Realtors have developed their own language and sales techniques to manipulate buyers. The practice is so widespread that most accept this indoctrination as being the way real estate is sold. Does it have to be that way?
Asking Price: $440,000
Address: 8 Chardonnay #16, Irvine, CA 92614
Try Again — Aaliya feat. Timbaland
What would you do?
To get to me
What would you say?
To have your way
Would you give up?
Or try again
If any of you have every perused a typical realtor website, they attempt educate and inform like the IHB does. The main difference is they are not attempting to elucidate the truth, they are attempting to indoctrinate people into the nonsensical tenets of realtorspeak and kool aid intoxication. Realtors attend sales seminars and learn from other agents how to manipulate buyers through emotional appeals. The art and science of real estate sales is largely a study in the psychology of exploitation. Those that master these techniques make more money than those who do not.
During the bubble, buyers got caught up in the crazy fantasies of kool aid intoxication. Buyers wanted to believe the nonsense; they demanded it. A realtor or mortgage broker who attempted to talk a buyer out of overpaying for a particular property would lose the business to someone selling the fantasy. Making a living telling the truth and behaving morally is more difficult in financial manias. There is no reward for being realistic when nobody wants to live in reality.
The dynamics of a financial mania tend to drive good people out of the business. What you end up with are those who prospered during the mania by manipulating buyers and behaving in a completely self-centered manner. Is it surprising to see these same people call the bottom every few months? They don’t care about buyers, they only care about their next commission. That leaves us where we are today with an entire industry so completely imbued with bullshit that few recognize the truth any longer and even fewer speak it.
Realtorspeak must die. The general public is waking up to the fact that they have been lied to for far too long. If people desired duplicity, the websites and blogs of realtors would be getting much more traffic. Instead, people come to the IHB to experience an alternate reality; the truth.
Everyone was worried last week that the solitary voice of truth and reason was lost. Nothing has been lost. We would rather stick to our principles and fail than change who we are. Judging by the popularity of the IHB, now that the bubble has popped, the world is ready for a change of direction. We will lead it.
Asking Price: $440,000
Income Requirement: $110,000
Downpayment Needed: $88,000
Monthly Equity Burn: $3,666
Purchase Price: $unknown
Purchase Date: 9/29/1995
Address: 8 Chardonnay #16, Irvine, CA 92614
| Beds: | 1 |
| Baths: | 3 |
| Sq. Ft.: | 1,362 |
| $/Sq. Ft.: | $323 |
| Lot Size: | 1,362
Sq. Ft. |
| Property Type: | Condominium |
| Style: | Contemporary |
| Year Built: | 1980 |
| Stories: | 2 |
| Floor: | 1 |
| Area: | Woodbridge |
| County: | Orange |
| MLS#: | S570058 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 6 days |
framed by bricks. Sundeck off loft overlooks atrium. Two story living
room with fireplace. Master bedroom boasts a soaring ceiling, mirrored
closet doors and ceiling fan. Scraped ceilings, plantation shutters
throughout, ceiling fans in loft and dining room. Main floor powder
room with custom beach mural. Attached 2 car garage with new roll up
garage door. Woodbridge offers residents 22 swimming pools, 15
beautiful parks, paddle boat & canoe rentals at the Beach Club, and
rental facilities for events.
One of the reasons I chose this property today was because of the well-written description above. The realtor described the property accurately, featured its positive qualities, and used a minimum of flowery adjectives. There are no exaggerations, the punctuation is generally correct (There are sentence fragments), the words are spelled right, and it doesn’t employ any of the cheezy sales techniques I ridicule daily. It is possible to write a good property description without using realtorspeak; this description proves it.
I don’t know what is going on with this floorplan. Is there really only 1 bedroom and 3 baths? I think that is a mistake, but I don’t know.
Is it just me, or does anyone else think that mural is really tacky?
The owners of this property bought in 1995, but the final sales prices is not in my database. Here is what I do know:
- On 6/16/1997 they opened a stand-alone second for $40,000.
- On 11/3/1999 they refinanced their first mortgage for $201,000.
- On 8/23/2000 they opened a HELOC for $20,000.
- On 11/4/2002 they refinanced with a $234,000 first mortgage and a $10,000 second mortgage.
