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July 01, 2008


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4,800 square feet - wow - I can't imagine the upkeep on something like that. Not to mention the 10 acres. We struggle trying to keep our 800 sq ft house clean (I guess that's more due to 2 shedding dogs than anything thought).

I think it's always a good time to low ball, people are too personally attached to homes and almost always ask too much

We looked at a house yesterday that fits many of our criteria; it's in a great location and is the type of design we're looking for.

It's priced near the top of our range at about 290k. But unlike a house we missed out on that sold at 280k, this house needs more work. We don't think we could afford to pay more than 250k for it given what it needs. Notice I said "we don't think we could afford...".

After thinking it over we sent a nice email to the real estate agent (who has shown us other properties) and listed the pros and cons and told her our concern with the price. We don't plan to make an offer for the reason the Newsweek article mentioned; it's a new listing and we think it would be a waste of everyone's time to offer almost 20% below the list price.

We have no interest in low-balling. We have a big interest in only paying what we can afford and think the property is worth. There probably are people out there who are low-balling deliberately, but I think there are also a lot of people out there who do their homework and are unwilling to pay too much.

But we'll keep an eye on it and see if it's still available in a few months. You never know.

RHW: Hopefully the house you missed out on wasn't one that you really wanted and that you're kicking yourselves for passing up your "perfect" house for $10,000. Over years of enjoyment that $10k becomes pretty meaningless.

The real-estate market is unique in that sometimes what the house is worth to you may not be equal to what it's fair market value is (in ether direction). If you were planning to stay in the house for any considerable time and can afford the mortgage then most likely the value will be substantially greater in future years. However, attempting to "time" the market and buy at the the lowest point is really really difficult.

Well I did fit the Newsweek article - Divorced, moved, and house was on the market for 8 months by the time we got the bid on the house. It was a reasonable offer I think it was 10k below what we were asking and believe me I was ready to sell it and move on.

rwh - we're in the same boat as you (or a little smaller boat considering price difference). We found a nice home on a half-acre that would be perfect for our dogs and young son. However, they just dropped it from $215k to $199k. It needs a lot of updating - I think an older couple lives there now by the looks of the decor.

We really don't want to pay more than $180k for it, so we're keeping our eyes on it. My wife thinks the same as you - that offering $175k or even $180k would be like a slap in the face to the owner. I don't want to low-ball either, I just think that is what the house is really worth considering the $10-15k we'd have to put into it most likely.

On the bright side, we really weren't planning on moving until next spring anyway and there are similar houses in that neighborhood, so it might make sense for us to wait it out. Plus our agent advised us to wait until next spring since she thinks our house would sell quicker at that time of year.

D: I think you misread my comment. We aren't trying to time the market. We are looking for a house that works for us that we can also afford. I don't think there was anything I wrote that would indicate we're trying to lowball or time the market. We'll have to turn around and sell our house in the same market.

We didn't miss out on a different house because of the price; someone else beat us to it. What we learned is what 280k can get us in our market and the house we looked at yesterday isn't worth the asking price (to us). But it may very well sell for 290. Who knows?

Kevin: Good luck with it. You aren't that far away from 199, about 10%. The best advice anyone could get is to buy only what you can afford. There are lots of houses out there.

We bought our house as a foreclosure and got a steal. I was prepared for the worst because it was listed $45K (25%) BELOW market value. In our area, even the foreclosures and fixers (in much worst shape than this one) weren't listed that much lower. It didn't need a ton of work, just normal upkeep for a house that was close to 20 years old. We put in what we could to make it livable and updated many things. The remaining, we will do as the time and money come. They are fine for now. I agree with the other comments that you just need to make sure you don't go beyond your means just bc it is a great bargain. We found a great deal on our dream house. But to purchase it would have put it at the top of our budget. That didn't include the $50-$60K in repairs and updating that were needed. Yeah, we could have been sitting on $100K in equity about now, but I couldn't have been able to furnish the extra rooms or do anything else besides stay in the gorgeous house.

