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@m378, trying to follow your math on a small phone screen, so I am struggling a bit to reverse engineer the numbers. Do your buy/sell examples include the monthly mortgage outlay (since you are including the principal reduction)? For an equal comparison to the $2k/mth rent example, the $1420/mth mortgage would need to be included.
Basically I took current value - current balance - realtor fees - closing fees - maintenance - down payment, in order to get gain/loss.
Now that I've had a few beers and am thinking more clearly, I realize that doesn't take into account taxes, insurance, or HOA. So subtract another 10.4k from those numbers.
Location: Chapel Hill, NC, formerly NoVA and Phila
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Quote:
Originally Posted by m378
Basically I took current value - current balance - realtor fees - closing fees - maintenance - down payment, in order to get gain/loss.
Now that I've had a few beers and am thinking more clearly, I realize that doesn't take into account taxes, insurance, or HOA. So subtract another 10.4k from those numbers.
....or something.
Don't forget to subtract out the monthly principal+interest payment, too!
The idea of your house primarily being an investment vehicle is what got us into that mess back in 2008.
...
Quote:
Originally Posted by TarHeelNick
Say it louder for those in the back! I've had a few buyers who are OBSESSED with the thought of a home being a "good investment" and freaking out about the idea of not being able to sell it for a profit in a few years. That's not why you buy a house; and if a financial investment is your main motivation for purchasing a home (unless it is an investment property you plan to rent out)....please do us all a favor and continue to rent and invest in the stock market instead.
This is a common misconception... you cannot draw these parallels in relation to the 2008 "mess". Predatory lending to the buyers who should have never "owned" a home, was, at the very core, the issue. Those people fell victim to "home values only go up very rapidly" when they signed - but, the vast majority of those folks weren't "buying" as a financial investment or to "make money". They were sold the dream of "home ownership" - that's what they were buying. The derivative shell game, the tranches, the outright Wall St fraud... you can't correlate that to a buyer today who is looking for investment value in a purchase.
In fact, if we had more buyers OBSESSED with the thought of the quality of their housing investment, we probably would never had to bailout the crooked bankers.
This is a common misconception... you cannot draw these parallels in relation to the 2008 "mess". Predatory lending to the buyers who should have never "owned" a home, was, at the very core, the issue. Those people fell victim to "home values only go up very rapidly" when they signed - but, the vast majority of those folks weren't "buying" as a financial investment or to "make money". They were sold the dream of "home ownership" - that's what they were buying. The derivative shell game, the tranches, the outright Wall St fraud... you can't correlate that to a buyer today who is looking for investment value in a purchase.
In fact, if we had more buyers OBSESSED with the thought of the quality of their housing investment, we probably would never had to bailout the crooked bankers.
Welll…
There were a LOT more loans to blame in the mess besides getting marginal buyers into house. Yeah, there were tons of them, for sure, but....
"Liar No Doc Loans", Zero-Am, and Option-ARMS offered to investors, and sold aggressively certainly contributed.
Any investor will walk away from an investment property first, and keep their primary.
But, thanks for the nod to the FACT that most buyers MUST consider a return, i.e., resale value, just like their lender does.
It certainly is an investment to buy a home. It just should never be considered a primary investment by people with an otherwise thin portfolio.
I can only speak for myself but Opendoor's offer came in higher than the comps pulled by my RE agent. The comps pulled by my agent took into consideration $10k +/- of improvements I would have had to make to get the house sell-able (Carpet, paint, damaged hardwood replacement, replace windows with a broken seal, fixing broken fence, etc.).
Opendoor's "convenience fee" is 5% in the Triangle so from that standpoint if you were paying commissions you are around break even from a traditional sale.
I don't know what their business model is, but for me, no complaints and I wouldn't hesitate to recommend them. (I can't speak to buying from them as we bought new construction)
I haven't popped in here for quite sometime, but we sold our home to Opendoor. (I really need a new username, but we're here in the Triangle ) Initially, they weren't even on our radar. We kept dragging our feet about selling, mainly because we hadn't nailed down where we wanted to move to. Life changed, more money, further commute from our house, and we felt our neighborhood was no longer a good fit. Had a friend go through the Opendoor process, and he raved. Figured we had nothing to lose by putting our info in. Within 24 hours we had a quote, and it was a hard pass. Received a phone call from them later that evening, and they bumped their offer by 10k, then 15k. It was now within 7k of two estimates we received from a traditional agent. (We had several) At this point, we had watched homes fly off the market in our neighborhood, to sitting with several price drops around late August. We had a corner lot that sat at the front of the neighborhood, and knew it would sit much longer. Decisions.
