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dhsbooker:
Most certainly in the area. I live in South Tampa and work in St. Pete, Florida. It will be a chore for me to sell but eventually I can take a $25,000 negative hit if I sell. My equity has skyrocketed in the last 16 years. For those of us going to CR in the future, I should advise you that prices have also skyrocketed over there. The speculators are everywhere, even in CR. My brother is over there doing some dental work. He traveled from Virginia and last week told me that prices are going Up, UP and UP in San Jose in regards to houses. He no longer wants to invest in property but is looking for small apartments complexes, 4 to 6 units to buy and rent. I was amazed to read that Brit’s are buying most of the high end properties in FL to include Tampa/St. Pete. I just hope someone from London comes and buys my house, why not? Now that David Beckham (the soccer player from England) is moving to California, then his cousin can buy my house. DB contract is for $250 million over 5 years. He can loan his cousin a mere $300,000 for my house.
What do you think?Edited on Jan 17, 2007 17:17
As far as Brits and other Europeans are concerned – the one thing that most Americans seem to forget is that the value of the US$ has declined dramatically in value against the pound and the Euro so US$ real estate looks very cheap.
Scott Oliver – Founder
WeLoveCostaRica.comPS. Did you edit this while I was typing? I could have sworn it said $25 million ….
Housing or RE is a very touchy subject to discuss, simply because we always have an emotional attachment to them. Interesting comment from Maravilla, where she couldn’t stomach anymore loss by reducing her price. Just because it sold for more 2 years back doesn’t mean it should sell more the same or more in todays market. That is pure emotion dominating logic. Just because gold sold for $850 in 1980, it should sell for more now. Wrong, for a quarter of a century, it has dropped to as low as $250 and now sells for $650/ounce. Including inflation, investing in gold during the 80’s was one hell of an awful decision.
Now we’re talking about houses (which can be quite scary considering it has carrying costs). Prices have skyrocketed from 2001-2005, over and beyond the point of reason. What’s this point? From an investment standpoint, bottom line is, it should generate you more income than expense, else it becomes a liability. Those 20% increase is just simply not sustainable unless we saw its rental income increase by the same magnitude. The thing is, it did not, thereby creating a scenario where rental income is probably like half or a third of the total cost to own the home. SImply a bad investment. You always have to go with the fundamentals, the herd almost always ignores it and creates these boom and then crash. Cycles of life.
Bottom line. The best investment is what assets can carry the most buying power in the future. Thats it. If you think buying a house and just letting it sit there is fits that thesis, then you are mistaken. Money is not easy to make, easy money is just pure luck.
pura vida
Luckily, I don’t have to sell my house, which puts me in a better position than a lot of people. I can afford to sit on it until there is an upswing in the market. It would be nuts for me to go lower than I already have just to sell it, unless my circumstances change and I’m forced to sell. If I rented it, I would generate 80% of my fixed expenses on the house, so I guess I’ll just wait and see what this realtor says on Friday. She’s already told me that it’s priced right for the market today, which is $80,000 lower than we would’ve priced it two years ago. It’s not emotional with me at all. It’s about the bottomline.
Really crunch those numbers M, figure what it will cost you to carry your place 3-6 months for taxes, fuel, utilities etc…add in the potential headache of a tenant(if you put one in). Also I think we have to assume this market will be flat at best, more likely downward pressure continues. Any bet on the future is pure speculation, unless you have a crystal ball. Ad up all those carrying cost x the time period you will have to wait for this “improving market”. After these calculations are done perhaps it could be wise to go lower and perhaps draw out a buyer now. If this does’nt work in say 1-2 months take it off the market and come out swinging in the spring. Remember those comps you are looking at should only be signed contracts and closed sales. And in this declining market I only like to look back two months. Forget about listed prices they are worthless. I work as a broker in Manhattan and we don’t have an MLS, so I don’t know if this will work. But you can cut the comission in half by not giving the exclusive to a broker, instead open list it with everyone and offer to pay 3% to the buyers broker that sells it and maybe through in a vacation or a flat screen?. I hate to admit this but I currently have an exclusive on a property and if a buyer came to me directly and I could reduce the comission to 3% this thing would have been sold. By waiting you run the risk of having to sell into a much softer market, a very real risk. It’s hard to sell a declining asset(psychogically), thats what killed so many newbies with e trade accounts who were never faced with falling stock prices. They just coudn’t pull the sell trigger untill it was to late! I am more of a market timer, than a buy and hold guy. my Uncle like to say, “You can’t go broke making a profit”. Anyway that just my two cents, goodluck… now it sounds like I’ll have some good bread to sop up that “dog food” with!
