ 22 –
This guy is describing a very common approach to rental income portfolio building. He doesn’t need to know the Seattle market place because we never got the price reductions some other areas did. You know that by visiting Las Vegas. After the crash, and until this year, I guess, from what I hear, you could positively cash flow a rental unit. The Detroit market place is a point of discussion, but there are areas of rentals that have always been rentals, and always will be rentals. Some of those properties got dumped hard even by long time investors. I’ve been told there are bargains there, but there is so much going on Nationally it’s hard to keep track.
These guys are promising safe returns to investors in the 6% range. Does that seem reasonable? because it does to me.
Rate this comment:
0 
0
RE: David Losh @ 26 – A few years ago (2007-8 sometime) I talked with the homeowner at a moving sale in Newcastle. He had lost his job in the Seattle area, had watched some late-night TV informercial on how to become a slumlord, bought the package and attended the week-long seminar, and was moving his family (with a couple of young kids no less) back to the Detroit area to become a real estate investor. I am not making this up!
Having attended college for a couple of years in Flint (Detroit’s little sister city) back in the 1980s, I had a pretty good idea of what he was in for (and it has gotten much worse since I was there). I wished him good luck, and didn’t waste any breath trying to talk him out of it since the house was already sold and he was cleaning out the remaining stuff. I wonder how things have worked out for him, with Detroit being #1 and Flint #2 on Forbes’ most recent worst-city list.
I am following the decline of Detroit closely and the financial numbers are simply staggering – here, I’ll give you an example from recent news: In the City of Detroit (about 700K population), there are about 305K properties, and roughly HALF of the property owners are no longer paying property taxes! There is one word that describes the situation (and not only theirs): unsustainable.
Rate this comment:
0 
0
RE: Ray pepper @ 10 –
Yeh, it’s great people quit paying their mortgage, but looks like former Sonic Robert Swift’s time is about up:
http://www.komonews.com/news/local/Former-Sonic-Robert-Swift-loses-home-to-foreclose-but-refuses-to-leave-192433591.html?tab=video&c=y
Rate this comment:
0 
0
By wreckingbull @ 24:
There are some very nice houses in Ballard for just a hair over double the median.
Rate this comment:
0 
0
RE: Ray pepper @ 13 –
So, how do i get rich in real estate if I don’t have cash on hand? It seems like in need money to make more money. The only way I will get that money is to sell my house.
Rate this comment:
0 
0
By Erik @ 30:
The old fashioned way? Get a job, save some money?
Work at night if you have to, get two jobs. Buy a lottery ticket?
If it was easy to borrow and turn SOMEONE ELSE’s money into a fortune, everyone would be doing it. Besides, how are you going to qualify for loan with no income?
Rate this comment:
0 
0
RE: Erik @ 30 – RE: redmondjp @ 27 –
The guy who wrote the comment described building a rental portfolio. There are many people who are doing that, some are good, most are bad, bad people.
In a market place like Detroit you would have to be very careful, no doubt about that, but redmondjp just brought up another get rich quick seminar favorite talking point of paying off back property taxes to get properties at a sever discount.
I know most of you don’t follow the infomercial Real Estate scene, but there is, unfortunately, a lot of truth in it.
People make money with Real Estate every day. I think any buyer today needs to educate themselves in all the facets of the Real Estate industry.
So, yeah, you should research the auctions, you should pay attention to broader markets than just what is in front of you. Buyers need to know that there is a bigger scheme out there, and not get caught up in it.
and Erik, cool your jets, get a job, save some money, work for some one in the Real Estate industry, and try to learn something.
Rate this comment:
0 
0
RE: David Losh @ 32 – RE: Howard @ 31 –
I am an aerospace engineer. I have a good job. I make decent money. Saving up enough money to do this auction scenario is really hard for me since I need like 55k just to do it.
I recently fixed my credit. I could buy another homepath home and rent out the place I have now. Then I will sell the place i rent and move forward with the trustee sales.
