Worst Housing Market Ever? (Baltimore: foreclosure, credit, loan)

[carolott]

There is also a dirty little secret -- I dont know if it happens in other cities...but here it has been going on for the past year or so.

Seller "sells" house to a friend or investment partner for "asking price" or above. No money (or very little) actually changes hands, but it inflates the comps in a particular neighborhood.

I can think of at least three or four properties here in Pigtown that have "sold" in this manner, and Im sure there are many more. It took me a while to catch on, but one guy got sloppy with his transactions, so it was right there for all to see, if you paid close attention.

[krakenten]

I remember when you could buy a building in downtown for the money you had in your pocket, so trust me, the market has been a lot worse.

(I actually saw that done, on Eutaw Street, in 1979-the buyer was one of those guys who carried a serious roll of greenbacks, but the price was around a grand.)

[Local Expert]

Good afternoon Annisette,

As a Realtor I believe in using statistics. Based on a report that I just ran for the 21211 zip code from the MLS here is what I can tell you regarding the Average Sale price as a percentage of List Price. In March 2007 sellers were getting 96.70 % of list price. In March 2008 Sellers were getting 90.47 %. For April 2007 sellers received 92.54 % and April 2008 sellers received 94.65 %. Basically, when you are ready to purchase you just need to look at the property, relative to days on market and current inventory.

[jonjj]

Originally Posted by rudy_d

Actually I think that was a typo. I looked at the actual money article and there was a minus sign in front of the 8.

I agree...it's pretty crazy if you search a real estate site for property in Detroit. Check out some of these winners. You could buy a whole block for a few grand.

Detroit, MI, Real Estate Listings and Detroit, MI Homes for Sale - Realtor.com

Here is his property in Farmington, Michigan: a suburb of Detroit.
Farmington, Oakland Michigan Real Estate - 23165 FARMINGTON RD, FARMINGTON, MI* 48336 (http://www.century21town-country.com/property/property.asp?PRM_MLSNumber=28048342&PRM_MlsName=De troitMI - broken link)

Like I mentioned earlier, these places were getting over 200 about 4 years ago and now they are up for grabs and still not moving. Unbelievable. We haven't hit that extreme yet in Baltimore. Notice how I say yet!

[rudy_d]

Originally Posted by carolott

There is also a dirty little secret -- I dont know if it happens in other cities...but here it has been going on for the past year or so.

Seller "sells" house to a friend or investment partner for "asking price" or above. No money (or very little) actually changes hands, but it inflates the comps in a particular neighborhood.

I can think of at least three or four properties here in Pigtown that have "sold" in this manner, and Im sure there are many more. It took me a while to catch on, but one guy got sloppy with his transactions, so it was right there for all to see, if you paid close attention.

There's another dirty little secret where sellers will take their homes off the market if there's no interest and then put it back on a few days later at a lower price. It will make the days on the market look a lot better as well as the % of asking price if it eventually sells.

[carolott]

Originally Posted by rudy_d

There's another dirty little secret where sellers will take their homes off the market if there's no interest and then put it back on a few days later at a lower price. It will make the days on the market look a lot better as well as the % of asking price if it eventually sells.

Interesting. I know someone who's done that, too. Honestly, I don't understand why the market was so inflated in the first place -- most of the houses I looked at were pretty cookie-cutter to begin with...and then there was the one where they laid the hardwood floor upside down (yes, you read that right) and the crown molding stopped in the middle of the "living room" (if that's what you can call a 8 X 8 room). Some sad sorry stuff.

Oh, and then there was the "developer" who hired a bunch of crackheads to do his plumbing...and then they stole everything of value out of the house, including the windows -- yeah, that "shell" is now on the market for 100 grand. Give me a break.

[baltimore's best]

Originally Posted by Local Expert

Good afternoon Annisette,

As a Realtor I believe in using statistics. Based on a report that I just ran for the 21211 zip code from the MLS here is what I can tell you regarding the Average Sale price as a percentage of List Price. In March 2007 sellers were getting 96.70 % of list price. In March 2008 Sellers were getting 90.47 %. For April 2007 sellers received 92.54 % and April 2008 sellers received 94.65 %. Basically, when you are ready to purchase you just need to look at the property, relative to days on market and current inventory.

