Ox, Other/Just Looking in Virginia Beach, VA

Buyers market...

Asked by Ox, Virginia Beach, VA Thu Oct 4, 2007

Any advice for buyers in the current housing market? How low should one bid on a house - 10, 15, 20%? It seems based on an array of economic data, current prices cannot be sustained and prices are expected to/must continue declining for the foreseeable future. As a potential buyer, I don't want to lose money on this investment when I decide to sell a few years down the road. How aggressive should one be in placing a bid? Last I read, there are a glut of homes on the market I believe almost 10 month supply. Foreclosures are rising on a monthly basis. Plenty of new construction built or need to be built that are sitting. ARMS are expected to adjust next summer.

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Since this is a Hampton Roads / Southeastern Virginia / Virginia Beach thread, I will state it. House prices in Hampton Roads / Southeastern Virginia / Virginia Beach are way too high. If you take the median household income and compare it against the median home price, it is very out of line. The result of this will be huge price decreases once lax lending standards are removed. The recent run-up in home prices was ABNORMAL, and can't go on. Look at professor Shiller's chart. I agree that the "bubble" didn't happen everywhere, but it did happen in over 60 prime metro areas and Hampton Roads is one of those. 100%+ appreciation in home values in Virginia Beach with an actual DECREASE in Wages since 2001 (Source Virginia Pilot, it is adjusted for inflation). America (our USA) is mostly a has-been, and going forward there will be more financial pain (for us) as other countries rise up and an equilibrium in living standards is reached (this means down for us, up for them). Why can't Realtors get it? Your primary house is NOT AN INVESTMENT, it's SHELTER. You are supposed to have RETIREMENT SAVINGS outside of your home. The housing bubble was just a way for the masters to hide the real problems and keep uneducated Americans feeling good. But now it's time for payback, and as a result we will loose trust, we will loose faith in the dollar, and things will be much worse versus just letting things play out before. Realtors -- you don't get it. You might have been able to rent your Benz based on home sales, but the bubble has really damaged America. It's not sustainable.
4 votes Thank Flag Link Sun May 11, 2008
Ox, I read your question and the following posts, and IMHO you are wasting your time (and possibly the time of the agents here). Before I go on, I should mention that I too am bearish on the housing market and the economy overall. Second, I don't know much about the market you are looking at. But let me offer you my perspective of why you are wasting your time. I have nothing to gain or lose from this discussion except maybe offer a perspective that you might appreciate.

1. You are reading and processing national real estate, economic, and mortgage data. And true, national data has impact on local data. But across the country, there are markets that (a) have not peaked yet (i.e., prices still going up), (b) are just peaking, but very slowly, and having experienced a smaller bubble, and (c) have peaked 2 years ago and come down from the highs as much as 10 - 15%.

Yours could be in any one of those situations. And in any of those 3 situations buying vs. waiting is a tough decision.

Just because you think prices are going down does not mean that today you can buy at a price which would be prevalent a year from now. A year from now prices may very well be LOWER, but the market participants will set the price and transactions following will have to use that price as a basis.

So if you wanted to put your money where your mouth is, you SHOULD wait. This is my first point in why you are wasting your time.

2. Are you familiar with the paradox of lemons? Someone got a Nobel prize for that idea. Imagine 10 used cars, each offered at $5,000. The owners of 9 of the cars TRULY believe that their car is worth $5,000, and the owner of one of them knows that his car is worth $4,000.

You don't that one of the cars is worth $4,000, and you don't know which one it might be. You go see each of these cars, and don't see any substantial difference between them.

You then try your approach, i.e. low-ball all of them at $4,000, e.g. by sending a fax to each of them. And boom, to your delight, you get a response back. One of the owners accepted your $4,000 offer.

Now - if you think you are smart - which one of the 10 owners do you think accepted your low-ball offer?

This is a pretty standard setup in economics / game theory.

I am not saying you will end up buying a lemon. All I am saying is that you will attract lemons by making offers to everyone and their mother-in-lawl. Your offer will only get accepted by those who hold lemons, and, hopefully, you will find this out LATER. But in the process, you will have wasted your time.

3. It sounds like you have access to some scattered national data, but you don't have access to local data, and you are feeling frustrated. One part of you is pulling to buy, thinking this is the right time. Another part of you thinks, oh, wait, what about all this negative news, etc, etc.

You should make up your mind by studying the local data and your own situation (financial, family, etc). If you are buying something with the hope of appreciation, I think you will be disappointed, because most likely there will not be much appreciation in the next 5 years or so (some decline for a year or two to come, plus some slow appreciation).

