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I think not. Where I'm looking, each neighborhood is lucky to have even one sale in the last 6 months. What good are these old comps anyway? Realtors seem to like these to support asking prices. But markets have continued to trend down, interest rates are up, etc. So what to do with comps?
And this says nothing about all the times I ask a listing agent why the home is listed so high, and they say they have comps to support it, but never send any. Wth?? I actually had one listing agent tell us that they have comps supporting the price, "but it would not be in the client's best interest to share them with us"
On that last one, do your best Donald Trump impression as you tell them "Your're Fired! (SM)".
I agree with you, 6 months ago you could have sold a property for more than you are going to get for it today.
Maybe you should look at the town with the second-best schools in the state? I have never heard of anyone having adventures like you looking for a house. Besides unrealistic prices, you have been struggling with structural problems, flood plains, what else?
I mean if you were buying a cheap shack in the 9th Ward of New Orleans, structural problems and flood plain R us, these are part of why you can buy such a shack so cheap.
But you are looking to spend serious coin, IMHO, and ought to be able to get a good house away from flood plains, etc.
On that last one, do your best Donald Trump impression as you tell them "Your're Fired! (SM)".
I agree with you, 6 months ago you could have sold a property for more than you are going to get for it today.
Maybe you should look at the town with the second-best schools in the state? I have never heard of anyone having adventures like you looking for a house. Besides unrealistic prices, you have been struggling with structural problems, flood plains, what else?
I mean if you were buying a cheap shack in the 9th Ward of New Orleans, structural problems and flood plain R us, these are part of why you can buy such a shack so cheap.
But you are looking to spend serious coin, IMHO, and ought to be able to get a good house away from flood plains, etc.
True, true. I've broadened my horizons somewhat. I am still focusing on this house from the 70s, it has a tiny bit of floor tilt, but it's almost 40 years old and probably has settled. I'm going to bring the level to find out how significant it is. The house appears very solid otherwise.
I'm going to have my engineer look at it as well. Problem is the seller is in la la land with the price, there is not a single comp to support it and it needs some TLC, so I don't know how far I'll get. What's annoying is they're asking for over $100k in appreciation since they bought it (10 years ago).
It is a type of trick to get the suckers to not ask the hard questions.
I tell this war story about advising a bunch of my relatives who wanted to buy houses at the last of this prior boom. It took a lot of jaw boning to keep them from leaping into that fire.
Probably involved a 100 houses or better that I looked at for them. Of course it always came down to what was the house really worth? Most of these were older houses.
The correct approach IMHO opinion is to ask the question, "What would it cost to build this house on this lot today?" You then ask, "What would I change and how much would that cost"???
It can be sort of objective. You attempt to develop a feel for what type of premium is being asked. In the case of all these houses they looked at, nothing was remotely worth the money being asked. Most were defective, some in very major ways, we saw the same old mistakes time after time. Cheap psuedo rehab's with less than sterling craftsmanship in old defective designs that would have been less than desirable even in super condition. If you listened to all the pap and bought into the game, sure would have been sorry at the asking prices, basically nothing in it for the buyer, no money left over for any type of rehab or corrections.
The chuckle being you could have looked until the cows came home and it probably would have been the same story. The better option always came down to attempt to buy some land, somehow build it yourself.
In that bunch of houses, two sort of stood out as possible purchases. One was a small sort of Cape Cod house, nicely done, over priced I would have judged by like $30-40K. Sort of a no brainer because the location was just miserable, good house but way over priced, definitely not in that location.
Another was the only real fixer candidate we saw. So, so location, would have needed a super complete rehab. You could only have paid low $40K's to have had a shot at a winner. Would have been a bit limited in what you could have turned it into. Good basic housing but it would have been nothing fancy. Nobody would buy it, way, way over priced, like double. Finally was sold off at an auction and the fool paid in the $60K's. Lots of luck with that one.
What I took away from that entire exercise was the fools basically managed to completely ruin the real estate market for any potential buyer in that last boom. Prices have come down but not to the levels that there is really anything in it for the new buyer. Only with a crazy game of massive appreciation based on nothing can they ever get even in any reasonable time. It only works if the suckers will buy based on a phony type valuation system. Never allow them to ask the wrong questions, pretend it is this or nothing, it will cost more tomorrow.
Plus they want to return to the same game where all sorts of talking heads, parasites, glad handers will get paid, the overhead (can't call it anything else) totally kills any chance of profit for most buyers, even at present levels.
The kicker being the tax man really also got into the game big time. Lots of ways to become the new loser.
To me it remains to be seen how they will attempt to run the game in future. Any type of meaningful reform is not going to happen. The key is always can they get the suckers to pay those super inflated premiums based on some weird logic. It depends on finding the Greater Fool in a strange type of pyramid game.
You are so much better attempting to build new by buying land and then attempting to control the process to get exactly what you want for money that reflects somewhere close to the actual value of the sticks / bricks.
A lot of this mentality will never change until the buyers demand it.
Good points, I have always at least worked out how many square feet, then get the price for roughly similar quality of construction. What I usually found, although it's been 20 years since I bought a house, is that I could buy the existing house for less than it would cost to build a similar house.
Potatosoup, you have certainly found an interesting town there, where prosperous but crazy people build weird houses, some that are structurally unsound, do dumb things to damage them, let their pets use the basement for a litter box, and then somehow think it's still worth more than they paid for it.
I might change my mind if my boots were on the ground there, but offhand it's starting to seem to me you would be better off building than buying what's on offer so far.
Yeah, I think Potatosoup could be getting a sort of education in this entire process.