I wonder if the percentage of asking price statistic improvement is related to the drop in asking prices. People are a lot more realistic about what they ask for a house now.

[Augie]

Originally Posted by carolott

There is also a dirty little secret -- I dont know if it happens in other cities...but here it has been going on for the past year or so.

Seller "sells" house to a friend or investment partner for "asking price" or above. No money (or very little) actually changes hands, but it inflates the comps in a particular neighborhood.

I can think of at least three or four properties here in Pigtown that have "sold" in this manner, and Im sure there are many more. It took me a while to catch on, but one guy got sloppy with his transactions, so it was right there for all to see, if you paid close attention.

Hi Carolott,

Not a dirty little secret, but a common practice all over the country. To wit, I bought my house for $317,000 (asking price was $329,000.00), but the price of $317,000 included a credit from the seller for $7,000 towards closing costs. Hence, my net price was $310,000, but in the real estate stats it shows as having been sold for $317,000. It appears to be legal!

I have seen this many times before. The for-comparable-use price is meaningless to the buyer, but the real net cost has a nice break built in for the buyer, and the seller has better future comparables, if he has more than one unit/house/rehab to sell. Everybody is happy. The same is also done, in reality, in other deals via "free" upgrades. Pay $XXX,XXX and you get $20,000in free granite countertops, hardwood floors, tiles in the bathroom, etc., etc., but the selling price is recorded at the original $XXX,XXX asked. The purpose of comparables is to convince the next buyer to buy at the $XXX,XXX price +++ (obviously). The trap can be when the "free" upgrades are linked to going with the seller's in-house financing where you get screwed on the mortgage interest rate as compared to shopping around at your own banks. If you don't agree to use their financing, you don't get the freebies!!! Sometimes the freebies can end up costing you, in the long run, more than they are worth, in higher mortgage rates.This all comes with experience!!! What I have just told you can save you thousands, if you were not already aware of it. It's a cruel world and there are other traps galore that I've learned about!!! People who like real estate should take the real estate course for a license just to learn this stuff for their own benefit.

[carolott]

Originally Posted by Augie

Hi Carolott,

Not a dirty little secret, but a common practice all over the country. To wit, I bought my house for $317,000 (asking price was $329,000.00), but the price of $317,000 included a credit from the seller for $7,000 towards closing costs. Hence, my net price was $310,000, but in the real estate stats it shows as having been sold for $317,000. It appears to be legal!

I have seen this many times before. The for-comparable-use price is meaningless to the buyer, but the real net cost has a nice break built in for the buyer, and the seller has better future comparables, if he has more than one unit/house/rehab to sell. Everybody is happy. The same is also done, in reality, in other deals via "free" upgrades. Pay $XXX,XXX and you get $20,000in free granite countertops, hardwood floors, tiles in the bathroom, etc., etc., but the selling price is recorded at the original $XXX,XXX asked. The purpose of comparables is to convince the next buyer to buy at the $XXX,XXX price +++ (obviously). The trap can be when the "free" upgrades are linked to going with the seller's in-house financing where you get screwed on the mortgage interest rate as compared to shopping around at your own banks. If you don't agree to use their financing, you don't get the freebies!!! Sometimes the freebies can end up costing you, in the long run, more than they are worth, in higher mortgage rates.This all comes with experience!!! What I have just told you can save you thousands, if you were not already aware of it. It's a cruel world and there are other traps galore that I've learned about!!! People who like real estate should take the real estate course for a license just to learn this stuff for their own benefit.

No, my "scenario" is different. Credits are fine -- bogus transactions are not.

[Annisette]

Originally Posted by carolott

Oh, and then there was the "developer" who hired a bunch of crackheads to do his plumbing...and then they stole everything of value out of the house, including the windows -- yeah, that "shell" is now on the market for 100 grand. Give me a break.

I agree with this! I've been looking at shells online, too. I can't believe shells are going for $100K! That's not fair. It might be worth someone's while to pay $30-$50K for a decrepit shell, and then get a loan for $100K of renovations. THAT might be a real deal. Realtors have to take into account the aggravation, stress and work that the new buyer will have to go through. That time and aggravation has to translate into money. It would probably almost kill me to go through that. But it might be worth it for a REAL deal.