Boy I am glad Minnesota isnt that desperate. Lotus how do you work with out a MLS? How ever I have seen some listings offering trips and bonuses lately. Personly the upper bracket homes that I have sold lately only the price works. That and most sellers are paying closing costs but that is to be expected in todays market.
Hola Keith- that is very good advice and yes, i’ve crunched those numbers and we’ve decided if this RE agent who’s coming to look at it tomorrow doesn’t buy it now, then we will list it when we get back from Costa Rica in April at what we believe is the current market value, which also reflects all discounts, etc. If it doesn’t sell by September, then we’ll try to rent it or just carry it through the winter and maybe keep it on the market during that time too. More than a financial burden, it’s a physical burden of having to maintain two homes and flying back and forth all the time, which gets to be stressful given the new tactics of TSA. The housing market up here is completely flat. Homes that were listed last summer and didn’t sell and were then taken off the market, were re-listed in December. Good luck trying to sell a house with one blizzard after another. There’s lots of buzz about the news jobs coming into Colorado so that always gives the RE market a little kick. I have no crystal ball but my ear is to the ground all the time and daily I talk to people about the economic market here. Everyone says it will get better in the spring, but then nobody ever saw this crash coming. As for foreclosures that someone else talked about — we rank #1 in the country (at least as of a month ago). Luckily I have a fixed rate mortgage and never fell for those clever rip-off mortgages. Yes, we are going to be doing a lot of cooking at our house when we get down there — bread included. Hubby’s a chef, one of the best, so he is enthralled with all the fresh food available down there to play with!!
Scott, you are correct in both counts.
The Euro and the British Pound are way ahead of the almighty $$.
And yes, I edited the $25,000,000.00 to $250,000,000.00. It is $250 million dollars over 5 years, 0r $50 million a year or close to a million a WEEK playing for the LA GALAXY team in California. Mr. Beckham (who is 31 years old) will make more money in the US than the Beatles ever did, isin’t this a shame? This is a structured contract of course. The soccer team is only liable for $400,000.00 a year and endorsements for the rest. Clearly endorsements from Wall Street companies and other mayor corporations.
This is in reply to dhsbooker… We have sold several houses by suddenly (after 60 days of a 90-day listing)offering an extra thousand dollars to the SELLING agent. It always angers the LISTING agent who wonders why he or she wasn’t offered the extra thou, but in every case the house sold immediately. And I have always felt that the listing agent should get no more than 90 days to sell the house. And this is to everyone: Be sure you also interview at least three agents. And tell them to throw out the comps and look at your house as an object in itself.
Jim
If I rented it, I would generate 80% of my fixed expenses on the house, so I guess I’ll just wait and see what this realtor says on Friday. She’s already told me that it’s priced right for the market today, which is $80,000 lower than we would’ve priced it two years ago. It’s not emotional with me at all. It’s about the bottomline.
Please don’t take offence, we are all just simply giving our opinions (which obviously could be right or wrong). First problem was pricing it way too high then cutting the asking price by $80K. That’s a huge cut and a good realtor should have told you in the first place that your initial asking price was unreasonable, regardless what 2 years ago similar houses were selling.
Second problem, which is now obvious but in a hot market, buyers just overlook or simply ignore. You said that renting the house can only cover 80% of your costs, which would mean that you will have to carry this 20% carrying costs. From an investment standpoint, you basically overpaid for your house. Rents and housing costs (after deducting a typical down payment of 20%) should be close enough. During the hot real estate market we saw, this ratio was simply out of balance with houses costing more than 3X rents.
I own a duplex rental and if fully rented, covers costs. However, everytime one unit is vacant, it bugs me to no end that I have to dig into my own pocket every month till I find a tenant. If the rent can only cover 80% of your costs (which I think would increase even more when you factor in vacancy), it would become a big burden on you sooner or later.
davidcmurray is right, realtors brake hard for a high commission so sell your house yourself. Put a sign and flyers in front offering 4%, 4.5% or 5% (whatever) to the buyer’s broker and when realtors come to your neighborhood to show a house that is listed on MLS, they’ll also stop to see your house. They’ll also try to get their client to purchase your home if it is as nice as the others nearby because the commission is so much higher!