If you are trying to get a good deal, IMO you should compare how good a deal is relative to your income, situation, and preferences. No one wants to buy a depreciating asset, but that depreciation might take 1, 2, maybe 3 years or more. While you might be correct in your opinion that prices are headed lower, suppose, for a minute, that they WILL be lower in 2009 than today. But for that price to realize you will have to WAIT until 2009. You are suggesting walking up to a seller, and saying, "Mr. Jones, I know your house is worth $400K today, but it will only be worth $350K next year. I suggest you do yourself a favor and see ME that house for $350K today."

Do you think any rational seller would do that?
8 votes Thank Flag Link Sat Jan 19, 2008
Ox, no disrespect, but you seem to already have all the answers, so why bother asking the questions? Especially since this is a forum that consists of the very agents you are suspicous of offering advise to consumers.
8 votes Thank Flag Link Thu Oct 4, 2007
I am a home buyer in the Virginia beach area. The posts by OX has been met with passionate responses by some. But we should all keep things in perspective here. Money is a passionate subject to talk about because nobody likes to lose it. If we were to take the emotion out of this discussion, OX has come up with some very good points. I think it should be understood that buyers are really looking for a fair price. Today’s buyers did not purchase a home because of the overpricing and shaking financing in the previous years. Individuals looking for homes over the next 2 years are the ones who made it a point to research and make educated decisions. In other words they held out because they could see a bubble on the rise and the associated risk. I do have to question the number of homes that have a purchase price of 350k and higher in this area. I myself make a low 6 figure salary, with less than $2500 dollars in credit card debt and a car payment of $300. I am better off financially than many other perspective buyers. My mortgage and associated other cost could possibly range from $2100 -$ 2700 for a home listed between 350k – 380k. I can afford that. But lets say I had a family and the following, health insurance $400, Car insurance $168, college tuition savings $800/month, 401K $467, after school child care $500/month. That is easily over $4400. If my salary is 105k after taxes and paying the previously mention debts I am left with $1435 to live on for that month. Keep in mind I didn’t add in food, credit cards, children expenses such as clothing, medical bill deductable, entertainment ,cable,internet or gas expenses. After these expenses $1435 does not seem like a lot of extra money. My point here is the vast majority of people in the Virginia beach area are not making this much money. I am assuming I got a great mortgage for a 350k home at $2100/month. A lot of homes are sitting on the market for good reason. They will have to come down at least another 10 – 15% based on the monthly expenses most people have. I think its misleading to have buyers believing they will be able to sell homes at those prices . Also the amount of money a real estate agent will have to invest to market the house may not be very much but can add up very quickly if they do this for 20 or more homes. In order to recoup your investment and make profit these home have to sell for a price higher than the market demands for. Would it not be more profitable to be honest with home sellers and tell them the homes are not going to sell for the higher price they may be asking for? or you need to lower the price for me to take on this project or give me more commission on the sale. If this were done their maybe some hard feelings at first but in the long run everyone would be better off and this painful downturn in home purchases would subside quicker.
7 votes Thank Flag Link Fri Jan 25, 2008
I'll tell you it sure does not seem like a buyers market where Im at! I have made offers on 4 properties now and not gotten any of them. There have been multiple offers from other buyers on all of them. I just switched agents to one who is way more savvy, so we'll see how that goes. Agents really are necessary and you must have a good one who understands your market.
7 votes Thank Flag Link Fri Oct 5, 2007
Hi Ox,

All local markets are different. While I do not know anything about the local market in Virginia Beach, make sure you understand that even different neighborhoods within Virginia Beach will have different market climates.

There have been lots of Trulia Voices Q&A regarding this same topic. There is no good blanket answer to your question, because the strategy regarding each individual property should differ depending on the property in question itself, where it is located, the recent comparable sales data, it's asking price, the seller's circumstances, what entity you are actually negotiating with, etc.

I do not recommend throwing out lots of lowball offers just to see what sticks...doing so is no better than tossing darts at a dartboard with your eyes closed, and it will prove to be a big waste of time. I suggest carefully evaluating each situation individually with your agent. I have represented buyers where we have offered more than 15% below the asking price...on the other side of the coin, I have represented buyers where we have offered more than the asking price (yes recently) because there have been other offers on the table from other parties. There are so many factors to take into consideration!! Don't navigate these waters without a skilled agent...
Web Reference: http://www.sacreblog.com
7 votes Thank Flag Link Thu Oct 4, 2007
Erin Stumpf…, Real Estate Pro in Sacramento, CA

I think you're on the right track. Low Ball them all. This over-priced market stems from the ones that are now saying that things aren’t that bad. The greedy realtors and lenders, all of whom are commissioned based. If realtor truly cared about there communities, how about giving back. Maybe instead of working for a commission. Look at a flat fee approach. And stop taking bonuses from the seller when representing the buyer. I’ll never use a realtor again.
6 votes Thank Flag Link Tue Jan 22, 2008
From Irena
"Every property ownership carries plenty of tax write offs that are by far better than renting. Also homes always appreciate in value, kind of like a low risk stock. You have to be in it for a while to see a good return."

