How much is too much, or too little? (housing, Realtor)

[baystater]

Originally Posted by CouponJack

You only get the deduction if you ITEMIZE. For people w/lower mortgages/home values, this doesn't in most cases happen, I believe.

Also, when you move from certain states (IE NJ) the SELLER has to pay a nasty 1% realty transfer fee that surprises many people unfortunately. There is a growing movement here in NC to implement this to collect revenue also.

NJ Div. of Taxation - NJ Realty Transfer Fees FAQs (http://www.state.nj.us/treasury/taxation/lpt/rtffaqs.htm - broken link)

Trust me no state is more corrupt and out to get all your money more than the pitiful state of New Jersey. Just get me back to Massachusetts. Yeah it corrupt but not as corrupt as NJ.
Hope NC. don't get a similar tax structure as NJ. Otherwise you guys are doomed.

[CouponJack]

Originally Posted by Gretchen B

Oooh, that's not good. And you're right about folks who don't itemize not getting the tax break. Hopefully, though, they're still coming out better than renting for years and years. Although, having had a home in the days of high interest rates in the 80's, I can say first hand we would have been so much further ahead to have rented and put our money in one of those 10%+ CD's that were available at the time. Oh well, hindsight is 20/20.

Gretchen, I cursed the transfer fee when I was closing in NJ, but now I think its a great idea since I'm planted firmly in NC...

Personally, I think renting makes sense in certain situations (everyone situation is different). But I like my home.

[AnthonyB]

Originally Posted by Gretchen B

Somewhere in the 90's up til 2005, homes suddenly became commodities to be purchased like stocks, held, and sold for a profit, and timing the market became critical. "Leap into a new market on the upswing and hope you can get out before it falls" -- just like trading stocks and mutual funds. That's why I'm more worried about the present housing downturn than earlier ones. This talk of lowered interest rates to give the housing market a shot in the arm will only perpetuate the houses-for-profit attitude that's caused the huge price appreciation of the past decade and our current downturn. And who's the victim in all of this? The first-time homebuyers. Most have been totally priced out of the market.

Gretchen - just thought I'd say that you are the most sane realtor I have come across on any board. Your responses are consistently the most even handed and thoughtful regarding all aspects of the housing market that I have seen.

I'd like to add to your post that when the first time homebuyers suffer, everyone suffers as no-one else can move up. The rapid price appreciation has hurt everyone (except for lucky downsizing retirees), including many who don't realize it yet.

[AnthonyB]

Originally Posted by jimj

My question is how much profit should one expect on a house and I will give an example.

I'd go with those who say you can't definitely expect anything. You can ask whatever you like, but you need a buyer who can 1. Afford what you are asking 2. Like and want your house 3. Agree to pay what you want for your house.
The only thing you can go on is recent comps in the area and asking prices for your competition and then hope you find an applicable buyer, or wait until you get an offer you find acceptable - which may take a week, or may take years.

[Gretchen B]

AnthonyB - Thank you for the very nice compliment. That really means a lot to me as I really do try to be as honest and forthright as possible with everyone.

[Northwoods Voyager]

Originally Posted by Gretchen B

AnthonyB - Thank you for the very nice compliment. That really means a lot to me as I really do try to be as honest and forthright as possible with everyone.

What AnthonyB says, I second it. I find your posts to be most comprehensive and true to your name under your name: 'nothin but the facts'. You are a credit to our industry. Can't thank you enough. I look forward to your posts.

[cynmkolohe]

Originally Posted by jimj

Ok, let's refine this further then, within the last 6-8 months the comps have sold for anywhere between 400k on the low side to 460k on the high. Let's take my market for example, the market from 0-350k is moving and from 550k to well over a million are moving. The middle is slow. Now I guess where this is going is not as much what could it be sold for but where do people draw the line as to what's fair profit if it's possible to draw the line?

JimJ, am I reading too much into this by getting the impression that you might be considering pricing your home very low in light of the comps between 400K-460K? Are you asking if it is "right" for you to sell and make a "large" profit since your estimated investment is around 330K (not including the hidden costs already mentioned)?

I read your post earlier today and it has been on my mind all afternoon. I'm curious as to the background of the question.

