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#874668 - 12/17/07 10:54 PM Re: I'm buying a townhome! Sound Tactic
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Originally Posted By: Visionary Harry
Originally Posted By: Dip
You guys forget that rents went up in San Diego...price gouging from the fires. Not to mention, people are doing what you all are saying, and renting vs buying, meaning rents are forced up. Rent for a similar unit is about what the mortgage payment would be, and isn't that also money down the drain?



Yes, but in X's example you could be out $26,000 or more in two years in San Diego's market. You might pay down $2000 of principle leaving you out $24,000. My guess is though you will be paying much more. But $24,000 would be thrown out if you were paying $1,000 a month on a $100,000 property. My guess is you will actually spend more by a declining value property that won't sell in two years. I could be wrong, but I do want to throw that caution out there.

But it would be nice for you to have some room for your critters.


I guess I left out the pertinent part. OK, so suppose you are out your $24K when you want to go buy another home. You are now -24K that will need to be made up. Hence, your now a long term investor, or you need to find a crooked LO willing to write your next loan up or come up with another 24k. In which case, you will spend more time paying down the 24k then two years. But if you rented the whole time (2 years) you would owe 0 and when you want to buy that new home then your loan would be the value of the new property. IE your not in the hole an extra amount.
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#874673 - 12/17/07 10:55 PM Re: I'm buying a townhome! Dip
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Originally Posted By: Dip
Rent: $1600

1600 x 12 = 19200

So: $19,200 down the drain in 1 year...

_X_, I see your point, but to rent is also a waste. Lucky for me, I live with Mom. That is, until I go insane and gouge my eyes out. I'll put up with it though until the right property comes along...


OK, but how much are you really looking to spend on a Townhome. We put the market at 100k but if its much more (which it is if you need to rent an apartment at 1900/mo. then you can lost so much its rediculous.
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#874708 - 12/17/07 11:22 PM Re: I'm buying a townhome! Sound Tactic
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It might be a townhome, but it is larger than many of the comparable houses out here. In fact, it's more sf than my friend's 3br house! I don't know what the homes are like in the rest of the country (I need to get out more), but over 1200 sf in a condo is pretty good out here. Most are conversions, so even the 2 br units are usually in the 800-1000 sf range (and typically 900). Plus, it's not common to have a garage, especially attached. Also, it's always been a condo...it's not a conversion.

I think a lot of what you all say is true, but keep in mind that while I live in San Diego County, there are very few areas here that I will move to. There are supposedly hundreds of foreclosed homes in Chula Vista, but I would NEVER live there. And other areas I would live in are way over my range, and will be even if the market goes down for another 2 years...
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#874712 - 12/17/07 11:28 PM Re: I'm buying a townhome! Sound Tactic
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You mentioned the need to repairs and that being an unknown factor. I'd expect the worst for that. Since you mentioned the wild fires, don't be surprised if those costs for materials and labor are jacked up by contractors as well. I know if there are major hail storms in my neck of the woods, roofers have raised their rates as much as 30% due to the demand.

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#874713 - 12/17/07 11:28 PM Re: I'm buying a townhome! Dip
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well God bless ol' Dip, it sounds like you have the info you need to make an informed decision, or soon will have -
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#874715 - 12/17/07 11:30 PM Re: I'm buying a townhome! Dip
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Originally Posted By: Dip
Rent: $1600

1600 x 12 = 19200

So: $19,200 down the drain in 1 year...

_X_, I see your point, but to rent is also a waste. Lucky for me, I live with Mom. That is, until I go insane and gouge my eyes out. I'll put up with it though until the right property comes along...


True, Dip - but, your exposure in the housing market could be much higher than you can imagine. Now, I see your point about wanting out of your Mom's house, I would also imagine that she is looking forward to that, but just use extreme caution - anyone in the sales end of real estate is basically lying to you, the bottom has not been hit, they are still looking for it.

BTW - do you feel comfortable telling us how much you would be paying per square foot?

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#874719 - 12/17/07 11:33 PM Re: I'm buying a townhome! Dip
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Keep in mind that the examples the other people have given are just what you will have lost in equity - they don't take into account the mortgage payments (including taxes), or the money that you plan to put into renovating the place. If values continue to decline in your area, your potential loss could be huge. Eventually, the market should recover and you'll be okay, but if you should need to sell before then, you could be in trouble.

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#874721 - 12/17/07 11:34 PM Re: I'm buying a townhome! hmdagal
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Dip, I think what everyone is trying to say is...

