B

I am someone who could buy your house in High Desert . Now, I will tell why I won't spend that kind of money as the financial markets all around the globe are crashing.

I would rather buy a cheap house and save/invest would would have been the rest of my mortgage payment. A house less than $300,000 would be from 8 to 10% of our income. We have a flawless credit rating and no debt. But, we are on the fence about buying a house any time in the near future. Last May when we moved to Albuquerque, we tried to buy a house. Sadly, we ran into several sellers who would only entertain full price offers. We bought nothing and rented in High Desert instead. After going to open houses in High Desert for the past several months, these are my observations.

There is no traffic. Nobody seems to be looking. I have never seen realtors work harder. They now have open houses on Fridays, Saturdays and two on Sundays. Some of these houses have dropped $100,000 or more in the past 12 months. They have missed the market. Those that bought in 2006 are in deep trouble because they are upside down in their house. (They owe more than what it is worth.) Some realtors tell you that this is a short sale and the house must be sold.

A gorgeous million dollar plus house on Zina is an REO--bank owned. Nobody bid at the auction and this is the last step in the foreclosure process. The house is beyond description--perfect. It has views that will take your breath away. Compare your $800,000 house to this one. Someone could make a cash offer for $800,000 and probably walk away with that house.

Another house that started at $850,000 last October is down to $699,000 and still hasn't sold. When is that last time that a house sold in High Desert? Banks want compariables that are no older than 60 days. Nation wide, banks are building in a 10% drop in the value of the house in their loans. They are looking for a 10% or more downpayment to cover them in case the houses continue to lose value.

Your pool of buyers have shrunk dramatically. How many people are willing to part with $800,000 cash to buy your house? How many sellers can afford to go over the magic number of $416,000 and into dangerous jumbo territory? Will any bank loan a jumbo mortgage these days? Someone whould have to come in with a down payment of $384,000 to avoid a jumbo mortgage. With that, they could buy a less prestigious house for cash and have no house payment.

In this crazy market, who are your buyers? They are executives that have been transferred to Albuquerque. They will either buy a house or rent like us. First time home buyers can't afford your house. At this time, few buyers and banks are willing to venture into jumbo territory. For most buyers, it's a mess out there to try and get a mortgage. Like our new neighbors from CA, we are going to sit on our cash down payment and watch the housing market. When our lease expires this summer, we may or may not buy depending on the financial crisis.

If I were in your shoes, I would set back, pay off my cars, credit cards and pay down my Albuquerque mortgage as fast as possible. Why? Because when you go to sell the house, the market may be a lot worse. You do not want to negiotate a short sale with the bank. The government considers the loss on sale amount of money to be a gift-- if the bank forgives that part of the loan. Then, you will be taxed on it. Although a lot of banks these days are no longer forgiving the short sale amount. They want the sellers to pay them back. No one has a crystal ball to predict what will happen in High Desert next Spring or in the next couple of years. Your best course of action is to plan for the worst case scenario and prepare. If the market picks up, you will have paid more on the house and will take more cash back with you to Wisconsin. Being debt free and a cash couple is the best defense in these uncertain times.

BJL - Thu Oct 9 2008, 08:53

Rent the house out to the new tenants with a thirty day lease that ends when your contract with the realtor expires. This way, when the realtor contract expires, you can either sign another contract or keep off the house off the market for the rest of winter. You can sign a new lease with the renters when the contract ends or just keep the thirty day one. The odds of your house selling right now with the panic about the financial market is dismal.

The agent gets nothing if you go into foreclosure. This way, the agent has the opportunity to show it and sell. You are lucky to have found a renter where the rent covers your mortgage. A lot of sellers who bought in 2006 are upside down on their houses and rent doesn't cover the morgage. What you could do with the renters is give them a break on the rent until the contract with the agent expires or offer them a cash bonus if the house sells while they are living there. You could agree to have some one come and do yardwork (keep up that curb appeal) and snow removal until the contract expires or the house sells. That could be another bargaining tool to offer the renters to keep this house on the market.

Also, you will be money ahead with the renters because they will pay for the heat and be there if the hot water heater springs a leak, the furnance stops working or a pipe bursts. THe only problem is if they smoke (the smell never goes away) or if they have pets that damage the property or they trash the place. Get a big security deposit. You also might consider hiring an agency the will manage the property if you are out of town. They have contracts with plumbers, roofers, etc. if anything goes wrong.

Good luck.

Bev. - Mon Oct 6 2008, 22:03

Buy an antique or vintage set. Not only should the entire set be solid wood (no particle board, plywood, etc.) but it is the earth friendly thing to do. It's already made, no trees destroyed and you are recyling.

For the past twenty years, we have only purchased antiques. Not only were they cheap (within the budget of newlyweds) but some of our furniture is worth a fortune now. Also, an antique you bought a few years ago, will normally sell for at a profit or close to what you paid for it. You buy new furniture and it drops in value the moment you take it out of the store.

Good luck.

Bev. - Mon Apr 28 2008, 11:16