Let me present another situation and get your take on it:

A client of mine purchased a home before the major upswing of the Hawaii market. A real fixer. Purchased at $139,000. Within a year, the market values had skyrocketed here. Along the way, he got a home equity loan to pay off a small amount of debt and to pay to renovate the house. Refinanced once after buying out the person he had purchased the home with (wisely, to a good fixed rate). Currently has a mortgage balance at 200,000 and a nicely renovated home. Even with the market down-turn, the comps for his area are showing that he could sell for 360-380K, possibly even a bit higher since he has an unusual property with some historic details preserved through the renovation. He will need every penny to purchase a new home.

Should he feel any kind of remorse for having "gotten lucky" in his well-timed purchase (it was of necessity due to relocation, not a planned investment)? I have to say no. There are forces at work in the market that are beyond the control of individual buyers, sellers, investors. I think that is where people get frustrated.

Investing is always about taking risk. I see no need to give your money away if you are in a market that is still healthy and you can still sell and make a profit. If you don't take it, you have just done your buyer a big favor! If you are in a position to do something kind for a first-time buyer, I think that is very generous. But that comes after the house is on the market and after identifying unique circumstances. The list price should accurately reflect the comps and the market trend in your area. Price a bit below the comps if the market is trending down. Price at/near the comps if the trends are static or improving. Then see what response you get from buyers and evaluate from there. I would not advise short-changing yourself!

With aloha,

Cynthia

[jimj]

Ok, this may be a long one...
Cynthia, your idea is somewhat on track, I'm not looking for ideas on where to price my house, but where I was trying to go is I keep seeing posts and hearing talk about how the people selling houses are (to paraphrase) greedy and making an unreasonable profit which is driving up housing prices artifically. Then you hear the other side that says you will only get what the market will bear so take what you can. On top of that is the group that is upset the market is dropping vs the group that is gleeful that it's happening teaching some a lesson.
Where I was trying to generate some thought was pretty much the situation you described, was the person right or wrong to do what they did?

Also, I'd hoped to glean some idea as to what point people thought you were being greedy or just a savy seller.

You see, there has always been this question in my mind as to who sets the market and where the high cost of a house starts. If I sell a house that I got for 1$ for $50 then the next guy says hmmm, I should sell it for $150, how did he get to the idea he can sell it for $150? You can't say comps, because in this scenerio there are none, he is becoming the comp and there is starts but on a grand scale. Is it the realtors telling him he could get that? Is it the guy being greedy? Is it greed if someone will pay it? Should the $150 guy realizing he COULD sell for $150 not do it because he is setting a trend and only sell for $75? The comps have to start somewhere by someone, prodded to do so by????

As for my former neighbor couponjack (I moved from brook valley to here),
A house is definately an investment by the very definition of the word just like a stock is, they both can go up or down, they both require money to buy and the only difference being is you can't live in a stock but over the long haul they both appreciate (most times).
I am at a loss as to why people get more upset when house prices go up but you hear no complaints when google is $500 a share. I understand that it's a house, I get that, but no one has any more right to a house than to own Google stock and maybe that's the issue, people don't look at it that way.

[magellan]

Originally Posted by jimj

Ok, this may be a long one...
Cynthia, your idea is somewhat on track, I'm not looking for ideas on where to price my house, but where I was trying to go is I keep seeing posts and hearing talk about how the people selling houses are (to paraphrase) greedy and making an unreasonable profit which is driving up housing prices artifically. Then you hear the other side that says you will only get what the market will bear so take what you can. On top of that is the group that is upset the market is dropping vs the group that is gleeful that it's happening teaching some a lesson.
Where I was trying to generate some thought was pretty much the situation you described, was the person right or wrong to do what they did?

Also, I'd hoped to glean some idea as to what point people thought you were being greedy or just a savy seller.

You see, there has always been this question in my mind as to who sets the market and where the high cost of a house starts. If I sell a house that I got for 1$ for $50 then the next guy says hmmm, I should sell it for $150, how did he get to the idea he can sell it for $150? You can't say comps, because in this scenerio there are none, he is becoming the comp and there is starts but on a grand scale. Is it the realtors telling him he could get that? Is it the guy being greedy? Is it greed if someone will pay it? Should the $150 guy realizing he COULD sell for $150 not do it because he is setting a trend and only sell for $75? The comps have to start somewhere by someone, prodded to do so by????