This is the kind of dribble from realtors that created the bubble. Thanks Irena. By the way, you are wrong. Housing right now is like a high risk stock. Why take chances. Rent, wait for the bottom. No need to gamble with your future.
5 votes Thank Flag Link Fri Mar 14, 2008
Do some research. For instance, today in the PIlot there are over 70 foreclosures in Virginia Beach, 47 in Norfolk, and over 90 in Ptown/Chesapeake/Suffolk. Unfortunately I didn't track those before. Craigslist is slammed full of people trying to sell overpriced garbage (This could be a case of FSBO, but many of the eyesores look like they are in the MLS as well). Countrywide (Now bought by BofA) I believe has halted much of their back end financing. This is a good sign that more lending will be cut back as credit continues to tighten as all the fraud that has occoured over the past few years comes to light. 80 Billion dollars lost on housing loans. That is a big number, and if you look at the ARM reset chart from Credit Suisse you will see there are plenty more resets to go. Housing is absolutely overpriced. The value isn't there. People thought that they would get rich rapidly, it was a speculative mania, now it has ended, and now there is going to be much pain. The prices went up 100%+ in Virginia Beach. The salaries didn't. Now it's time for pain. These cities are still spending like there is no tomorrow as well, even though their tax base is starting to shrink. The housing bubble blogs and such laid out these facts in 2004. This isn't a secret, and if you didn't realize it was going to happen you are unintelligent. I think many realtors fall into this category. A little research would easily show what would happen, especially when people use teaser rates to base affordability on the assumption of possible refinance later. Who would use an ARM loan when rates are at record lows? That is just insane. Just remember to say NO to any sort of gov't bailout. Greed got us where we are today, time to let the greedy suffer. Got 20% down?
5 votes Thank Flag Link Sat Jan 19, 2008
Prices still have 40% or more to go down. Look at the median incomes, and median home prices. Count on the easy lax lending standards of the past few years not being there, and count on having to come up with a down payment. Don't forget all of the inventory, much of it high end, that has been built over the past few years and the owners will be ejected out since they can't really afford it. Maybe they used ARM loans, maybe they were in a business related to housing that has taken a nose dive. Do research on the housing bubble, it's real, and has a number of years of more pain. Don't listen to this garbage about the market returning in a year. That is just the NAR trying to fool the sheep.
5 votes Thank Flag Link Wed Jan 9, 2008
As a homeowner, I am learning that it's true: all real estate is local. My neighborhood--about 350 homes--about $1M and up--is still holding strong, although other neighborhoods here in Pasadena may not do as well. The average selling time is 60 days, often with a backup, and for the listing price. I am even happier than the local real estate agents.

So, it depends on the local market. Homes will always increase in value, but it may take a long time, such as a decade. You must do your homework, checking the local values, so you can recognize a good investment when you see it.

You, like the current owners, can't read the future, so you can't tell when or why you will sell in the future. "Why" is the big question that helps you find a good choice. Not every seller is just testing the market. Every seller has a background--how much they have invested in the property and their tax situation. This is, I think, what helps to determine what they will accept.

Besides, when I read about the prices in NC here, I see them as dirt cheap compared to CA. Out-of-state buyers from a richer market may keep the prices up to a degree.
5 votes Thank Flag Link Fri Oct 5, 2007
Ox, I just erased a rather scathing response to your bitter diatribe. I won't dignify your prescense nor tolerate it any longer.
5 votes Thank Flag Link Thu Oct 4, 2007
The best post on this thread was Erin’s. TY and TU! The beginning was passionate and true, and the closing made be LOL.