As a re investor, I had to get used to making "lowball" offers. My motto became "if I'm not embarrassed by the offer, I bid too much". Now I'm buying a residence, obviously the process changes some because the houses are in better shape, but some similarities exist. I also learned that even when a lowball offer is rejected, sometimes they call you back later on when they eventually come to reason or have a circumstance change. If you bid to a bank on a foreclosure, they are famous for this.

You all don't know how nice you have it over there. Around here that same property would be around $1.5 mil, even after the recent, er, correction. Consider yourself lucky.

Consider yourself lucky that you didn't get the home. Someone other than you caught the falling knife. Judging by the comments here, people are still sold on the idea that real estate is always a great investment. Long term, real estate has performed pretty close to historical inflation (although it is failing miserably now in that respect). When you factor in holding costs and maintenance, real estate, especially in overpriced markets like California, is a very poor investment.

I'd stay clear of real estate for another few years. This was the biggest financial bubble in the history of the world, based off rampant fraud and excessive, unchecked greed; all the gains from 2000-2005 will be wiped out and we'll probably fall below the longer term trend. My thoughts are that if you are interested in bidding on property, go to Zillow and find out what the owner paid. I wouldn't pay anything more than 1998 prices +3% per annum inflation. Pay anything more and you've made a bad decision and are essentially funding someone else's retirement.

Then again, don't take my word for it. Although, I sold my house in 2005 (at the market peak) against the advice of the so-called "experts."

Criminey! I thought I wuz gunna die when I had to take care of 3300 square feet. That was when I could afford cleaning help (one of whom ruined the custom parquet floor throughout the kitchen, living room, dining room, and hallway!) and yard care. Forty-eight hundred square feet....gaaaaahhhhh!!!!!

That said, a few weeks ago my Realtor and I actually wrote up a Scrooge-like offer for a house being offered for around $350,000 in an area of $750,000 houses. It needed some fix-up...and some fix-up...and some fix-up. But really, to bring it up to par with the neighboring homes, all of which have had considerably more than mere "fix-up" would have cost a good hundred grand--assuming you didn't run into the obvious problems inherent to house built in the late 1950s. Then we did a little market research and discovered that a house bought out of bankruptcy just around the corner went for significantly less than the lowball offer we were about to make, and another very nice house around the other corner had been on the market for over 400 days. I decided not to go through with the offer. Someone else promptly bought the place. More power to 'em, I say.

In our part of the country, it's not altogether accurate to say RE is a bad investment. Depends on the location, as always. The newly built suburbs halfway to Yuma are suffering. Really suffering! But here in the center of the city, real estate is holding its value pretty well. My house hasn't increased in value much over the past couple of years, but neither has it lost value. Meanwhile, a house my son and I copurchased two years ago reappraised for $35,000 more than we paid for it, and a nearly identical neighboring house just sold for exactly that amount.

IMHO a house is not a home: it's an investment. People get into trouble when they invest emotion into their houses and fail to watch the market carefully. And fail to exercise common sense.

You mention that once the house closes you'll know what the price is and I'm wondering how you go about getting this information. Some houses have recently sold in my neighborhood and while I knew the asking price from the flyers I'm interested in finding out how much these houses actually sold for. I had thought they were asking a lot but the house was only on the market for a few weeks before it went under contract. If you could share how to find this data it'd be really appreciated.

Matt --

I ask my agent and she finds out for me.

Matt, you can also usually find selling prices through your county assessor's website. They might be delayed a few weeks until the clerks enter the information, but it eventually will be there. I do this all the time for houses we're looking at - just to see when the sellers bought them and for what price.

Kevin --

Is there a way to do this online?

Thanks for the info, I'll give both methods a shot although having used the counties website for other things in the past I think contacting my RE agent will be the easier option.

Kevin --

Duh! I just saw you said "website." Forget my question. So much for reading closely before vacation!!!!! ;-)

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