Saturday, June 28, 2008

Another why bother post

The Inland Empire real estate market has been in the toilet now for 2 years. You'd think the pricing of properties these days would be fairly consistent. The current price trend is well established. Take the latest comp and subtract 12k per month since it sold and that should be your current price. But 75% of the new listings are still hitting the market too high. Many of them are ridiculously too high. I understand that the people owe more than their homes can sell for in the current market. But what they owe is irrelevant. Buyers are not going to overpay because they feel bad for an upside down seller. And no bank is going to give a loan for more than a property will appraise for. So, what is the point of even listing these homes??

Here is a perfect example I ran across today.

4931 Nottingham in Riverside just listed at $660k. The home is a 5 bedroom 3 bath one story ranch, 3281 sq/ft on just under 1/2 acre. The realtor says this "Tired of making Offers on Bank owned homes or Short Sales with little or no reply? Our Seller will responds to all reasonable offers within 72 hrs of receipt".



Ok, what would be a reasonable offer? How about we go by the last comparable sale. Fortunately there is an exact model match in the same tract that sold only a month ago. 10084 Willowbrook is the same floorplan as the Nottingham house. It sold in late May for $441k. That comp is already a month old and the current prices are dropping at about 12k per month so a reasonable price for the Nottingham home is $429K.

That is $230K less that the asking price. I wonder if they'd consider that a reasonable offer? In reality though, it is a reasonable offer based on the last comparable sale. So again I ask "what is the point of even listing a home like this?" Any Realtors out there care to chime in on why other Realtors are still taking these crazy listings?

8 comments:

Empire Realty said...

I have a listing that we put up that is about $100k over the market, Cherry Leaf in Fontana.

Why you ask, pure strategy, we are going to attempt to renegotiate the loan when we feel that we are near the bottom and we are in the process of building evidence to support our position. I know we will never sell this home, nor is this our goal.

Love your blog!
RJH

Sroy said...

RJH wrote "we are in the process of building evidence to support our position."

I have a friend that was advised by an agent to do exactly this strategy. Says that bank will not consider a short sale unless it has been listed a few months with no offers. Guess the trip down is a staircase and not a slide.

dgelz said...

Golfer, I need your advice on this property. I usually take a Sunday stroll on my way home from the gym and try to see if there are any open houses in my area. Well, today I saw one that I really liked. The wife and I have been looking for some time, but thanks to your site, have realized that we still have some time to go before we should probably bite. Well, I liked this house so much that I came home, woke up the wife from her Sunday nap, and took her to see it. She absolutely loves it, and wants to see about financing. I'm sure we're good to go, as we're both professionals in the field of education with minds set for saving our dough. But before we do anything, I told her I'd ask you what you thought, or anyone else out there for that matter on this house. Its pretty nice. The rooms are huge (its 3500sqft with only 4 bedrooms), it needs nothing, and its in the 92882 zip code area we love (we currently own in the nearby Mountain Gate community in a 3 bdroom 1300 sqft...same zip code).

The link to the house is below. I put my faith and trust in the opinions that you guys give.

http://www.trulia.com/property/1027698132-3330-Shooting-Star-Ln-CA-Corona-92882

With said...

Dear dgelz, $156/sft is really quite expensive for Corona these days, when the going rate is between 110 to 120. But hey, if you like it, go for it.

golfer_X said...

I really do hate to offer my opinion on things like this. You obviously want the house. If you love the house, can easily afford the house, AND will not lose any sleep if it drops $100k after you buy it then I would say "take the plunge!". Before I offer my opinion let me say, I agree it's a very nice looking house.

My feeling is and has been for quite some time, that prices will return to the levels of 2001 or there abouts. Now whether that will take a year or 5 years is anyones guess. That house was probably worth $350k~$400k in 2001 add in some $$ for upgrades and the pool if you like. Today at $550 I think that the home is still priced too high. I'm not sure it would even appraise that high (which might help with a low offer). There looks to be recent comps of slightly smaller homes for around $400k (although who know what they looked like).

1167 Starbright (3102 s/f, $400k),
3276 Stargate shows a recent sale at $345K (also 3102 s/f, might be a sale back to the lender though at that price).

See what your agent thinks it's worth. I think it's still about $100k too high. Heck even useless Zillow thinks it's priced too high ($516k). I see they've been chasing the market down for 332 days now.

Empire Realty said...

dgelz,

Everyones input is valid, good words of wisdom.
How many homes did you look at before you found this one? 10-15-20, if you take a pass on this one your next home is only 10-15-20 viewings away. If you are like the majority, you only seriously looked at less than 5 homes.
I a with everyone else, the bottom appears to be somewhere in the future and keep in mind Real Estate is not like the stock market, prices will not hit bottom and bounce back up, they will bubble around the bottom for 24-36 months, at least that is what they have done since 1968.
If you have a prticular area or configuration of your dream home I can put you on a watch list that wil shoot you homes of your design, i.e 3 bed/ 3 bath, > 2,500sq ft etc.
I also publish monthly market fundementals about Corona down to the zip code at, http://www.activerain.com/blogs/huntsirj.
Good luck!
RJH

golfer_X said...

Anyone see the preliminary foreclosure numbers for June yet? BMIT has thier numbers posted and if they are correct it looks like June exploded. Riverside was nearly 4800 and San Berdu was about 3500. That's double the amount from May. If those numbers are correct that will mean there were more homes lost to foreclosure than will be sold in June assuming we sell about the same as May (3400 in Rivy).

Terry said...

Regarding the house in your post, wouldn't $429K be the right ASKING price, which would mean an offer should be for less. Probably at least $12k less since it'll take a month to complete the sale and it'll drop in value that much. I'd say an offer of $48k less than the $429 asking price would be in order. And in reality I wouldn't offer that either.