Saving for 3 years and spending the money on a trustee sale is the painful way to do it. I’m not that disciplined to live frugal for 3 years. I bet there are other ways.
Rate this comment:
0 
0
RE: Howard @ 31 – RE: David Losh @ 32 –
I understand if you work really hard your entire life, you’ll eventually get rich. I’m not interested in working hard my whole life. I want to make a bunch of money and retire. I think it’s possible if you are smart enough.
Rate this comment:
0 
0
RE: Erik @ 33 –
You build wealth by the accumulation of property. You have to figure out how to pay for it, in good times, and bad. The auction is always a risk, and you can make or lose money. The trick is to be able to afford the risk.
Building a rental portfolio allows you to afford the risk, it gives you cash flow, in theory. You can build cash flow any number of ways, but you need cash flow. Selling a property to risk a second purchase isn’t getting you anywhere.
Go to the Vestus, or investor meetings. Go to the auctions. Meet some of the people who do this full time. Be willing to get dirty. Real Estate is a 24/7 business, it goes on all day, all night. There is plenty to do.
I slept in the tarps a bunch of nights. Girl friends left me constantly while I was working. You get a property, and work on it until it’s done, or you hire people.
Go to some investor meetings, get to know the people, and offer to work, work cheap if you have to, but get dirty, do the frigging job, get paid, and keep the day job. Keep what ever property you have, and never sell, no matter what. If have to work a triple shift at 7/11 you do that.
It’s termed the accumulation of wealth. Get the get rich quick idea out of your head.
Rate this comment:
0 
0
I always appreciate the feedback David.
I have gotten down and dirty and remodeled a couple of places. The second one was much easier because I learned some big lessons. I’m trying to plan this out really well and make sure I’m taking the right approach so I can maximize my success and limit my pain. I had planned to sell this remodel and maybe move on to trustee sales, but Ray Pepper gave me a strong “No!” when I suggested I sell my place to create enough money to move forward with that plan. I could probably refinance what I have and get money out to buy trustee sales and remodel them. I have workers and I have some know how.
I will go to the Vestus meeting tomorrow and talk to them.
Rate this comment:
0 
0
RE: whatsmyname @ 15 – Very interesting read. The original article is here: http://www.newsobserver.com/2013/02/23/2702528/california-billionaire-bets-on.html
Where we read about a flipper-pastor! But the article is missing some details: “Creswell had bought the property back in April at a foreclosure auction for $162,500. After fielding low offers for months, the mystery buyer offered $210,000, or $10,000 below his asking price.”
Why couldn’t he dump the property after snagging it at auction? And why did the fund pay so much: “Creswell eventually agreed to a price of $213,000, or $1,000 more than the home originally sold for in 2002. In addition to paying cash, the buyer paid the closing costs and the cost of the home inspection.”
I certainly don’t know squat about the NC market (but looking at Atlanta shows a very different market from Seattle!!!) but I don’t know what the fund expects to do. Looks like some builders lucked out.
“American Homes 4 Rent hopes to charge monthly rents equal to about 1 percent of the purchase price, and provide returns of about 6.5 percent a year to the Alaska Permanent Fund, according to the board’s meeting minutes. In three to seven years, if the housing market recovers, the portfolio could be sold or be converted into a publicly traded real estate investment trust, which is what Hughes successfully did with Public Storage. ”
Hmm, maybe they’re just milking the fees until the conversion to REIT?
Rate this comment:
0 
0
By 3rd Generation @ 21:
Original post deleted after I went thread hunting.
Tim, could you enable a Private Message function so Kary and Dave could flame each other behind the privacy of closed doors as consenting adults?
Fel Temp Reparatio
Rate this comment:
0 
0
Damm- looks like I missed something. Gonna have to catch up ;-)
Rate this comment:
0 
0
By Erik @ 34:
RE: Erik @ 33 –
Eric: Here’s a lesson for you. First off, if you are an engineer, you should be good at Excel, so go do the math yourself to prove it.