- On 5/22/2003 they opened a HELOC for $40,000.
- On 10/1/2004 they refinanced with a $325,000 Option ARM with a 1% teaser rate.
- On 10/1/2004 they opened a HELOC for $50,000.
- On 7/8/2005 they opened a stand-alone second for $77,000.
- On 2/10/2006 they opened a stand-alone second for $135,000.
- Total property debt is $460,000 ($325,000 + 135,000) plus negative amortization.
- Total mortgage equity withdrawal is about $250,000. I can’t be sure of the amount.
These were typical Irvine homeowners who doubled their debt and now cannot afford their properties. It is a story we have seen dozens of times, and we will see it dozens more. If this property sells for its asking price, and if a 6% commission is paid, the total loss on the property will be $46,400.
{book6}
What would you do?
To get to me
What would you say?
To have your way
Would you give up?
Or try again
If I hesitated
To let you in
Now would you be yourself
Or play your role
Tell all the boys
I keep you low
If I saw no
Would you turn away?
Or play me off
Or would you stay, oh, oh
Try Again — Aaliya feat. Timbaland
One bed, and three baths. Perfect for someone with irritable bowel syndrome.
And I was bitching about two earlier properties with one more bath than bedrooms.
You never see this in Riverside, except in very large properties (5 beds/6 baths and 4,000+ sq ft, that sort of thing). Is this typical in Irvine, having condos with more baths than beds? Obviously a 1/3 is extreme, but are 1/2s and 2/3s common?
It looks like the other units nearby are 2 bedrooms so I’m guessing they made one of the bedrooms a loft as described. One bath for master, one off the other bedroom / loft, and a guest bath downstairs wouldn’t be too far fetched.
With the Suare feet of 1362, it would not surprise me if this was a 3 bedroom converted to a 1 bedroom.
I saw these models in 1985 and considered the 3 bedroom 2 story. I ended up with a whole house in Riverside at 2/3 the price.
Looks like the price dropped to $420k last night.
They must be trying to stimulate even more interest. That reduction should trigger people’s search parameters. They have scheduled an open house this weekend. At least now, plenty of people know about it, not that anyone wants to go see a $420,000 one bedroom apartment.
In 1997 my house cost me $425k—a 5 bed. 4 bath—10k sq ft. lot–on a canyon—3k sq. foot house–3 car garage-just to give you a dose of reality at how high the OC is—IN 1997 The bay area was more expensive for housing compared to the OC.
So when you go shopping for a house think that house 10 years ago was under 200k.
Why would anyone pay this price now?
“not that anyone wants to go see a $420,000 one bedroom apartment”
Yes in the flats of Irvine, if it was on PCH with an ocean view it would be a different story.
FYI, I have been watching the RE market, and have been confused about the still overly high prices that are being asked for these dwellings, until I read an article yesterday. It seems that the banks are withholding a lot of forclosed homes from the market, they are manipulating price by trying to keep supply low. I do not know if this has ever been tried before, and don’t know if it will work, but right now it seems to be holding prices steady, still home prices are way too high for most middle class working families. It will be very interesting to see how all this plays out in the end. Real unemployment rate is approx 15%.
If you factor in the number of people who have been living rent free for up to a year (or more!) due to them not paying their mortgage payments for that long, as well as the REOs that aren’t on the market, the size of the overall “shadow inventory” is absolutely huge.
This won’t work in keeping values up. In fact, it’s counter productive in the long term. If somebody realizes their neighbor has been living rent free for a year, they might be tempted to do the same thing. And leaving REOs vacant for long periods of time causes the condition of those properties to deteriorate, due to vandals and squatters amoung other things, also lowering their value.
At some point, the market must be cleared. Trying to withhold supply from the market does not magically reduce supply. It just makes the supply get larger. Like water overtopping a dam, at some point there is going to be a flood.
I suspect the reason more REO is not on the market is because the banks are so overwhelmed they cannot effectively manage them all. This is also why they are delaying foreclosing on some homes and creating an even larger mess.
It’s quite possible that lack of manpower is the reason for this, as opposed to an active withholding of inventory. It could be a combination of the two.