As for my former neighbor couponjack (I moved from brook valley to here),
A house is definately an investment by the very definition of the word just like a stock is, they both can go up or down, they both require money to buy and the only difference being is you can't live in a stock but over the long haul they both appreciate (most times).
I am at a loss as to why people get more upset when house prices go up but you hear no complaints when google is $500 a share. I understand that it's a house, I get that, but no one has any more right to a house than to own Google stock and maybe that's the issue, people don't look at it that way.

Having worked for several builders and developers in the past, I think the general industry standard is between 24 - 30% (including sales commissions, advertising, etc.). So that would put you somewhere between $409 - $429,000 jimj if I do my math correctly.

Before everyone screams that 24% is "gouging", most builders cannot really stay in business very long at 24%, unless they are a stripped down "guy working out of the back of his pickup truck" kind of builder.

If you can't make 24%, then you probably shouldn't have built the home (which is why many builders are pulling way back on inventories because they can't make that 24%).

[mrsengle]

Originally Posted by jimj

Ok, this may be a long one...
Cynthia, your idea is somewhat on track, I'm not looking for ideas on where to price my house, but where I was trying to go is I keep seeing posts and hearing talk about how the people selling houses are (to paraphrase) greedy and making an unreasonable profit which is driving up housing prices artifically. Then you hear the other side that says you will only get what the market will bear so take what you can. On top of that is the group that is upset the market is dropping vs the group that is gleeful that it's happening teaching some a lesson.
Where I was trying to generate some thought was pretty much the situation you described, was the person right or wrong to do what they did?

Also, I'd hoped to glean some idea as to what point people thought you were being greedy or just a savy seller.

You see, there has always been this question in my mind as to who sets the market and where the high cost of a house starts. If I sell a house that I got for 1$ for $50 then the next guy says hmmm, I should sell it for $150, how did he get to the idea he can sell it for $150? You can't say comps, because in this scenerio there are none, he is becoming the comp and there is starts but on a grand scale. Is it the realtors telling him he could get that? Is it the guy being greedy? Is it greed if someone will pay it? Should the $150 guy realizing he COULD sell for $150 not do it because he is setting a trend and only sell for $75? The comps have to start somewhere by someone, prodded to do so by????

As for my former neighbor couponjack (I moved from brook valley to here),
A house is definately an investment by the very definition of the word just like a stock is, they both can go up or down, they both require money to buy and the only difference being is you can't live in a stock but over the long haul they both appreciate (most times).
I am at a loss as to why people get more upset when house prices go up but you hear no complaints when google is $500 a share. I understand that it's a house, I get that, but no one has any more right to a house than to own Google stock and maybe that's the issue, people don't look at it that way.

Jimj, the guy selling for $150 will do it if he thinks he can - and he'll only be able to do it if there is a great enough demand for it. If everybody else is selling for $50, no one is going to buy for $150. He doesn't determine the price - the buyers do. If a large company comes to town, and demand skyrockets, $150 wouldn't be such a bad deal. As Cynthia stated below, there are forces at work on the market that you just can't control, and those forces are never static.

I understand that you're not wanting to be unscrupulous or 'greedy' about the sale price of your home, and I really don't think you are. You made the investment, you took the 'risk', and you put the sweat equity into that home. You legitimately earned a return on your investment. All seller's are greedy for wanting top dollar, all buyers are greedy because they want as much as they can get for as little as possible, and the equity is like a splinter of the true Cross - everyone wants a piece. Don't worry so much about what other people think in that regard. Some people really are greedy, and some people are cheap and have a different idea of 'fair,' and get belligerent about it.

Do the best you can, be fair to others, and let the world take care of itself. If $460K would make you lose sleep because you'll feel like a chum, then don't do it. But if $440K is truly a fair market value for your home, don't short-change yourself. It's your property, it's your investment, and you can do whatver you want with it - you can be saavy and fair at the same time.