Here’s the lesson: LIVE BELOW YOUR MEANS. In fact, live WELL below your means. Saving is how you accumulate the capital necessary for investment. You don’t have to work your entire life. In fact, if you’re an aerospace engineer, you ALREADY make a bunch of money – well above mean / median / average. You know what is likely your, and for that matter, most people’s problem? They spend it all or so close to all that they never get ahead.
Here’s the math: You need between 25 and 33 times of your annual expenses saved / invested in income producing assets to live on without ever touching the principal. Those numbers correspond to a 4% and 3% rate of return. How do you get there? Well, build yourself a spreadsheet to figure out how long it will take you to save a year’s worth of expenses at various savings rates. In other words, if I save 5% of my annual income (and hence spend the other 95%) it’ll take 95 / 5 = 19 years to save one year of expenses. If you cut your spending some, and save 10% of your annual income, it’ll take 90 / 10 = 9 years to save one year. Cut spending a bit more and save 15% and it’ll take 85 / 15 = 5.7 years to save one year of expenses.
Continue the calculation on your own to the point where you save 80 to 90% and spend only 20 to 10%.
Now, take those results and see how long it’ll take you to get to 25 years of savings and 33 years of savings. As you can see, saving 5% of your income results in taking 475 years to get to 25 years of expenses (19 x 25) saved and 627 years (19 x 33) (assuming no return on the saved monies, which bounds the problem on the long end of the time scale) – in other words, it doesn’t ever get you there (there being financially independent / retired / independently wealthy). You’ll find that saving 60% gets you there in 17 to 22 years – again, without any return on the saved / invested funds. In reality, if you’re sharper than a blunt rock, you’ll get some returns so those time scales will be shorter. So, if you start when you’re young – say you recently graduated with a shiny aero engineering degree at 22 and have been at the Big B for a few years – call it you being 25, you can be retired / FI / IW by the time you hit your mid 40′s, easy.
Oh, and there’s no short cut unlike your whiny post at 31 implies you want. You have to work hard, especially when your young – it makes it easier to save a large fraction of what you earn when you earn more (spend only a small slice of a bigger pie, than a bigger percentage sized slice of a smaller pie that is the same total size).
And how does one go about saving 60% (or more) of their earnings you ask? Easy – don’t be a consumeristic sucker. Skip the cable – it’s there to make you want to buy crap you don’t need and is a huge time suck anyways. Skip the latest piece of iCrap and the expensive contract plan – pay as you go. Big new diesel trucks or sports cars are for morons – get a 5 year old fuel sipper – let someone else take the initial hit of depreciation, then KEEP IT until it dies. Rent a modest place close enough to work to walk or bike to the job, or at least with good transit you can walk or bike to – cars are big money pits, even with a fuel sipper, so drive it as little as practical. Learn to cook at home – better food for a fraction of the cost (in coffee for example, the cost of goods, the coffee, milk, cup, etc is 30% of the sale price, the other 70% being overhead, labor and profit). Expensive vacations to Vegas, Hawaii and Italy are for suckers – take up hiking or bike touring, both of which are better for your health anyways. Fashionista? Sucker. Buy only when what you have is worn out. Consumer / student debt is for fools, pay it off ASAP and never go in debt again – better to earn interest than pay it. And when it comes to owner occupied real estate – if it’s right for you (as in you can stay for AT LEAST 10 years), buy a modest place, one that won’t cost a fortune to maintain and heat and then pay off the mortgage ASAP. Get to being an OWNER quick. Avoid being a perma-renter from the bank with refi after refi after refi where you take cash out and extend the term and extend the term yet again.
Rate this comment:
0 
0
RE: No Name Guy @ 40 – Fantastic advice!
Too bad that our publicly-funded indoctri- uh, I mean education system fails to teach even a fraction of what you laid out! They used to require classes in high school (“home economics” or the like) way back when, but apparently that message no longer serves the power that be (with our consumer-based, debt-funded economy that will be the end of us IMO).
Common sense isn’t that common these days . . .
Rate this comment:
0 
0
Where is the vestus meeting? The website says 5:30 pm,but it didn’t say location. Thanks.