Ox, the challenge for you will be that many good Realtors will quickly dismiss you as a buyer. Some of my best clients are highly educated. I respect them, and they respect the knowledge and experience I bring to the table. I prefer to work in relationships of mutual respect. If I picked up that attitude represented here in your posts, I would simply allocate my time in a different direction. Ultimately you create your own self-fulfilling prophecy, since many knowledgeable agents will quickly dismiss you and you will be left to choose from those who need to or are willing to accept your disrespect.
5 votes Thank Flag Link Thu Oct 4, 2007
Deborah Madey, Real Estate Pro in Brick, NJ
Thanks for the reply Rosalind! The data you provide does not paint the whole picture. Averages can be misleading, I would like to see the YOY averages for the SAME type of homes (square feet, zipcode, etc). It is possible that the average can be skewed when more higher priced homes are selling above the previous average. For example, that $400K home listed in 2006 is now re-listed for $300K in 2007. This would seem like a great deal to a prospective buyer and not the over priced shacks listed for below the previous average. Can you provide me the average price decrease on homes sitting on the market for more than 30 days (Original listing price vs Low price). Take the initial date on market not the re-list date after an upgrade, etc.
5 votes Thank Flag Link Thu Oct 4, 2007

No disrespect? How can I not feel disrespected when you spit on a profession I have poured my heart and soul into?

I have no commission and livelihood at stake answering your questions...and if you want to throw your many darts at the large dartboard at your disposal, go for it. You will waste tons of time by thinking the shotgun approach is any kind of "strategy." Please go get your real estate license, since you obviously feel any monkey with internet access can do a Realtors job, and that Realtors add no value to real estate transactions.
5 votes Thank Flag Link Thu Oct 4, 2007
Erin Stumpf…, Real Estate Pro in Sacramento, CA
Thanks for your response Erin. No disrespect, but comments from agents must be taken with a grain of salt. It is your commission and livelihood at stake. No different than car salesman. If the listing service was made public, many agents would be out of a job. But to address your darts analogy. I have plenty of darts to throw (10 months supply) and a very large dart board (no time constraints). It's ironic that no matter how bad the market is the NAR always tries to put a positive spin. But in recent times, they just don't sound so bullish on the market anymore. And you know it's bad when the local grocery clerk was talking about flipping homes.
5 votes Thank Flag Link Thu Oct 4, 2007
What you believe a seller should be thinking and what they should expect is incorrect. I guarantee that the average sales to list price ratio is well over 90 percent (typically 95 percent even in this market), not 85 percent as you think it is/should be.

If the home is already priced correctly (aka at the current market value), then it will sell at or very near it's list price minus seller concessions for closing costs (2 to 3 percent) - hence the over-90% sales to list price ratio. If it's overpriced, it's usually due to seller's greed and ego, which makes it even harder to negotiate the price down.

Just like you don't pay 15 percent less for a brand new car because it loses that much value within 5 minutes of you driving it off the lot, real estate is sold based on recent comps and today's market conditions, not what you speculate they will be 6 months from now.
Web Reference: http://www.LoudounStats.com
5 votes Thank Flag Link Thu Oct 4, 2007
Sorry, I should of said ARMS are scheduled to adjust AGAIN next summer. I understand looking at the comps and available market data. But do agents consider local and national economic data, not just housing comps. I think there is a general consensus with economists, that in order to maintain long term housing affordability, prices must drop. It's simple economics right? So lets consider the local market. Ford has folded in the area and it seems every other year the threat of Oceana shutting down grows larger. The biggest employer is the Navy, last I checked the majority of enlisted personnel are not making 6 figure salaries. Which any fiscally responsible financial advisor would argue that a house should not be more than 2.5-3% of your annual gross salary. Of course, we deviated from this with the rampant speculation and easy money. I will begin my house hunt shortly. There is plenty to choose from, I will compile a list of my desired homes and low ball all of them. Basically, the sellers will be bidding for my sale. Because in today's reality, the buyer sets the market. The sellers mentality should be, I have the option of selling at 15% less than asking or refuse and be in a worse situation next year. Not every seller has the luxury of time on their side. Anyone interested in being my agent?
5 votes Thank Flag Link Thu Oct 4, 2007
What you bid on a house is figured out on a case-by-case basis. The homes that extremely well priced can (and will) have mutliple offers on them within a week while others that are overpriced sit on the market for months and months. You have to compare the property's asking price as compared to market value.

And a home is just that - a home/shelter. It's a home/shelter #1 and an investment #4 or #5. It's amazing that people will buy a car even though it loses 15 percent of it's value the second they drive it off the lot, but they won't buy a house for fear of it depreciating short term while increasing in the long-term.

None of us can predict the future so that's your call on whether you wish to rent for some time and then buy or buy now. Either way though, if you're in it for the long haul, you'll end up ahead in the end.

As far as what to bid on a property, talk to a good Buyer's Agent who will go over the comps for the specific property you're interested in and guide you on what to offer and how to best negotiate the price and terms.

And ARMs started adjusting a while back hence the "mortgage crisis". More will adjust in the future, but the market has already felt the brunt of it.
Web Reference: http://www.LoudounStats.com
5 votes Thank Flag Link Thu Oct 4, 2007

[[Some properties are already listed so far below market value that the seller simply can not take less.]]

