Buyers are out of their minds! (2014, appraiser, private mortgage insurance, properties)
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It was a bubble, not a boom, and one of the many reasons it formed was because mortgages had became too easy to obtain (I believe this is largely because banks were able to repackage and resell mortgages within complex derivatives, and this meant banks no longer cared about default risk).
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Originally Posted by RomaniGypsy
No. It happened because people allowed themselves to be stupid, overextending themselves to purchase homes they had no business purchasing. When I first sought a mortgage
This fails the same test that the greedy investment banker argument fails. For something to have been the cause of the crisis, something had to have changed recently before the crisis. People didn't suddenly become more greedy. They have always been greedy. Likewise, they didn't suddenly become more stupid. American consumers have always stupidly consumed more than they can afford. However, as long as banks bear the cost of a borrower defaulting on a mortgage, they had an incentive to not make stupid loans to stupid people likely to default. They were screening them out as bad credit risks.
The amount of money in the secondary market for mortgages (CDOs, etc.) mushroomed from $20 billion in 2003 and passed $180 billion in 2007, per Bord & Santos (2011). This increased the ease of a bank reselling a repackaged mortgage to somebody else, and decreased how much they cared about default. When a bank stops caring about whether a mortgage applicant defaults, what does this do to a bank's screening process to keep out high risk applicants?
This fails the same test that the greedy investment banker argument fails. For something to have been the cause of the crisis, something had to have changed recently before the crisis. People didn't suddenly become more greedy. They have always been greedy. Likewise, they didn't suddenly become more stupid. American consumers have always stupidly consumed more than they can afford. However, as long as banks bear the cost of a borrower defaulting on a mortgage, they had an incentive to not make stupid loans to stupid people likely to default. They were screening them out as bad credit risks.
The amount of money in the secondary market for mortgages (CDOs, etc.) mushroomed from $20 billion in 2003 and passed $180 billion in 2007, per Bord & Santos (2011). This increased the ease of a bank reselling a repackaged mortgage to somebody else, and decreased how much they cared about default. When a bank stops caring about whether a mortgage applicant defaults, what does this do to a bank's screening process to keep out high risk applicants?
They have actually made another offer..it is better but still not double for the same reasons stated above. We countered with what would work for us as our final. We shall see....
I hate to interrupt but...
They accepted our offer (the lease purchase) and we feel its a win win for us. You never know so being rude to an unreasonable offer is not a good business decision. I never took it personal. Not to say I wasn't disappointed but I've always kept the end game in sight.
We are fine tuning the contract so not a wrap but closer than we have been.
Everyone seems to have their own "style" when it comes to negotiating.
Experience has shown me that people who subscribe to this particular theory tend to take a lot longer to buy a house. They continually insult the other side, burn bridges, and basically pee in their own Cheerios on a regular basis until such time as they find a seller who is desperate.
I agree, Mike. But that's not malicious. Except maybe to their spouse who just wants a new house.
Pajamama - Congratulations on the contract, and kudo's to you for being sensible.
I've had some low offers accepted for homes I was only marginally interested in.
My agent would call and say I need an offer on this fixer... it has been on the market for 6 months etc...
I'd take a look and say something I would only be interested if I could buy it right and she would say, "Give me your best cash offer"
Bought one home for $11,500 that was listed for 39,500... it was that sad, but made sense at the price I paid.
Bought a great duplex for 25% less than asking because the sellers had several deals fall through subject to the city first time buyers program...
An offer can just be the first step of a sucessful transaction.
On another home my offer was countered at full price... the broker said they will not take less at this point.
Really liked the property and countered at full price with 10% down and seller financing 30 year due at 7 with a great rate for me... they accepted and got their full price!
Seven years later they asked me not to pay it off or refi... they liked getting the monthly checks and we did just that... several of their friends at their retirement community envy them... they wish they were getting 4% on their money.
I still own all of these homes today and have them as rentals...
Real Estate is about negotiation....
Last edited by Ultrarunner; 09-07-2013 at 10:21 AM..