DON'T DO IT!!!!!!!!!!!! DO NOT SEEK THE TREASURE!!!!!!!!!!!!!
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#874739 - 12/18/07 12:13 AM Re: I'm buying a townhome! Dip
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Originally Posted By: Dip
Rent: $1600

1600 x 12 = 19200

So: $19,200 down the drain in 1 year...


Are you going to spend materially less than that on interest, taxes, and maintenance?

Edit: I'm not telling you not to buy - only you can know all the factors that would make that the right or wrong decision. But I always bristle when I hear the argument that someone is throwing their money down the drain by renting - they may very well be throwing a lot more down the drain by buying, even if they don't lose any property value. Just my opinion.
Last edited by Jokerman; 12/18/07 12:15 AM.
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#874743 - 12/18/07 12:27 AM Re: I'm buying a townhome! Jokerman
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It's $198/sf at the asking price. The comparables sold in February and November of this year for $272, $277, and $281/sf.
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#874751 - 12/18/07 01:29 AM Re: I'm buying a townhome! Dip
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Dip, move in with _X_ into his mom's basement and save the monthly expense.

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#874757 - 12/18/07 01:39 AM Re: I'm buying a townhome! Dip
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Is that before or after renovations?? $/sf is a meaningless figure without comparing properties in similar condition.

Regardless, it still might be too much. Japan went through a real estate frenzy like we just did in the 90's and residential real estate prices are still 50%-65% off their peak and that has trickled up from about a 70% decline. This is only 16 years after the beginning of their crash.

If you didn't have to buy real estate now in the U.S. - I totally agree - wait a couple of years for this thing to wash out and for prices to stabilize. I still don't think anyone has a true idea where or when that is going to happen and I would not put much credence in the people that say - yeah that was different and it will never happen here.

From a recent NAHB report:

"Commerce Department reports show nearly 6 million vacant year-round housing units on the for-sale and for-rent markets (combined) at the end of the third quarter, second only to the record high in the first quarter of this year. NAHB estimates that more than a million of these vacant units represent “excess” supply, based on an estimate of the “equilibrium” vacancy rate. That’s a heavy weight that must be whittled down substantially before overall housing production can return to healthy levels and prices of single-family homes and condo units can resume persistent upward trends."

What that doesn't say is that there is estimated to be 2 million more foreclosures and that current home starts are still exceeding current sales. At that rate excess capacity is going to take a long time to work through the markets. Anytime you have a commodity where the supply outstrips demand - prices are going to drop.
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#874764 - 12/18/07 03:08 AM Re: I'm buying a townhome! rlcarey
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and they need to drop when residential is going for $280 s/f!!!

thats outrageous; well it would be in Texas anyway
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#874770 - 12/18/07 05:12 AM Re: I'm buying a townhome! Pale Rider
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Dangit!!!

Somehow, we all (my family and agent) skipped over the pet restrictions on this place. All the places we've looked at so far had restrictions of two pets, max 25 pounds, so I never gave it a thought, what with my cat and 5 pound dog.

Turns out this place has a one pet restriction. Too bad! Guess I'll wait...

I learned a lot for the next place that comes along though Thanks buddies!
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#874813 - 12/18/07 02:12 PM Re: I'm buying a townhome! Dip
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Dip,

sorry about the pet issue. next time you find a fix-er-upper, make sure you have it inspected by a competent inspector who is unrelated to the real estate agent in any way. Ask the real estate lenders at your bank for the name of a good one. Just make sure you KNOW what you are buying and how much you need to knock off of the sales price in order to pay for repairs. I love my little house, but I will never buy another house without a full inspection by a certified inspector. Too many surprises!
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#874928 - 12/18/07 03:37 PM Re: I'm buying a townhome! Dip
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Originally Posted By: Dip
It's $198/sf at the asking price. The comparables sold in February and November of this year for $272, $277, and $281/sf.


That's too high, Dip, especially for a townhouse - the rule in CA at this time is anything close to $200 per sq. ft. is too high, unless there are several acres involved and other improvements, like a pool.

I wonder about the comparables - actual sales? Where does that imformation come from - go to the site a noted in another post - look up your target area - look at the sold property - there are lots of foreclosured condos in SD, price those out - they will be closer to the market, as if there is a market.

BTW - I was talking to our Chairman last night - he's an RE Superstar - his feeling is that the market has not bottomed out, on the other hand, he's seeing bottom feeding coming into the market, for example a horse property listed for $595K 15 months ago, finally reduced to $519K just recently, sold for $475K Friday - now, was that a deal, it's hard to say as time will tell.