That's the oxymoron of the day. If it is below market value, it should be long gone by now.
4 votes Thank Flag Link Thu Jan 31, 2008
Put your offer in at the amount you are willing to pay and if it's not accepted you are happy to walk away. Remove as many contingencies in your offer as possible so you are a strong buyer.
My office serves the Manhattan market which seems to be one of the few strong markets. However I am intimately aware of the surrounding suburban neighborhoods where homes are lingering on the market. And from my scouting, my assessment is that the properties are simply overpriced. So my advice remains make an offer that you think the property is worth and ignore any type of "%" discounts. They are simply not applicable.
Best wishes
Web Reference: http://weichertpeters.com
4 votes Thank Flag Link Wed Oct 24, 2007
Patti, that is a fair question. I wanted to get a sense of the agent's mentality at this point in time. So far, it's apparent we are still out of touch with the reality of the market and agents like Danilo still providing mis-information.
4 votes Thank Flag Link Thu Oct 4, 2007
Danilo - Your car example is poor. A car is NOT an investment but an expense. I expect my car to depreciate and a home to appreciate over time. I hope this is not what you are teaching your clients. Could this contribute to all the current negligence? Agents with none or very little business education? How is Louden county doing anyways? I understand it's one of the worst hit areas in the mid-Atlantic?
4 votes Thank Flag Link Thu Oct 4, 2007
Economists view the housing market from very high above. At the ground level, the housing price has been very stable. We can do a math here to find out why. For example, if the seller bought the house 10 year ago @250K. He/she lives through the magnificent low rate period so the mortgage rate is likely to be very low (assume 5.5% on 30FRM). The PMT is merely $1400. Now the listed selling price is $500K (this is a very conservative number already). 10% discount of that is $50K, equivalent to 35 months of PMT. In other words, the seller can wait for almost 3 years to get the full asking price (in order to break even with the option of selling you the house at 10% discount today). Will the housing slump last for another 3 years?
4 votes Thank Flag Link Thu Oct 4, 2007
new reality for real estate agents (see link below)
3 votes Thank Flag Link Fri May 9, 2008
So the Realtor(TM) says he goes by what the buyer wants the monthly payment to be... THAT IS WRONG. How about the true intrinsic value of the property? It's a LOOSERS market for any first time buyer. You look at the income from the census data here in Homicide Roads, and you will quickly realize that the incomes in this area won't support all of the high end housing that is sitting empty. Sure the low end stuff is moving, at the maximum price point the people can actually qualify for loans... but eventually they will run out of fools, and banks will run out of financing, and there won't be anyone. YOUNG PEOPLE, REVOLT! Don't feed these greedy old people YEARS of your hard work for a cheaply constructed (most likely by exploited illegal labor) house stuffed with cheesy gimmick stainless steel appliances (that were most likely made by exploited foreign labor, with the profits going to the greedy old people). Real estate prices are going to fall... perhaps 50%+ in Hampton Roads. America is falling apart because we are a nation of debt. The old people ruined it for us.
3 votes Thank Flag Link Tue Apr 8, 2008
Ashley seems a tad confused about WHY a "Short-Sale" is used.
"the seller could not accept it because the new loan amount could not satisfy their current mortgage payoff"
uh, that's CALLLED a "Short-Sale"!!
3 votes Thank Flag Link Thu Jan 31, 2008
Ox, You do need a professional Realtor. In my area we can pull statistics that will give you a feel for what people are paying in relation to asking price, 95%, 99%, of asking, etc. Every neighborhood is different, every area is different and don' believe everything you read in the paper. Good luck!
3 votes Thank Flag Link Thu Oct 4, 2007
You are right, agents livelihood are at stake, which means most of the not so serious agents are getting out of the business. I would disagree with the grocery store clerk that it is a good time to flip houses. If you are looking at your purchase as an investment and not putting a roof over your head, you will want to be able to hold on to it for a few years anyway. Maybe purchase - rent it out to all these folks afraid to buy and then sell it later. Even with smaller appreciation precentages the advantages of homeownership far outway thowing your hard earned dollars on rent - never to be seen again.

As far as the NAR putting a positive swing on the real estate market, they keep repeating that real estate is local. Yes - in some areas of the country average sales prices have gone down i.e. florida. Maybe some local numbers will show you that it isn't as bad here as the rest of the country and the national news want you to think.

I am an agent on the peninsula, so here are some numbers for the peninsula - two different areas - two completely different price ranges and types of buyers.

