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Topic: Affected by the Housing Slump?
| Author | Message |
| SpinDr810 | Posted – 8/28/2007 7:43:41 PM | show profile Anyone else out there affected by the housing slump? I am trying to sell a home in California and have reached my stress limit! Arghhhhhhhh! |
| wineaux | Posted – 8/28/2007 8:11:02 PM | show profile You are certainly not alone! I sold my home in CA late last year, which I had owned only a short time. We needed to relocate for employment issues, and renting the house out was not an option since what we could have gotten in rent wouldn't have covered enough of the mortgage to make it worthwhile. I sold it for far less than I would have liked, but now I am seeing that it was fortunate that we were able to get as much as we did in a timely manner. I have friends that signed on for interest only, adjustable, no money down-type mortgages and are positively screwed. They are upside down and drowning fast. I know a few people who have given their homes back to the bank, and it stuns me, since they are losing their equity. It's happening seemingly everywhere, but in particular in So. Cal. The market there was inflated for so long. It seems like every day I am reading about plunging home prices, large percentages of foreclosures and sluggish home sales. The good news, in my opinion, is that it is all cyclical and will eventually level out again. Just when, I have no idea. I feel your pain. I hope you are able to walk away with something. |
| SpinDr810 | Posted – 8/28/2007 8:28:45 PM | show profile | email poster Hi Wineaux, I am in the same position. Trying to relocate to NYC for a job offer, and I have until January to work it out. I am in Southern California where I can't even cover my costs if I were to rent. I am already priced as low as I can go in order to break even---just walk away with nothing. But unfortunately, this is still about $30,000 over the comps in my area. I fear I will lose the amazing job opportunity if I can't sell my condo in time. It's really out of my hands at this point, so keep my in your thoughts and prayers! |
| wineaux | Posted – 8/28/2007 8:56:57 PM | show profile It just sucks. I'm so sorry. I will certainly keep you in my thoughts. |
| Astera | Posted – 8/28/2007 9:03:27 PM | show profile I got my real estate license a while back just so that I could sell my parents' house and get the commission on that $2 million sale. I am now on a long-term copywriting contract job for one of the nation's top-10 home lenders. I, too, am in Southern California, so I am familiar with the market conditions down here. Based on what I've seen around the office, it's going to get worse before it gets better. Even buyers with great credit scores and a hefty down payment are getting turned away for loans because very few lenders are willing to make "jumbo" loans anymore (that's anything above $417,000, which, as I'm sure you know, is pretty much everything in California.) The lender I work for stopped offering jumbos for a while. If you really want to sell and relocate, you may have to take a loss. The people I know who have been successful at selling their homes in this terrible market have priced extremely low to begin with. It's better to make one drastic cut than a series of little cuts, because with little cuts, buyers think that you'll eventually make another little cut soon, and they'll wait it out. Your other option is to offer a higher-than-normal commission--say, 7 percent, with 3.5 percent going to each real estate agent. I know, I know...why should you pay more commission? Aren't you paying enough already? The fact is that most real estate agents will accept 2.5 percent, or even 2 percent, so if a seller offers more, it really catches the agents' attention and makes them more likely to steer their buyers toward that property. Things are bad right now. I thought about trying to sell real estate when I located down here a few months ago, but I quickly gave up that idea--couldn't risk going for months without a paycheck. There are still some buyers out there, but you will have to be very aggressive with pricing to get them to come out of the woodwork and make an offer. Good luck...I really hope it works out for you. ------ www.adventuresofastera.blogspot.com |
| wineaux | Posted – 8/28/2007 9:10:20 PM | show profile ooooohhhhh....that truly incenses me. MORE of a commission? To do what agents are already overpaid to do? To hell with that. Real estate is a miserable racket. I may continue to rent forever just to never deal with another real estate agent as long as I live. |
| keltoi | Posted – 8/28/2007 10:26:15 PM | show profile My wife and I have been trying to sell her little house in Northeast PA for a year now, and no one is buying. We bought a house together in June 2005 about 25 miles from her old one, and have been trying to sell hers ever since, with barely a nibble. Fortunately we didn't get stupid and use a bridge or ARM loan, but it's a challenge juggling the two mortgages and the fat equity loan we used as a down payment on our house. We hope we won't have to carry both through another winter, but it's looking likely. |
