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Many--perhaps most--of the houses listed today were bought long ago at much lower prices. There are lots of houses listed right now by people who aren't serious sellers, apparently hoping that it's not too late for them to cash out by finding someone who will come along and offer them a 2005 price for their house. I suppose there are some saps out there who would do so, but not many. And I'm sure as heck not one of them.
The house that I saw listed at $809K was bought for $247K in the '90s--his mortgage was a fraction of the asking price. Of course, it could be that he had taken out a bunch of equity loans against the house and thus was in at a high amount--I have no way of knowing that for sure without doing a title search. But the feeling I got was that the seller was not motivated and was simply trying to sell at an inflated price. I have three words for those folks: rot in he**.
Sorry for going off thread here but I agree with Prof! A lot of the houses we looked at seemed to have decent equity and we figured we could bid low and maybe the sellers could come our way. And it is not until you do the whole title, deed and mortgage work that you see what happened to the house. I was sure that the sellers of the house we eventually bought made a decent profit and were just stingy during the negotiation. The house was built and bought in 88 for $300000 (already expensive for back then)and was sold to us in 07 for $570000. So we figured they would have at least get $250000 back which is a very nice little profit. But after all the balances were paid off including the realtors fee they ended up with maybe $90000. There were at least 2 bigger Heloc loans on the house that had to be paid of and the main mortgage. Now I am sure the finished basement and some other home improvements were financed with these loans and maybe the kids college but then again why should I fund education and retirement from these sellers? Of course I did! Stupid Me! I am sure a lot of today's homeowners have these problems, even long term original owners and I can only say: Let it be a warning and don't use your house as ATM machine.
Many--perhaps most--of the houses listed today were bought long ago at much lower prices. There are lots of houses listed right now by people who aren't serious sellers, apparently hoping that it's not too late for them to cash out by finding someone who will come along and offer them a 2005 price for their house. I suppose there are some saps out there who would do so, but not many. And I'm sure as heck not one of them.
The house that I saw listed at $809K was bought for $247K in the '90s--his mortgage was a fraction of the asking price. Of course, it could be that he had taken out a bunch of equity loans against the house and thus was in at a high amount--I have no way of knowing that for sure without doing a title search. But the feeling I got was that the seller was not motivated and was simply trying to sell at an inflated price. I have three words for those folks: rot in he**.
I disagree that just because he didn't lower his price to what you wanted is any indication that he was not a serious seller. You have no idea what his personal situation is. As you indicated, he could have a number of equity loans against the property.
Furthermore, in my opinion, how much equity he has in the house has absolutely nothing to do with what his home is worth. And perhaps he needed every penny that he was asking to go purchase his next house.
Prof- do you get pissed off at someone who buys stocks when they are low and want to sell high? What's the difference?
Business is business. If his house is priced too high, the market will naturally push it down. Or he will stay there. No reason that he should rot as you suggest.
I disagree that just because he didn't lower his price to what you wanted is any indication that he was not a serious seller. You have no idea what his personal situation is. As you indicated, he could have a number of equity loans against the property.
Furthermore, in my opinion, how much equity he has in the house has absolutely nothing to do with what his home is worth. And perhaps he needed every penny that he was asking to go purchase his next house.
Prof- do you get pissed off at someone who buys stocks when they are low and want to sell high? What's the difference?
Business is business. If his house is priced too high, the market will naturally push it down. Or he will stay there. No reason that he should rot as you suggest.
Agreed, what the seller owes or doesn't owe on the house has no bearing on what the house is worth. It's only value is a negotiating tool in the sense that if they owe little on the mortgage and they are highly motivated, you might get a good deal.
We owe nothing on our house. We took out a 15 year mortgage when we bought, and paid it off 6 years ago. We paid cash for all additions and improvements. I really hope there aren't people out there who would think we were "greedy" and try to limit our profit just because we tried to do what to us was financially responsible.
Prof- do you get pissed off at someone who buys stocks when they are low and want to sell high? What's the difference?