South York County
jan-oct 2003 avg price $237,728 Days on market 30 total sold 554
jan-oct 2004 avg price $270,736 DOM 29 total sold 510
jan-oct 2005 avg price $325,000 DOM 33 total sold 594
jan-oct 2006 avg price $340,314 DOM 48 total sold 531
jan-oct 2007 avg price $374,823 DOM 80 total sold 521

South Newport News
jan-oct 2003 avg price $67,235 Days on market 73 total sold 230
jan-oct 2004 avg price $73,867 DOM 76 total sold 269
jan-oct 2005 avg price $106,955 DOM 56 total sold 303
jan-oct 2006 avg price $119,553 DOM 56 total sold 336
jan-oct 2007 avg price $136,367 DOM 77 total sold 227

As you can see the average sales price has gone UP in both areas. Yes days on the market is longer - that means you, the buyer, has a choice of homes (you don't have to settle for a house that is just "OK" and you don't have to write a contract on the hood of your agents car). The drop in volume for this year in south newport news can most likely be contributed to many of the subprime lenders going belly up this year, so fewer buyers are qualified. But number of homes sold it is still very close to 2003 when the boom was starting.

Interest rates are still at historical lows and in Hampton Roads homes are keeping there value and appreciating. Why not buy?

Your agent should be able to show you the same type numbers for the area in virginia beach you are interested in - maybe values are going down there - but your agent is an expert in the field and should be able to tell you. If you don't have a buyer's agent, you should get one. If you don't want to talk to one at this point, let me know what area of virginia beach you are looking at, and I can pull up the same numbers for that area.
3 votes Thank Flag Link Thu Oct 4, 2007
Bubble Boy,

You are 100% correct and people, especially Realtors, just don't get it. And to make matters worse, it is hard to get people to change in this country. We like to see ourselves as the most intelligent people in the world but the reality is that we are far from it. Check out this link, I plan to post it in a few places, but to be honest, I've given up on trying to talk to these so-called "Real Estate Professionals". There are opportunities in this chaos to help people and make money, but it requires "free thinkers" and America is really short on that. Peace.

Khazeem Asadullah
2 votes Thank Flag Link Sun May 11, 2008
Do any of the realtors have more current data for this area? I think things have changed since oct 07. Thanks in advance.
2 votes Thank Flag Link Sat May 10, 2008
Prices in the tidewater area are still overpriced- way overpriced! All the talk about having the military and a strong local economy is just realtorspeak. As a military member I will not buy. This is the same feeling with lots of folks I know PCS into the area this year. There are loads of rentals which my BAH will cover. The market will drive the prices not a realtor or other professionals. All the talk about undervalued homes is rubbish- they are a commodity like anything else and subject to supply and demand. J.J. in Baltimore actually nailed the real problem. The housing bubble caused such a rapid increase in prices they overtook earnings. Housing prices will continue to fall, likely around 10 to 15% as a market correction. If homes are sitting for nine months the problem is simple- they are over priced. Go with an offer YOU think is reasonable. Owners and realtors will take all offers now the tables have turned.
2 votes Thank Flag Link Sun Apr 6, 2008
In my market homes are selling at 97%, although not many are selling. The reason for the high asking price to purchase ratio is the only ones selling are those PRICED to sell and often below comps. For example, we took some buyers out last night, they found a home and decided to purchase it - after viewing over 40 homes. The home was by far the nicest they have looked at and well under the price they expected to pay. They put in an offer only to find out there is another offer out on the home. The point here is a good deal can be found and often does not have to be underbid. Make sure you get comps on the property from the agent you are working with. Your on the ball with your information and there are great deals out there! Just remember the homes that look the best in your price range are often looking that way becuase they are priced to move. If you offer too little you won't get it - and someone else will. My buyers put in an offer for full price - they would loose the house if not and know its not likely that another will come around at this price.

Good Luck!
2 votes Thank Flag Link Wed Oct 24, 2007
Just wondering Ox, why believe there is a fixed percentage one should get "off" when they buy a house. If the house is overpriced, by all means, offer much less, but do your research, and if the house is priced right, which I like to believe my own are, offer close to asking or you will lose it. There is a 10 month inventory where I am, there are foreclosures, and there is are few buyers, and my listing just sold at close to list in 12 days. Another sold close to list in 4 weeks. I had multiple bids, and the lowballers lost out.
2 votes Thank Flag Link Wed Oct 24, 2007
Ox, I'm torn between spending my time to answer your questions and proving my point that the market in Hampton Roads is not as bad as you think. Do you really think homes that were WORTH $400K a few years ago are now selling for $300K - that is absolutley rediculous. And why would the bigger houses all of a sudden be for sale, but not the smaller homes? I specifically chose the two areas that I did because most of the homes in South York County are similar and most of the homes in South Newport News are similar. OK, So you want more specific
zip code 23693 - resale detached homes built after 1995 between 2300-2700 sf 4 bedroom 2 bath
year list price sales price #of homes
2003 255,162 255,243 21
2004 293,525 293,513 16
2005 344,718 344,700 19
2006 375,148 374,196 25
2007 389,422 384,452 27