| writesonwater | Posted – 8/28/2007 11:32:19 PM | show profile | email poster The housing market is cyclical -- the trouble is that in pockets of places like California, prices were over-inflated. Did you buy into the market at its peak? If so, and if you didn't put much or any cash down, you might could have trouble getting out from under in short order. You may be best off if employment is still good in your region, you didn't buy when housing was its highest, and you have some equity in the house which could be used as wiggle room on your selling price. Renting it out from a distance is easiest if you have trusted contacts or a trusted realtor to function as landlords in your stead. Otherwise, you may want to talk to your lender/servicer about loan modification -- changing the terms, such as interest rate, reset date, length of terms, etc. Right now they're being unusually flexible; this COULD give you a chance to wait for the market to improve (rent in the meantime) etc. Good luck! |
| SpinDr810 | Posted – 8/29/2007 10:52:45 AM | show profile Thanks for all your advice everyone. I did by at the height of the market, but in a community that was a bit undiscovered. It's located in the wine country. I put 20% down, and have barely any wiggle room. My realtor emailed me last night and suggested I drop the price by $45,000. Does he think I'm rich?! Man, I feel like if I don't dump it now, I'll have to wait 3-4 years until things get better! So discouraging. |
| questoo1 | Posted – 8/29/2007 11:41:23 AM | show profile wineaux, what do you mean they gave their houses back to the bank? I'm in ny, but in my experience thats the last thing that banks want to do. They are in the business of lending money, not property owners - it really is a last resort for them. That being said, if anyone is drowing because their recently adjusted a.r.m. is more then you can afford, try to negotiate a new rate with your bank - again, they don't want you to foreclose. That all being said, this is a tough situation and I wish everyone the best of luck. |
| wineaux | Posted – 8/29/2007 2:22:49 PM | show profile I lived in wine country too, in a tiny town that is sort of a niche market. My agent asked me to list the house about 50k less than what I had paid for it. I refused, but did list it slightly below what I paid. I sold it within three weeks, and still did sell it for more than what she'd suggested the list price should be. I shudder to think what I would have gotten for it if I'd listened to her. Shortly after I sold my home, my neighbor listed her property at the price my agent had pitched for me. Their house was nicer than mine in several different ways and they got 25k less than asking. This was 10 months ago, and I'm guessing it is worse now, unfortunately. I'm not all that well versed in real estate, but I had two people I am familiar with tell me that after attempting to sell their home unsuccessfully, only getting offers of 100k below asking, the banks took the home back, along with some stiff penalties and a loss of equity. I'm sure there's far more to this story, but I didn't delve too deeply, since they were really upset to lose their waterfront home. This was about a year ago, when the slump began in So. Cal, so I'm guessing that since things have gotten so much worse, it isn't as easy to get a bank to work with you. maybe the real estate poster who sold their parent's house can explain it more in detail than I can. |
| Astera | Posted – 8/29/2007 5:27:42 PM | show profile People who give their homes back to the bank are usually involved in what's known as a "short sale." They cannot get anyone to buy the home for more than they owe on it, and they can't afford to make up the difference themselves, so they make a deal with the bank to sell it for less than they owe, and then the bank takes back the property. Banks don't like to do it because they don't want to have a lot of real estate (REOs) on their books. For instance, I think that Countrywide owns something like 10,000 homes in California that they are now trying to sell. A short sale is not a foreclosure, but I think it still has some sort of negative effect on your credit. (I've never dealt with this situation myself.) I do know, however, that if the bank agrees to take back your house at a discount, the IRS views the difference between what you actually owe and what you sold for as capital gains, so you're looking at a hefty tax bill. If I were trying to sell in this market, I would price my house on the low side to begin with. Then, if I didn't get any offers within the first month, I would make a drastic price cut. I think sellers need to take the long view. Of course, it's terrible to lose money on the sale, but if you really need to move, what are your alternatives? Is it better to keep paying the mortgage (and possibly pay rent or another mortgage wherever you move to) for six months, a year, or longer? Who can afford that? I rent in a pretty nice beach community in SoCal, and I see properties lingering on the market for more than a year. If you don't get any nibbles on your house within a month, then something is wrong, and it's usually the price. ------ www.adventuresofastera.blogspot.com |
| wineaux | Posted – 8/29/2007 8:53:32 PM | show profile Thanks for clarifying Asteria! |
| wineaux | Posted – 8/29/2007 8:58:00 PM | show profile Sorry, I meant Astera. |