So, dip - you need to act, look and deal like a bottom feeder - maintain that mentality, do not waiver - do not get emotionally involved or fall in love with the property and you should do well, possibly not even buy at this time. Also, outrageously low offers do work, occasionally and especially now - try it.

PS - just saw your pet post, it's more than passsingly strange when pets step in to put you on the right path.

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#875015 - 12/18/07 04:36 PM Re: I'm buying a townhome! °X°
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Well, my dream home allows me to bring both pets. Pets on are my "needs" list...had I noticed the restrictions earlier, I never would haven even looked at the place.
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#875117 - 12/18/07 06:04 PM Re: I'm buying a townhome! Dip
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3 pages of this mess and no one looked at the pet clause??????? Geesh!!!!!!!!!!!!!!!!!
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#875119 - 12/18/07 06:06 PM Re: I'm buying a townhome! Mrs. Rizzo
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I would think that would have been one of the first things you looked for........along with how many bedrooms the place had.......no?
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#875213 - 12/18/07 06:54 PM Re: I'm buying a townhome! Queen Bee
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Go back and read what I said... This one pet limit is the first we've come across.
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#875242 - 12/18/07 07:11 PM Re: I'm buying a townhome! Dip
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Didn't sound like QB meant anything harsh, Dip. A good realtor should have that at the top of the criteria list to check before suggesting properties to show you.

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#875336 - 12/18/07 08:16 PM Re: I'm buying a townhome! Truffle Royale
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Thanks TR, I didnt mean anything rude....I did read what you said Dip, and like I said, I would think that making sure you could have more than one pet woudl be one of the first things you looked at......
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#875351 - 12/18/07 08:32 PM Re: I'm buying a townhome! Queen Bee
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From what I read here, and what I know, it might be a good idea to drop "Real Estate Dude". Just my personal opinion. Additionally, if I ever found out I had a broker working for me that created a site with that in the name, I would fire him. In this market, he probably needs the work.
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#875616 - 12/19/07 01:33 AM Re: I'm buying a townhome! rlcarey
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Originally Posted By: rlcarey
Originally Posted By: _X_
Originally Posted By: Jokerman
Originally Posted By: rlcarey
Just a word of caution. In most States, just because you have been working with a realtor, does not mean he is a buyer's agent. You would have specifically signed a buyer's agent agreement - otherwise, the realtor is always working for the seller and technically is not representing your interests.


In my opinion, there's no such thing as a buyer's agent, regardless of the terminology. So long as they are compensated based on your purchase price, and not until you buy, they are always going to be incented to get you to buy as soon as possible, and not for the lowest price possible.


You are correct, Jokerman - no RE agent is working for anyone except themselves - their goal is the 6% commission with the sale way more important than the price of the house - that's what is strange about that industry, there is no incentive to secure the best price for the seller or the buyer, it's all about the sale itself. I'd like to see a lower commission if they don't get what is viewed a market price. Of course, with no market, market price is whatever a fool wants to pay at this time.


In most States, under State law, signing a buyer's agent agreement imposes a fiduciary responsibility on the agent. Thus, it allows lawsuit for breach of fiduciary responsibility. This includes a duty of loyalty; obedience; confidence to the buyer. It also includes confidentiality, which prevents disclosure that the buyer will pay a price greater than the price submitted in a written offer, the motivation of the party for buying the property, that a buyer will agree to financing terms other than those offered, or of any other information requested to remain confidential and any additional duties that are mutually agreed to with the buyer.

So, while you may feel that only the commission is important, in States that accommodate buyer's agents, it does offer you a little more protection than relying on representation of a seller's agent or a co-commision seller agent relationship.


One other thing to mention regarding this topic is if the actual listing broker is acting as an intermediary where an agent in the broker's office is the listing agent and an agent in the same office is the buyer's agent. This is where commissions and fiduciary duty can sometimes get tricky. There is an incentive for a broker to act as an intermediary and encourage their agents to buy/sell in-house. They will typically provide a bonus for any in-house transaction. However, each agent typically has “insider information” and sometimes their fiduciary duty is compromised in hopes of higher commissions.
Last edited by Texas Boy; 12/19/07 01:33 AM.
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#875617 - 12/19/07 01:36 AM Re: I'm buying a townhome! Jokerman
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Originally Posted By: Jokerman
Originally Posted By: rlcarey
The compensation within the buyers agreement does not have to be based on the sales price. It is a contract between the buyer and the agent.


And what percentage of those contracts, in your estimation, are based on something other than the sales price?


In residential this rarely happens, however, in commercial, its not uncommon to see this type of commission agreement.
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