In Friday's comments, I was challenged by a reader who feels that I have lost my objectivity because we now sell real estate. Another reader seconded that concern so I want to address it directly in this space.
I think prices are too high. I also think prices will soften, particularly this fall and winter as the inventory continues to mount and buyer demand wanes. I don’t think buyers should purchase at prices above rental parity which most properties in Irvine still trade at.
Shevy is out working with buyers every day. Both he and I tell them they should not buy a property today unless they are prepared for continued weakness in pricing and they are in for the long haul. There are many properties that are trading for less than rental parity (mostly outside of Irvine), and for some buyers who plan to live there for a long time, they can save money versus renting if they buy today. If they need to sell in three years, they will have problems, and unlike many realtors working Orange County, we are telling clients this truth. There is no real urgency to buy property right now. Prices will likely go down and affordability will likely improve. That is the message we tell buyers because that is what we believe is true. If anyone reading this has heard anything else from me or Shevy, please post it here or email me.
If I am selling anything, it is the truth about profits to be made in the trustee sale market. I will continue to bring this fact to readers attention as I am trying to generate interest for that part of our business because I believe in the opportunity. I am not exaggerating or relaying anything other than factual observations. People who are active in the trustee sale market are making money, and anyone who wants to participate in this market can do so with our assistance.
Some of you may not believe this, but it is possible to be both an objective blogger and a salesman. If the sales opportunity is real and backed by observation of verifiable facts, I can objectively report on it. Sales doesn’t have to be sleazy manipulation and lies. Sales can be exposing a truth and detailing exactly how people can take advantage of it. I feel very comfortable with what I am doing.
Expect to see more trustee sale flips as property profiles in the coming weeks.
Writer's Corner
I have enjoyed a wonderful emotional state and clear frame of mind since coming back from my vacation. When I went, I spent the first few days alone walking in the woods and doing those things that calm and ground me, but that isn't what really cleared my mind. Playing golf did that.
I played several rounds of golf on my trip, and given how little I had played leading up to the trip, I expected very little from my performance. Once I got there and teed off on the course where I learned the game, many of the old thoughts and habits began to return. I shot 78 on my first 18 holes, and I was pleasantly surprised with how well I struck the ball. But more important than that, I was keenly aware of how my own self-confidence had a direct bearing on the level of my performance. The link between golf and life was direct.
As I pondered the link between confidence in my golf game, my performance on the course, and the rest of my life, the purpose of my trip became clear: the spiritual center I was looking for was not going to be found in the woods or climbing the mound, it was going to emerge on the golf course through confident play and solid performance.
On my second round, I accomplished something I have been frustrated with for 25 years: I broke par on my home course. The nine-hole course I grew up playing in Wisconsin is not particularly challenging, and shooting par or better there is within reach of any single-digit handicap player. However, I had not managed to do it since I first began playing there at age 9. I knew the course was in my head when I was 18 years old. In one round I was 1 under par after 8 holes and managed to double bogey the ninth to shoot a 1 over par 37. I have tried off and on for the last 25 years to get past this psychological barrier to no avail.
During that second round, I holed my wedge approach shot on the par 4 third hole for an eagle, and I birdied the par 5 fifth hole to put myself in a solid position. When I holed out my putt on the ninth hole, I had gone around in 35 strokes and bettered par by a shot. In my own mind, I had accomplished far more than that; I had broken through a mental barrier I had for many years. And in doing so, I rediscovered a fundamental truth about confidence in myself and the direct link to my own performance.
Since I have returned from my trip, I have found my heart has been more peaceful, my mind has been clearer, my stress level has been lower, and I have been happier. I am excited about the future, and I am feeling as confident in my own abilities as I ever have. And I am looking forward to my next round of golf, and I am looking forward to the next challenges in my life.