It sure is. Both sides need to agree in order to get the deal done. In the end, it's just business. I don't have a problem with low offers. It's all in the way you handle it. There's no reason for someone to be rude or to act like a petulant child when a seller declines your low offer. Nothing makes me roll my eyes more than when a buyer has the attitude that they're doing the seller a favor by making a low offer even when it's a desirable house. Then they're shocked when they find out there's another offer for much more money.
I grew up around the auto business and I think the sales team would just about fall over if someone paid sticker or have a coronary if someone offered over sticker...
Also, some cultures are more into bargaining than others.
My Grandfather had a customer that took just about all day to make the sale... it was a used car with marathon negotiations... I was there and very young at the time.
Anyway, that customer provided many referrals over the years... through the negotiations mutual respect was earned.
My Grandfather said it was just business and this is why some are more successful than others...
I've sold a few homes and was never offended when a low ball offer came in...
This fails the same test that the greedy investment banker argument fails. For something to have been the cause of the crisis, something had to have changed recently before the crisis. People didn't suddenly become more greedy. They have always been greedy. Likewise, they didn't suddenly become more stupid. American consumers have always stupidly consumed more than they can afford. However, as long as banks bear the cost of a borrower defaulting on a mortgage, they had an incentive to not make stupid loans to stupid people likely to default. They were screening them out as bad credit risks.
The amount of money in the secondary market for mortgages (CDOs, etc.) mushroomed from $20 billion in 2003 and passed $180 billion in 2007, per Bord & Santos (2011). This increased the ease of a bank reselling a repackaged mortgage to somebody else, and decreased how much they cared about default. When a bank stops caring about whether a mortgage applicant defaults, what does this do to a bank's screening process to keep out high risk applicants?
This may be, but regardless of WHO was stupid, human stupidity was at the root of it. Did the buyers of these mortgage-backed securities actually vet the securities and the lending practices of the lenders to see what mortgages they were actually buying? Or could it be that they didn't know what they were buying? STUPID.
Quote:
Originally Posted by ~Pajama mama~
I hate to interrupt but...
They accepted our offer (the lease purchase) and we feel its a win win for us. You never know so being rude to an unreasonable offer is not a good business decision. I never took it personal. Not to say I wasn't disappointed but I've always kept the end game in sight.
We are fine tuning the contract so not a wrap but closer than we have been.
So what terms did you offer them, which they accepted?
This may be, but regardless of WHO was stupid, human stupidity was at the root of it. Did the buyers of these mortgage-backed securities actually vet the securities and the lending practices of the lenders to see what mortgages they were actually buying? Or could it be that they didn't know what they were buying? STUPID.
I thought the deal was they were insured because the buyers were paying for PMI... private mortgage insurance?
I was in Germany and the news was the United States Government would step in... so no worries
It is important to remember that most buyers pay their mortgages... just as it is to see how fragile and interconnected the economy is... single digit defaults and everything goes into turmoil.
During the bust... some Bay Area neighborhoods were devastated... like homes I know down 80% and for others it was hardly a blip...
Many areas have come back and surpassed the peak and many are still struggling with new defaults...
A new default on my street last week... family has been there 30 years and refied too many times...
I must be missing something..feel free to point it out. We received 2 offers today.
One: 15% below listing price with contingency to sell their house. It is not on the market yet. I would rather continue to try to sell my house than wait locked into a contract during high season while they try to sell theirs. What are they thinking?
Second: Rent to own. Rent for $1800/mo with $1500/mo credit toward purchase in 2 years. So basically they would be paying $300/mo rent. I sure as hell would love to have a $300/mo rent payment.
Neither of these are of ANY benefit to us as sellers. Why in the world would the buyers think we would go for it?
When we sold our house we had the under bidding war! Three couples came in $30,000 under asking, fully aware they were bidding against each other. It makes me never want to buy again!
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I would rather continue to try to sell my house than wait locked into a contract during high season while they try to sell theirs. What are they thinking?