This is how I sold my house just a few months ago.
Prices in California have not declined very much. We have a lot of regulation here to build and not much available space so there is a housing shortage here. The people who are in a bad position are those that “have” to sell for any reason. With so many houses on the market, it does take time, but prices are still very high here.
Maravilla won’t reduce the price, but continues to pay mortgage, maintenance, taxes, electricity, water, insurance, expense of travel back and forth from CR…. nope, there isn’t anything emotional about this. If you rent it while it is on the market, you won’t get what others are getting because your tenants could care less about keeping it clean for potential buyers. Buying a house to LIVE IN (not as an investment) is all about emotion and I doubt a dirty or messy house will stir up any good emotions. Oooops, except the emotion which says, we could get this messy place for a lot less than they are asking for it.
Hey folks, it could be worse, I hear it takes years to sell a house in Costa Rica…. especially condos because a condo is a condo is a condo. A friend of mine lives near Santa Ana in a condo, on the 7th floor, and there are still condos for sale by the builder 2.5 years after completion and his 2 bedroom condo is really nice! Imagine being in a building, wanting to sell your condo and the builder still has available units – YUCK!
It was our realtor who set the asking price when we first talked about listing it 3 years ago. It was appraised at our original asking price 3 years ago, and the appraised price was still holding when we did put it on the market 18 months later. However, within 3 months of listing it the market started to slide and didn’t stop for the next year, at the end of which we took it off the market after coming down $40,000. We waited 4 months, then relisted it, and reduced the price again to where we are now. I certainly didn’t overpay for the house considering I bought it in 1989 at the bottom of the oil slump in Colorado. Our original asking price when we listed it was 5 x’s what I paid. The 20% of the rental costs that I would have to carry would amount to less than $200 mostly because I don’t have a huge mortgage in relationship to the value of the house. And given the rental market in my area, I could ask for enough to cover all the costs but would risk not getting a longterm renter. It’s not so much a financial burden as it is a physical burden having to divide my time between two places. There were so many factors in play in our area — the price of gas was one of them. I’m 7 miles from the nearest town, and 40 miles from Denver, and when gas was $3.25 a gallon, it made commuting problematic to a buyer in this price range. The other problem is that I have a small house in an exclusive area where the average house is 5,000 – 10,000 sq ft. so it wouldn’t surprise me if a developer bought it and scraped it just for the lot.
“we listed it was 5 x’s what I paid”
Maravill, why don’t you list it for just twice the amount you paid or three times, maybe this will sell quicker?Just a thought because then you don’t have to worry about rentals and you will have plenty of cash in your hand to on with life?
Just a question, is the price that you have it at now under all of your competitiors? Is it set to a level where when a buyer comes in they say hey this is a great buy?
Many sellers belive that if they put their listing price just a little above the price that they want to get that after dealing they will get a price that is ok for them. This is the wrong kind of thought for todays market. When I list a home it is at a point where the home is going to move and my sellers will next enough money to move on. Put it at the rock bottem price and stick to that price you will find that most buyers will pay full price if they feel that it is worth that price.
Seems to me that the more times a house is shown to qualified buyers the more likely it is to sell, all other factors being equal. So why not try this:
Make up a fact sheet with a picture. Deliver twenty copies to every real estate office within ten miles of the house (or more). Offer an additional sales commission to the selling agent. AND offer to pay a small fee (maybe $25 or $50) each time any real estate agent shows the house to a pre-approved (not just pre-qualified) potential buyer. Require that the buyer have a pre-approval letter from a lender on the lender’s letterhead and that the real estate agent leave you a copy.
Remember, the costs of selling a house are deductible on your income tax return, so $50 isn’t really $50.
twice or three times the price would be a joke! And right now we don’t even have it listed, except that there is one realtor who is interested in buying it for herself who called me and asked to see it again and who would work with us for a summer closing date. If she does, my problems are solved, if she doesn’t we re-list it in April at the same price we had it at last year, which is the going market value in my area where building costs are $242+ per square foot. The replacement cost on my house actually works out to more than we would sell it for, so I think w’re still in the ballpark. Then there are other considerations about hanging on to it just for the tax deduction, etc., especially with all the big projects we have to do this year. Arrrrggggggh, this has been frustrating but not unmanageable.
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