Still going up - and there are more sold in 2007 - and the year isn't even over yet. (this may be different in a different zip code)

As for current homes on the market price reductions - there are five homes that have been on the market over 30 days that match the same search criteria. Only one has reduced their price to slightly below the average sales price from $405,000 (hmm....that seems to be about $20K high) to $379,900 - maybe if he had priced it right to begin with it would have sold at the average in a timely manner. Let's see, there is another one that bought in '05 for $429 and wants to sell it in '07 for $535,000 hmmm.....overpriced you think? maybe this one you can take a bigger reduction on b/c it is over priced by so much. (See every home is different - if I was a buyer's agent in this situation, I wouldn't let you offer anywhere close to $535 - this home would be a case of the 20% you asked about in your first post - but are you really getting a deal, or are you buying it at market value?) So the question is - is the seller losing $100K when he does eventually lower the price or did he never have the $100K to lose?

That's all from me. I hope your buyers agent charges you a retainer fee :)

2 votes Thank Flag Link Fri Oct 5, 2007
And I would like to apologize to the forum for this little debate that is totally out of line here, and I would like to answer the question.....

I think a buyer should bid at least 30% - 40% in markets that are really overpriced and about 20% in other markets.
1 vote Thank Flag Link Wed Apr 9, 2008

That's a real answer. I like that.
1 vote Thank Flag Link Wed Apr 9, 2008
The old people ruined it for us.
Just saw this. Bubble Boy, I have news for you: it isn't the OLD people I see upside down in their houses and it isn't the OLD people I see who bought a brand new house 4 years ago for 250,000, pulled out another 250,000 from a home equity loan, have a handful of small children, stay at home mom, 2 brand new SUVs, all new furniture that looks like it was just delivered from Pottery Barn, an in ground pool and all top of the line appliances and now tell me the "have to get 550,000" for a 400,000 house because they want to make "a LITTLE profit". NEWSFLASH! You MADE the profit, sorry but you spent it already. This OLD PERSON was 50 before I bought an all new living room set, uses grandma and grandpa's antique (old) bedroom set still, and has never bought a new home OR a new car. This is not to say we are poverty level, in fact we have a 6 figure income, but we also have our priorities straight. I see twenty somethings paying over 1,000 a month on a LEASED car. It used to be you bought a house and lived with the kitchen. "Redecorating" meant painting the walls a different color and cleaning the rug the previous homeowner left. If there is anything us OLD people are responsible for, it is enabling these spoiled brats.
1 vote Thank Flag Link Wed Apr 9, 2008
If realtor truly cared about there communities, how about giving back.
Don't you care about your own salary?
1 vote Thank Flag Link Tue Jan 22, 2008
There is probably going to be some more reduction in price but don't get frightened, 40% sounds a little extreme to me. Will it be back in a year I don't know and neither does anyone else. Mortgage problems ? Yes but they will be worked out. People loosing homes? yes but not as many as some would like us to believe. Remember one important thing whether it is here or on any blog or on TV or the newspapers take the extreme opinions on both ends and throw them away. Go to the middle for level headed answers. Good luck
1 vote Thank Flag Link Mon Jan 14, 2008
Ox wrote:
I will compile a list of my desired homes and low ball all of them.
Go for it! And good luck, you may get one!
What will you do then? Flip it for quite a bit more than you paid, and become yet another seller who will be low balled by folks like you? ;)
1 vote Thank Flag Link Wed Oct 24, 2007
Ox wrote:
If the listing service was made public, many agents would be out of a job.
No we wouldn't, Ox. Last I looked, my dues paid for that listing service. We would just not pay for it and take all listings private and cobroke them, like we did before MLS existed.
1 vote Thank Flag Link Wed Oct 24, 2007
As a buyer (right now) you have a lot of leverage. Housing prices are dropping, there is a lot of "inventory" on the market to choose from, you have greater negotiating power, and if you have good credit you can easily qualify for a mortgage loan. Contact a reputable Realtor in your area to represent you and they may have an excellent mortgage broker they can refer you to to see how much house you qualify for. Now is the perfect time to buy a home. The odds are HUGELY in your favor. Good luck and if you need a home in Northeastern Illinois be sure to visit our website for advice and tips on buying a home in this market. http://www.beckergrouponline.com
1 vote Thank Flag Link Wed Oct 24, 2007
Ox.....you need to consult with a professional Realtor to give you the necessary information necessary to proceed with the process.
1 vote Thank Flag Link Thu Oct 4, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
Try a strategy that finds a cash flowing property at market value and then ask for a deal on the offer. That's the safest investment strategy I can think of in any market.
1 vote Thank Flag Link Thu Oct 4, 2007
Every house is different. Your buyer's agent should do a market analysis of the home you want to make an offer on and recommend a price.
Although days on the market have increased in the last few years, home prices in the Hampton Roads area are standing their ground. In some areas they actually increased slightly. We also don't have as many foreclosures as the rest of the country. The national news paints a picture of gloom and doom in the real estate market, but remember the real estate market is regional - it's not as bad as it seems.
1 vote Thank Flag Link Thu Oct 4, 2007
If you are thinking of buying you should talk to your Realtor, as a buyer this service is usually free, and as such it is best to get professional advice. There are many properties for sale in all of Hampton Roads and every property is different. There are many factors, how long has the home been on the market, what did the seller pay for it, how bad does the seller have to sell( have they already bought another home, are the moving due to a job change or military relocation) there are many factors. Are you in love with the home you are looking to buy. If you were my buyer I would give you all the details of what information is out there and let you make the decision of what to offer. All that can happen is it gets accepted, gets rejected, or gets countered. In this market most seller agents will try to make the sale happen. That said I just presented an offer in Virginia Beach on a property that had been on the market 5 months and the seller would only accept a full price offer. Feel free to visit my web site to see what is available in Virginia Beach
Web Reference: http://www.alicesheldon.com
1 vote Thank Flag Link Thu Oct 4, 2007
Your primary house is NOT AN INVESTMENT, it's SHELTER. You are supposed to have RETIREMENT SAVINGS outside of your home.
A lean-to is a "shelter". Even people who have retirement savings utilize the equity they have in a home for retirement. My parents bought a house in Huntington for 48,000 in 1968. Is it permissible that they sold it for almost a million PRE bubble, around 1999? And used the proceeds in their retirement. My grandparents, who were around during the depression had nothing BUT their homes as retirement income. Get a grip, life is not fair, if you can't afford a home either get a different job or look for a home you can afford, Mr. Bubble.
0 votes Thank Flag Link Sun May 11, 2008
I read your article on your website:

What does a “Market turn around” mean?
April 30th, 2008 . by Mike Kelly
I always wonder what the consumer and/or talking heads mean by the “Market turning around”? What? Back to the days of 20% yearly appreciation? Affordablity? Sane underwiriting guidelines? I heard a talking head stating the Fed was going to try and stop the “spiral downward of home prices”. Huh? The fed is NOT going to restore property values to a level where those now facing the ravages of “neg-am” loans, option arms payments and nothing down scenarios will stay put in their homes. These folks, the vast majority who should NOT have been allowed to buy homes to begin with, are looking at increased loan payments with falling values and thinking, “Why am I paying this monthly payment to live here!??” Your loan adjusts, you’re paying $4,000 per month to live in a modest production style home while you could “rent” a much nicer place with litle or no reponsibiliies. They move! They bail! It’s O.K. to bail now! It’s socially acceptable! I’m a victim of bad Realtors, lenders, Wall Street, everyone but my own actions.
That being said–is it a bad time to buy when the REO’s I have listed get 15-20 offers and overbid on the home driving the cost skyward? Should we allow 3% down with 580 FICO scores? Sub-prime scammers on the prowl again? Nope!! FHA!!
I got news for y’all–it’s the wild, wild, West out here in the Greatest State of California. The timid need not apply!

How many bank owned REO listings do you have? I think they raised the limit on the FHA so the timid people in cali can buy high priced homes.
0 votes Thank Flag Link Sat May 10, 2008
Once again our vaunted Trulia moderation team is asleep at the wheel. Can we put a timeline on these "rants"? We are becoming the Craigs List with these "rants" based solely on emotional reaction from folks who either got burned or are just bitter, cyncial folks. Here in Sonoma County, California we are seeing multiple offers on REO proerties so I can pretty much tell you WHERE the bottom is. New construction is right behind it. The other part of the market is a "Buyer's" market as inventory is over 6 months boardering on 10 months. Back in 1992 we had a statewide supply of homes of almost 26 months!! We ain't even close to that. So when you cynics and embittered, "missed the boat" consumers bring forth some sound economic data then I'll listen. But lay off the attack mentality or just go to Craigs List and check the freebies and leave a "Rant"!
0 votes Thank Flag Link Wed Apr 9, 2008
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