The Northwood II neighborhood was developed near the peak, and there have been a large number of distressed properties in this neighborhood. The previous owners paid $964,000 on 4/13/2005. They used a $770,950 first mortgage and a $193,050 down payment. They obtained a $250,000 HELOC on 8/8/2005, but there is no evidence that they withdrew their down payment with this HELOC. There are two other loans recorded later, but they appear to be in error. He did manage to squat for about 18 months.
Foreclosure Record Recording Date: 09/10/2009 Document Type: Notice of Sale
Foreclosure Record Recording Date: 08/21/2009 Document Type: Notice of Sale
Foreclosure Record Recording Date: 04/27/2009 Document Type: Notice of Default
Foreclosure Record Recording Date: 03/16/2009 Document Type: Notice of Default
When this property went to auction, the opening bid was $629,516, and the current owner-flipper paid $750,000. The profit margin does not look very enticing, and if they end up discounting this property to sell it, the flipper may not make any money at all.
Home Purchase Price … $750,000 Home Purchase Date .... 5/24/2010
Net Gain (Loss) .......... $49,000 Percent Change .......... 6.5% Annual Appreciation … 77.5%
Cost of Ownership ------------------------------------------------- $850,000 .......... Asking Price $170,000 .......... 20% Down Conventional 4.59% ............... Mortgage Interest Rate $680,000 .......... 30-Year Mortgage $167,878 .......... Income Requirement
$3,482 .......... Monthly Mortgage Payment
$737 .......... Property Tax $250 .......... Special Taxes and Levies (Mello Roos) $71 .......... Homeowners Insurance $120 .......... Homeowners Association Fees ============================================ $4,659 .......... Monthly Cash Outlays
-$834 .......... Tax Savings (% of Interest and Property Tax) -$881 .......... Equity Hidden in Payment $292 .......... Lost Income to Down Payment (net of taxes) $106 .......... Maintenance and Replacement Reserves ============================================ $3,342 .......... Monthly Cost of Ownership
Cash Acquisition Demands ------------------------------------------------------------------------------ $8,500 .......... Furnishing and Move In @1% $8,500 .......... Closing Costs @1% $6,800 ............ Interest Points @1% of Loan $170,000 .......... Down Payment ============================================ $193,800 .......... Total Cash Costs $51,200 ............ Emergency Cash Reserves ============================================ $245,000 .......... Total Savings Needed
Property Details for 65 BAMBOO Irvine, CA 92620 ------------------------------------------------------------------------------ Beds: 3 Baths: 2 full 1 part baths Home size: 2,460 sq ft ($346 / sq ft) Lot Size: 3,932 sq ft Year Built: 2005 Days on Market: 35 Listing Updated: 40347 MLS Number: S620792 Property Type: Single Family, Residential Community: Northwood Tract: Came ------------------------------------------------------------------------------ This property is in backup or contingent offer status.
EQUITY SELLER. BRING YOUR PREAPPROVED BUYERS AND CLOSE FAST! BEAUTIFUL, TURNKEY, CAMELIA PLAN 3 LOADED WITH UPGRADES. 3 BEDROOMS PLUS LARGE LOFT AND ALSO AN OFFICE ALCOVE WITH HUGE BUILT-IN DESK. DARK HARDWOOD FLOORING AND PLUSH CARPETING, CUSTOM BASEBOARDS, CROWN MOULDING, PLANTATION SHUTTERS AND RECESSED LIGHTING. GOURMET KITCHEN WITH GRANITE COUNTERS, STAINLESS STEEL KITCHENAIDE APPLIANCES INCLUDING A BUILT-IN REFRIGERATOR, LARGE CENTER ISLAND AND HUGE BUTLER'S PANTRY. SPACIOUS LIVING AREA WITH FIREPLACE AND BUILT-IN ENTERTAINMENT CENTER. LARGE LOFT WITH ENTERTAINMENT CENTER AND A TECH CENTER OFFICE ALCOVE WITH BUILT-IN DESK. CUL DE SAC LOCATION.
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