not sure what to title this..
May. 5th, 2008 01:38 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
ceaglemaybe "Because I luvs yas"
or
"Real estate is a shark, and it bites!"
In this hazardous and quakey market, it can be so hard to know what to do. For home buyers, they say it's getting better, but news articles are fishy. A recent article in U.S. and World Report had conflicting information in the very same article! In one section it said houses are not worth what banks have been claiming, but then it goes on to say that banks won't take lower offers, so where is the solution? arf. Many banks take their properties to auction, but then the buyer doesn't know what they're getting, so the problem perpetuates... ;P
For sellers, it's also very tempting to want to believe that what a real estate agent tells us is really the current price. We see a number, and we actualize it in our minds as if it's real, and it can be painful to let it go. Holding on to something that's not real can be more discomforting in the long run though, and real estate agents don't need to have as many successful sales as they used to. When the market was more 'normal', an agent would have to work, and sell several houses for a few thousand in fees to come up to, say, a $50,000 income figure. Nowadays though, they can have lots of listings and not work as hard, because if one or a few sell at a large figure, they've got that same 50k in one or two fell swoops. Thus, the market has gotten much worse for both sellers and buyers, but not really for real estate agents.
It's important to step back and observe any potential transaction, without the influence of our own involvement, or the 'advice' of a biased agent, to be clear on the outcome of what we're expecting to transpire. This will help us determine the likelihood of its transpiring. For instance, let's say, hypothetically, we've got a place to sell, and the agent says to try $550,000... Now let's ask ourselves what that means in the big picture...
Let's say the buyer comes up with 50,000 as a generous down payment. This means they will need a loan for half a million dollars. Let's suppose they can also get a very generous 6% 30 year loan. That means their payments (principal and interest) will be about $3,000 a month. And this sets their property tax rate high too, at about $6,000 a year, an additional $500 per month. If they are a young or first-time buyer, they might also be forced to get mortgage insurance, which tends to be about $50 per 100k, so there's another $250 per month.
And don't forget house insurance. This is about $400 per 100k insured, depending on your area, so that'll be at least another $2,000 annually, around $170 per month.
So overall this is asking a buyer to take on around $3,700 to $3,950 per month in costs. And that's before utilities.
What sort of person makes enough to cover that? And eat, and live, and maybe even have some savings?
Some people can, yup (not me! :> ). But next we have to ask ourselves, will anyone in that income/affordability range be a potential buyer for our house, or would they, looking at that level of expense, want to hold out for something like a 4 bedroom or larger place, etc.
Here's a short side-story of some other real estate agent shenanigans that have been blowin' my mind for a while... There's a house down our street that has been bouncing around in real-estate-agent-wacky-land for over a year now... it's in a pretty terrible location, and all new construction (yecch!), and other houses are going for $400-700k, but they started out by asking two and a half million dollars! And they even had the gaul to call it "private" with half a dozen houses above staring down into their living room!.... Plus!, meager parking and a zilch yard!
They slowly marked it down until they'd wiped a full million off the price... and it's still not selling! Not only does that mean it never was worth that insanely high original number, it shows that money is meaningless to them if they can throw hundreds of thousands of asking-dollars around like that...
Why not just ask a fair price at the get-go?
That way there isn't all this time spent waiting and waiting and losing and worrying and wasting... people can get on with their lives and everyone gets a fair shake.
Naw... instead we gotta have this effed-up crazy market.
I jus' don't wanna see good people get burned.
I don't have a radio or tv station or a newspaper of magazine to tell the world ... just this little LJ. So there's my lil' ole food for thought, in hopes it can help wherever it might.
*pip*
-comments screened for happy-jolly-goodness-harmony n all- ^v^
-if ya want enny unscreened, plz do tell kthx-
EDIT: One commenter posted this interesting LINK... thanks!
or
"Real estate is a shark, and it bites!"