Rate this comment:
0 
0
I voted “be more cautious” since I’m still willing to buy something *if* it is what I want (and I am not lowering my standards just to make it easier to satisfy them) *and* I can do so without being unduly rushed into making a decision.
Practically, however, I realize those two qualifications probably mean I will not be purchasing anything until inventory improves. Which is fine by me; I’d rather rent for another year or two than be stampeded into buying a piece of crap I’ll just regret having bought a year or two down the road.
Rate this comment:
0 
0
RE: David B. @ 43 –
Question. You said “… without being unduly rushed into making a decision”
Do you think it is good when a property is listed giving the buyers 4 to 7 days to view and think about their decision, as in “offers will be reviewed on March 2nd at 5 p.m.”?
It seems a bit arrogant to assume there will be offers. I have seen it go both ways. Two in the same neighborhood. One just went straight to Pending with multiple offers and pre-inspections. The other that said the same thing had no offers. Of course the one with no offers was over priced and the one that went to pending was fairly priced, maybe a hair under priced.
Do buyers prefer offers being reviewed on a certain day 4 to 7 days out from list date?
Rate this comment:
0 
0
RE: No Name Guy @ 40 – Word!.. but TeenErik went to Central Washington U. That’s where the broken pencils go after being denied to UW. They are about equivalent to 1.25 Losh units of intelligence. Similar to WSU grads. In a few years, he’ll get hooked up with some goofy broad who will define his life and he’ll forget about real estate investing for many years. 20 years out, he’ll be rolling around somewhere with a boyish face that’s never seen the sun and a balding head talking about how he started out small with a condo and how he wished he still had it, after all he only paid X amount of dollars for it. But unlike Losh, he won’t play pretend, he’ll keep quiet most of the time, he won’t continue to blurt out what’s on his mind, like a two year old who pulls his pants down… no he’ll keep his pants up.. he’ll have a small amount of something that makes him different than Losh, something that doesn’t quite qualify as modesty or humility but more like a half-knot in his stomach that comes up into his throat and keeps him quiet, that’s what those .25 extra units of intelligence will buy him.
Rate this comment:
0 
0
RE: ARDELL @ 44 – That’s really up to the seller to decide, and I am not a seller. I simply don’t want to buy if it means having to madly scramble and make a snap decision, lest someone else beat me to it. Forget it, I’ll wait until supply and demand are more in balance.
Rate this comment:
0 
0
By ARDELL @ 44:
They both stink as buyers. Rushed and not thinking and evaluating the property thoroughly if we have to make an offer in the first 24 hours. Feel like I am about to screwed with an accepting offer situation.
With the first case, I really can not scope out the neighbors, are they pleasant people or slobs? I can not come back and check out the house during different lights of the day (early am or evening sun). I can’t ask to see utility bills to see if the house is somewhat energy efficient. I probably won’t be able to crawl over the house looking at the nuts and bolts myself. And I won’t have time to dig into public records and building permits. I feel like I am taking a stab in the dark.
In the second situation, I think everyone will bid the asking plus some, escalator clause, waive inspections and I will pay for the priveledge. Granted I have seen some overpriced properties that don’t go pendIng in the first few days, but they are pretty few and far between.
Wait it out I guess….
Rate this comment:
0 
0
We just had an offer accepted on a house in NE Seattle this week. It was a multiple offer scenario, with pre-inspections, a cash buyer, escalator clauses, etc.. We’ve been looking for ~4 months and hadn’t seen hardly anything we liked — we looked at close to 100 houses and made no offers. We’d even considered moving a bit further north to Lake Forest Park or Edmonds, but inventory is tight everywhere.
Finally though, we found a great place I can see us living in for 20+ years in a great neighborhood. We probably overpaid ~5%, but it was worth it to end up in the right spot (10 min commutes for my wife and I, a great elementary school nearby, and family within walking distance). Optimizing for 5% purchase price on a long-term purchase just wasn’t worth it.
Rate this comment:
0 
0