What's going on with the housing market? (short sale, foreclosures)

[healeydave]

Originally Posted by aneftp

Sorry to bust in on this post, but I have a question about Lake Mary too...

My husband and I are looking at a home in Lake Mary that is priced around $700k. The owners purchased in 2005 for $740k and they have decided to take a 3rd party buyout from his employer for I believe $675k-$685k. With the market in the condition it is we aren't sure what offer to make on the house or what we should be willing to go up to...Any advice?

We do have 20% to put down on the home, job stability, and excellent credit so we shouldn't have any problems getting approved for a loan...

The trouble is, that home is 2005 was never worth anything near $740k, it was just the artificially inflated prices.

I purchased a home in 2001 for $160k. Over the next few years, that home accrued little in value in normal market conditions. Then from 2004 onwards the prices rocketed (see ucfjtm msg above).

I sold that home in 2006 for $295k. Now I'm no real estate guru, it was just circumstances. I have just purchased the home behind that home (which is an identical house) for $100k in 2008. Admittedly the new purchase is a bank owned home and in need of refurbishment, but in the current climate, if I was purchasing the same house now, that I sold in 2006, I would only pay around $160-180k (around 40-45% less than the artificially inflated prices of 2005/6).

So on that basis, I would not pay any more than $407k for that home in Lake Mary. It doesn't matter how good the home is and how good the area is, house prices around 2005/6 were just not real and paying anything near those prices now will put you into negative equity right from the outset.

[BuddyDog]

2005 was at the height of the inflated values. If housing values have dropped 20%, then 700k is quite a generous offer. However, price/sf is also important. $175 or less for a upper end LM house is a great deal. Case in point....although not LM technically (less than 1 mile), homes in Hidden Cove (32750) are a steal. A couple foreclosures and at least 3 others for sale. One in particular is going for around $640k for 3800 sf!! On a lake!

[aneftp]

Our realtor is also the selling agent so she can't advise us on the price.

[healeydave]

Another good thing to check is the deeds, go to the county's website and look for a public record search.

You should be able to put the address in and it will give you all the details of the house and the plot etc including the previous owners and what they paid.

Check what the home was worth around 2001/2, that's a good bench mark.

If your prepared to pay more than the value then, that's fine but it shouldn't be significantly more!

[GregTraub]

Originally Posted by aneftp

Our realtor is also the selling agent so she can't advise us on the price.

Oh jeez! Get yourself an agent on your side! I can't say how much you should offer based on the information given. What the house sold for in 05 and what the guy got bought out for by his company has little if any bearing on how much YOU should pay. You really need a CMA done, and for that matter a CRA done (comparable REALTOR analysis) to see 1 what the house may be worth compared to other homes available on the market and 2 to see what the history of this agent has for pricing homes accurately or not.

I'm not sure if you can bring your own agent in at this point, but I'd be certain to try, this is another example of why going with the listing agent instead of your own agent can hinder you. I'd be glad to help on this, and since it seems you already found the house you definitely want, I can work out something with you and the listing agent to make the transaction work....if it's priced appropriately.

[aneftp]

Thanks for the advice and the offer to help. We are going to hold off until November to make any offers as the interest rates are sky high and we want to put 20% down and we will have the funds to do that then. I will hold onto this post and let you know if we decide to move forward with this transaction.

[LIMermad]

Originally Posted by aneftp

Sorry to bust in on this post, but I have a question about Lake Mary too...

My husband and I are looking at a home in Lake Mary that is priced around $700k. The owners purchased in 2005 for $740k and they have decided to take a 3rd party buyout from his employer for I believe $675k-$685k. With the market in the condition it is we aren't sure what offer to make on the house or what we should be willing to go up to...Any advice?

We do have 20% to put down on the home, job stability, and excellent credit so we shouldn't have any problems getting approved for a loan...

I woud definitely get a professional appraisal. If the family bought the house in 2005, they bought at the peak and you would be paying much too much if you pay $700k. Do yourself a huge favor and pay (approx $500 or so) to an (unbiased) appraiser, it would be difficult for the seller to dispute it, but not saying they will accept it either. I am not an appraiser, I am a realtor new to Fl (Lord help me) S

[right-here-i-say]

For a smart investor working with a lawyer there probably has never been a better time to buy a home in Florida. You can get homes at much less than the cost to build them.

HOWEVER, for the normal couple with a realtor who doesn't specialize in Short Sales and Forclosures, this is a horrible time to buy. You will regret it.

[Parrotrosie]

Originally Posted by right-here-i-say

For a smart investor working with a lawyer there probably has never been a better time to buy a home in Florida. You can get homes at much less than the cost to build them.

HOWEVER, for the normal couple with a realtor who doesn't specialize in Short Sales and Forclosures, this is a horrible time to buy. You will regret it.

Why would one regret buying a relatively newer home at this time? We are currently checking out the possiblity...what should I be looking out for?

[right-here-i-say]

Originally Posted by Parrotrosie

Why would one regret buying a relatively newer home at this time? We are currently checking out the possiblity...what should I be looking out for?

You could be overpaying. The market will probably go down to 2001 to 2002 levels. (Not a guarantee, I am just using logical thinking).

Example (my old home compared to identical houses on the same street....I know homes are not 100% identical, but mostly similar)

2001: Purchased for $185K
2002: Homes like mine were selling for $200K to $205K
2003: Right after Hurricane Charlie, homes were going for $275K
2004: Homes were going for roughly $300K to $325K
2005: Identical home that wasn't lake front like mine and pool wasn't as nice as mine went for $380K
2006: Sold my home for $350K
Right now: Identical home to mine lake front listed at $235K

As you can see, $200K to $205K would be accurate considering supply and demand, and higher costs of insurance and property taxes.

So if you buy now, you could be $35K in the hole in a year or 2. If you use a lawyer who specializes in forclosures, you may get the home for $180K.