No, I don't get angry (hey, it's just a house. Housing is a commodity, just like food, oil, you name it). I just think its irrational. I think that too many people develop irrational and economically inefficient views of their home--as if their drywall and clapboards possess some magical ingredient that make them immune from market forces and allows the seller to ignore economic reality.
If the market price for a share of, say, MMM is $78, anyone who submits a sell order for today at $89. is wasting everyone's time. They're free to do so, but c'mon...get real.
I would have been happy to sell my house for what I bought it for, some years ago....if the buyer would be willing to take the house in the same condition I bought it, and refund me what it cost to renovate :-)
$10k on cabinets? They probably wouldn't be as good as quality as what is there now. Those look like real wood! Not wood doors with fiber backing MDF. Just paint the cabinets and do something with the countertops.
The sad and ludicrous thing is that there are probably plenty of "outdated" kitchens which are in perfectly good condition, and with some new wallpaper or wall paint, some cosmetic "cleaning up" of the cabinets with paint (I am not talking about refacing them), and possibly, but not even necessarily, redoing the counter tops, perhaps a new floor covering, are fine. But in our Keeping Up with the Jones culture, everyone thinks it has to be "new" and "updated" meaning new cabinets, etc.
What matters is condition, cleanliness, user friendly design and appliances which are energy star and work well. Plus, good light.
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As a buyer, I have little patience for these sellers--they aren't serious so I'm not going to waste my time on 'em. I put in an offer on a house listed at $809K (over priced by about $140K). My offer was about 15% below asking. The buyer countered our offer by reducing his list price by a paltry $20K (i.e. less than 3% off list price) What a joke! I'm sure he thought I was trying to "low ball" him (I wasn't->>
It is hard to know if you are just wishing that the price was lower, or if it is true it was overpriced. Because, even with reduction in house prices in Massachusetts, you do have to look at comparable houses in that area, street, etc. and see if his price is too high or if it is actually in the range of what they are still selling for. Did you check this out and find his price was out of line with the other houses that are comparable in that area? I assume you did, but need to ask.
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The house that I saw listed at $809K was bought for $247K in the '90s--his mortgage was a fraction of the asking price. Of course, it could be that he had taken out a bunch of equity loans against the house and thus was in at a high amount--I have no way of knowing that for sure without doing a title search. But the feeling I got was that the seller was not motivated and was simply trying to sell at an inflated price. I have three words for those folks: rot in he**. >>
Before you get too emotional about all of this <ggg>, let me tell you about my house, the one I live in, in Queens, NY. Houses on my street just about the same were going for (and selling) about $300,000 in 1996. I remember because a realtor was telling us how the houses had "gone up" so much. By 2005, our house was an easy sell at $950,000. Now, realistically, it would sell for $825,000 (not unusual for a house like ours in our very sought after area). And, the asking price people will set (I see the ads for houses around us) are currently $850,000 to $895,000. Now, I have been following the eastern Massachusetts market for years. Yes, prices have gone down, but they are not anywhere what they were in the 1990's. At least, I don't think so!
I would have been happy to sell my house for what I bought it for, some years ago....if the buyer would be willing to take the house in the same condition I bought it, and refund me what it cost to renovate :-)
You got it. We have put in energy star all new windows and a new entryway, new plaster work inside, and a 30 to 50 year roof (both 2 years ago), new cement floor in the basement with a new floor over that, all new cooper and brass plumbing, replaced the entire kitchen and two baths as well as the gas steam heat boiler and hot water heater...new brick driveway, new masonry wall, new specimen trees using a very expensive landscape company, and my neighbors have done similar work over the past 10 to 20 years, and in recent years. (I have only listed some of the work..much more done. This is what happens with a 1925 house that needs improvements. It costs a fortune. Many houses have required extensive improvements.)
People have spent easily $150K to $200K, at the least, to improve their houses around us, over the years. Then, take into consideration inflation.
I feel that the housing market, nevertheless, is a shame for younger people. (I am nearing retirement age.) It is harder than ever to just find an affordable, cheerful, decent place in a safe area with good schools and near jobs. I have great sympathy for those who need a home and cannot find one that is affordable on today's salaries. Something is very wrong here.
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