We've been keeping a close eye on Seattle RE for the past 2 years, and have been witnessing the craziness of RE there, to the basic standstill it's become. A year ago there was no inventory, multiple cash bidders (heavy injection of foreign money) and now it's crickets. Everyone said it couldn't happen there. Interest rates would never affect their market. Too many transplants moving there, Amazon/MS salaries abound, no inventory, too much future growth. Along the same lines of what is being said about the Raleigh area.
This combined with what we were seeing in our own neighborhood, we knew we needed to make a decision. Opendoor said they would come out and do an inspection at no cost to us. Read the fine print, and that checked out. Now this was where I was expecting them to REALLY pull a money grab. I searched here, Reddit, FB comments on their page - and there was a collective "Opendoor charges too much for repairs." Imagine our surprise when they came back 3 days later with $0 in repairs. $0. Almost felt too good to be true. (In fact, the whole process felt that way) The fees were right in line with what we would pay a traditional agent, and no worries of open houses, packing up kids/animals for walk-throughs, the stress of a buyers financing through, etc. It was painless. Moved our closing date twice with no issue on their end.
All that said, we bought brand new in 2013, so had some equity on it, and made a pretty heavy amount off the sale of our previous home in Seattle, which was partially wrapped up in the house we just sold. Did we leave money on the table? Probably, maybe - we'll see how much it sells for and where the market heads. We're just glad to be sitting on the extra cash in the current stock market. Right now it's listed on the MLS for about 10k more than they gave us for it. (They originally had it listed for much more) I don't believe they took into account our lot, or the fact the our color blind neighbors decided to put up a fence 6 months ago, and stain it the most horrible orange you've ever seen in your life. Imagine the Crayola crayon "macaroni and cheese" and spraying that all over a fence.
So while Opendoor worked for us, I'm not confident it's the answer for everyone. Too many variables involved. RE agents despise them, and I certainly can see why.. But I still think contacting several agents, and getting lots of estimates is the way to go first.
TL;DR - we sold through Opendoor. We were happy, it's not for everyone.
Welll…
There were a LOT more loans to blame in the mess besides getting marginal buyers into house. Yeah, there were tons of them, for sure, but....
"Liar No Doc Loans", Zero-Am, and Option-ARMS offered to investors, and sold aggressively certainly contributed.
Any investor will walk away from an investment property first, and keep their primary.
But, thanks for the nod to the FACT that most buyers MUST consider a return, i.e., resale value, just like their lender does.
It certainly is an investment to buy a home. It just should never be considered a primary investment by people with an otherwise thin portfolio.
Agreed - Countrywide and that ilk comes to mind, but I will acknowledge that "strategic default" was certainly a thing - that wasn't the preyed upon who had no business getting a mortgage. Some level of RE investors cut their losses and that certainly contributed. But, many financial institutions were/are positioned to absorb defaults based on accurate risk profiles. The fraud leading up to 2008 was endemic, though. That ultimately was what happened - many references available on this topic, from the Big Short to the recent VICE special report. It's fascinating stuff.
We all should be considering our return on the biggest purchase we will ever make, no doubt. It's why I avoided a "vinyl box" when I bought. Location, location, not a piece o turd. I believe that to be important in transplant heavy areas like the Triangle or Charlotte where we don't have the luxury of a finite number of homes zoned to a certain school in a prime location - we aren't that area where decades old fixers will "pay off big". We have to maintain our investment and it's much easier to do that with a reputable builder in an all brick community (for example). JMHO.
Subprime mortgage holder default rates barely budged. It was a very small increase. The top credit score holders however increased their default rates substantially. The liar loans were used by wealthier investors by all accounts, not the minorities that have taken the blame.
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) Initially, they weren't even on our radar. We kept dragging our feet about selling, mainly because we hadn't nailed down where we wanted to move to. Life changed, more money, further commute from our house, and we felt our neighborhood was no longer a good fit. Had a friend go through the Opendoor process, and he raved. Figured we had nothing to lose by putting our info in. Within 24 hours we had a quote, and it was a hard pass. Received a phone call from them later that evening, and they bumped their offer by 10k, then 15k. It was now within 7k of two estimates we received from a traditional agent. (We had several) At this point, we had watched homes fly off the market in our neighborhood, to sitting with several price drops around late August. We had a corner lot that sat at the front of the neighborhood, and knew it would sit much longer. Decisions. 