It is always understand how to put together the parts that make up the house to judge its value. That is land, sticks and bricks parts as you would find it on a truck to build the shack, labor, overhead, etc to make it a finished product. You can fairly estimate those for most houses once you have some degree of knowledge about a local market. If you do that exercise it puts in focus any house price and help illuminate huge asking premiums. Houses selling for far above their replacement values are a sort of red flag.
Plus he may also be in a type of market where a lot of cute games get played depending on who the buyer is. The locals know one set of facts and will only pay up to a certain level but the mover's and shaker's target folk from outside that area to really jack up the premiums asked. Far above what any local would pay.
That happens in my area. That in conjunction with another cute game where they try to rip the locals by telling them the house is basically worth little, try to arrange a sale to a straw buyer, the house is then flipped around quick to a buyer from like a big city for an extreme premium price. An operation that used that method has been shutdown in my area, the details still to be disclosed, some jail time would be a nice message but it sure did make a mess of the market for anybody trying to buy something in a normal way. In effect the real estate agents acted as a screening mechanism to roll any available properties around for extreme profit, with all sorts of games played in the process. Both seller and buyer got really hosed.
Another guy tells me the same thing was basically run up in the UP of MI, there they were selling the final products to folks trying to escape the bigger cities like Chicago. In many cases the locals may not tell an outsider the truth.
Land can be the key to many markets. Back when in Boston about the time busing hit, you could buy a house for far, far less than its replacement cost. Bargains by the bagful, the risk was, Boston was maybe going to become the new Detroit. You could buy many empty city lots for a few hundred dollars. The risk factors were not directly tied to the house itself.
For many years, that situation continued. No new houses were ever built in the Boston neighborhoods, impossible to get a profit. Finally that changed and prices started to rise. At like something around 80K for the standard single family shack, they started to build new houses again. That continued to the end of the boom. The key to understanding the price rises was land prices were going thru the roof as the boom really caught on and the builders were demanding super profit margins. The basic price of actually building the shack remained about the same. One example, this guy build one on a lot behind my house, paid like 100K for a 6000 square foot lot, the house sitting on it as final construction probably was like $225K out of his procket, he wanted $430K from a buyer. An insane system where the buyer was led to the slaughter. Nobody asked the right questions.
Some situations today might be a total trap, there is no right answers if you jump into it. The economics are that distorted, the present buyer is buried in a house and paid so much premium that there is no way out. There are a few of those around me. Basically there is no way for any buyer to ever get it for what it would have to sell for, for that buyer also to not become trapped like the present owner.
So I think there is so much to be understood, lots of it nobody might want to talk about. Never depend on those who make their living off the industry to ever tell you the truth. Learn to come up with your own evaluation type system. There are some games that can not be won. What some fool just paid next door may have zero bearing on what anything is actually worth.
Remains to be seen, how the present housing mess will work out. I don't believe they will be able to engineer another stupid bubble with extreme premiums like last time but you never know. I would be figuring what any house is worth as a sticks and bricks replacement and then asking very hard questions about why I should be paying more. Might be justified under some conditions but I would be understanding it at many, many levels. When prices get extremely out of whack with the rest of the normal economics, especially the ability of the buyers to afford it with a reasonable percent of their disposal income then you are in never, never land. In many areas that still may be true. Could be true in the areas that Potatosoup is trying buy. IMHO in many cases just about impossible situation to have a good result for the new guy.
Good points, I have always at least worked out how many square feet, then get the price for roughly similar quality of construction. What I usually found, although it's been 20 years since I bought a house, is that I could buy the existing house for less than it would cost to build a similar house.
Potatosoup, you have certainly found an interesting town there, where prosperous but crazy people build weird houses, some that are structurally unsound, do dumb things to damage them, let their pets use the basement for a litter box, and then somehow think it's still worth more than they paid for it.
I might change my mind if my boots were on the ground there, but offhand it's starting to seem to me you would be better off building than buying what's on offer so far.
Well I've had 1 engineer, 3 contractors, and a septic inspector out to see this house. They've all said I'm crazy for running from it over the structural problem. It all comes down to the fact that the original builder should have doubled or tripled the joist in one single place and it's easy to fix. There are a few other things about the structure, but from what I'm learning no house from 20 or 30 years ago would meet today's code when it comes to structure, and almost all of the problems are fixable.
All good points. The market I'm looking in (Seacoast, NH) has definitely not plumited like the rest of the nation. It has fallen, and continues to fall before my eyes, but it's just holding its value much better. The area has exceptional schools in all of the state, it has top notch international private school where tons of rich people with gagillions send their kids, and it inflates the price for the area since they sometimes buy property for when they visit their kids. That and you're 10 minutes from the ocean, so in a state with almost zero coastline, that's a premium, unlike Florida where there's gobs of coastline.
The house I'm looking at appraised (our lender's appraiser) at 20k over what we offered. I was told by my mortgage broker that the appraisers are being very conservative when appraising above sale value. That said they're using comps and the market is relatively iliquid, even up here.
When you throw in all these fixits that the house sort of needs, and they are all sort of hidden structural things, like basically doubling up studs in the garage, doubling up rafters in the roof, adding an LVL to the sagging joist that runs side to side in the kitchen, and replacing the polyB plumbing, I feel like I should go back to the table with a significantly lower price.
I have brought in contractors from out of state (Mass) and out of county (NH) and they all marvel at the house and say don't run from this beauty. Then again they might just want me to buy it so they can do work on it, lol. Everyone has an angle.
Could I buy a plot of land in that town and build the same house for less than I'm paying? I did the math, because I was getting desperate. The answer is a definite no way. It would be another 100k easily to replace the house as is, and probably another 50k premium for a plot of land that nice.
So I did find a very solid deal, in a small town where ethics are very important. It's so small a town that folks can't afford to outright screw people. People from out of town moving into a town with 2k people are automatically locals the day they arrive.
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Naw, that comp crap ain't worth dink......