In this hazardous and quakey market, it can be so hard to know what to do. For home buyers, they say it's getting better, but news articles are fishy. A recent article in U.S. and World Report had conflicting information in the very same article! In one section it said houses are not worth what banks have been claiming, but then it goes on to say that banks won't take lower offers, so where is the solution? arf. Many banks take their properties to auction, but then the buyer doesn't know what they're getting, so the problem perpetuates... ;P
For sellers, it's also very tempting to want to believe that what a real estate agent tells us is really the current price. We see a number, and we actualize it in our minds as if it's real, and it can be painful to let it go. Holding on to something that's not real can be more discomforting in the long run though, and real estate agents don't need to have as many successful sales as they used to. When the market was more 'normal', an agent would have to work, and sell several houses for a few thousand in fees to come up to, say, a $50,000 income figure. Nowadays though, they can have lots of listings and not work as hard, because if one or a few sell at a large figure, they've got that same 50k in one or two fell swoops. Thus, the market has gotten much worse for both sellers and buyers, but not really for real estate agents.
It's important to step back and observe any potential transaction, without the influence of our own involvement, or the 'advice' of a biased agent, to be clear on the outcome of what we're expecting to transpire. This will help us determine the likelihood of its transpiring. For instance, let's say, hypothetically, we've got a place to sell, and the agent says to try $550,000... Now let's ask ourselves what that means in the big picture...
Let's say the buyer comes up with 50,000 as a generous down payment. This means they will need a loan for half a million dollars. Let's suppose they can also get a very generous 6% 30 year loan. That means their payments (principal and interest) will be about $3,000 a month. And this sets their property tax rate high too, at about $6,000 a year, an additional $500 per month. If they are a young or first-time buyer, they might also be forced to get mortgage insurance, which tends to be about $50 per 100k, so there's another $250 per month.
And don't forget house insurance. This is about $400 per 100k insured, depending on your area, so that'll be at least another $2,000 annually, around $170 per month.
So overall this is asking a buyer to take on around $3,700 to $3,950 per month in costs. And that's before utilities.
What sort of person makes enough to cover that? And eat, and live, and maybe even have some savings?
Some people can, yup (not me! :> ). But next we have to ask ourselves, will anyone in that income/affordability range be a potential buyer for our house, or would they, looking at that level of expense, want to hold out for something like a 4 bedroom or larger place, etc.
Here's a short side-story of some other real estate agent shenanigans that have been blowin' my mind for a while... There's a house down our street that has been bouncing around in real-estate-agent-wacky-land for over a year now... it's in a pretty terrible location, and all new construction (yecch!), and other houses are going for $400-700k, but they started out by asking two and a half million dollars! And they even had the gaul to call it "private" with half a dozen houses above staring down into their living room!.... Plus!, meager parking and a zilch yard!
They slowly marked it down until they'd wiped a full million off the price... and it's still not selling! Not only does that mean it never was worth that insanely high original number, it shows that money is meaningless to them if they can throw hundreds of thousands of asking-dollars around like that...
Why not just ask a fair price at the get-go?
That way there isn't all this time spent waiting and waiting and losing and worrying and wasting... people can get on with their lives and everyone gets a fair shake.
Naw... instead we gotta have this effed-up crazy market.
I jus' don't wanna see good people get burned.
I don't have a radio or tv station or a newspaper of magazine to tell the world ... just this little LJ. So there's my lil' ole food for thought, in hopes it can help wherever it might.
*pip*
-comments screened for happy-jolly-goodness-harmony n all- ^v^
-if ya want enny unscreened, plz do tell kthx-
EDIT: One commenter posted this interesting LINK... thanks!
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
no subject
Date: 2008-05-06 03:25 am (UTC)This is why my hubby and I HAVE to rent...We don't have the money to invest right now into a home- although in some areas there are some great homes and we could maybe look into getting a home that is going into foreclosure and buying the rest of a loan from a home, but so many homes are upside down in this market...just like you mentioned.
The one bad thing with renting- we are kinda throwing money away by paying rent. We aren't really INVESTING into anything, mearly paying to allow for my hubby and I to live there...which has it's downfalls because we never really reap the benefit of putting that money out there. At least in our own home any money we put into it, we are directly seeing the effect of- such as improvements ext.
Gotta love trying to live in today's world- screwed if ya rent, screwed if ya buy! :P