This is from Golfer X over at Housing Kaboom
Late last year a multitude of foreclosure related legislation was passed. It had the effect of seriously slowing the filings of NODs, the first stage in the foreclosure process. If you look at the NOD numbers, they crashed big time in Sept, Oct and Nov. They shot back up again in Dec once the lenders got the systems in place to deal with the new rules.
It usually takes a home about 6 months to go thru the NOD phase before the NOT is filed. The NOT takes another 1 to 2 months before the home is auctioned (usually back to the lender). So that process usually takes 7 to 8 months from the time the NOD is filed.
So why are there so few REO properties right now. Well, wind the clock back 7 months……. BINGO! Sept of last year. That’s when the banks got whammied and the NOD numbers fell thru the floor. And that’s why there are far fewer REOs hitting the market right now.
How long before we start seeing REOs hitting the market in numbers again? Looking at the data, the NODs picked back up to near record levels in Dec again. Unfortunately that means the pickings might be slim for another 3 or 4 months. But come August, Sept there should be a big uptick in the REO numbers.
If there are any smart lenders out there they should be trying to expidite the process. After all, interest rates are low, the spring selling season is in full swing and there are buyers out there. If I were a bank manager I would want everything I had on the market NOW. There’s a good chance come late summer the inventory will shoot back up putting stronger downward pressure on those prices. Smart banks (oxy-moron) will get the stuff sold now.
If the numbers I saw were correct last month will set a new record for NODs filed at over 50,000. Don’t be fooled by the headlines you might read this month. The falling numbers of foreclosures that will likely be reported is a direct result of the 3 months it took the banks to adjust to the new rules. With record numbers of NODs currently being filed it’s just a matter of a few months before the false hope wears off.
I do now how some of you feel though. It’s frustrating as all heck right now. There ain’t squat hitting the market as of late.
Good stuff — thanks for posting that over here.
Well, if banks and others stop laying off people and start hiring people to processing these REOs, we wouldn’t be in this situation.
🙂
Also, the gravitiional pull of REOs in any neighborhood pulls the available market towards it. I wonder if a buyer who fails to grab the REO will then capitulate and buy the significantly higher priced home down the street? Somehow I think that they won’t. This REO vacuum is creating the impression of demand but until that vacuum is gone, the rest of the wtf priced homes will have to reset their prices accordingly. In many of the areas I look at in south OC, all I see is many wtf priced homes sitting while the low REOs go quickly. You’d think that sellers would get the picture.
I have heard this rumor repeatedly. I think one of three things is happening.
1. The banks are overwhelmed by the volume. They aren’t deliberately holding back foreclosures, they just can’t get to them. Personally, I think this is certainly part of what is happening.
2. Banks or MBS holders don’t want to write down homes held on their books. This might be true in some places. If this is true of banks, then you should see rather different behavior from one bank to another. Some banks have plenty of capital and few foreclosures. I have seen particular banks that are fast at getting rid of foreclosures at good prices. MBS holders is a more difficult argument. Typically there are a lot of owners. They don’t speak with one voice. They would have to give servicers instructions to do this type of thing.
3. Inventory is being held back to keep prices up. This would require classic cartel behavior, unless government regulation or a convergence of interest is at work. It is rather hard to keep a cartel in line. OPEC has a hard time getting member to stay with the quotas they have agreed to. If members of a cartel are in difficult financial situations, and they might get into serious legal trouble for such behavior, I doubt this is the explanation.
So, maybe regulations are causing this? SB 1137 is a good candidate explanation in CA. Add in voluntary foreclosure moratoriums which are now expiring, and you see a potential avalanche of delayed foreclosures. Many of them are already vacant.
Regarding properties which are already foreclosed, and are not be sold, I tend to believe it’s either being overwhelmed (#1), a hope that some new federal program will help, or that the homes being held back have some sort of problems. I wouldn’t be terribly surprised if some lenders waited until the end of the first quarter to take action. Companies often time things for balance sheet or income statement reasons. They do this more often than they are willing to admit.
I forgot one other possibility. Some of those homes have renters. In prior times, banks would have kicked them out and sold the house. I’ll be some banks are now letting the renters stay. That way, they have cashflow, less bad publicity, and might sell the house later in a better market.
If the banks’ loss mitigation departments had half a brain, they would more often sell homes occupied by good renters as investment homes. In areas where prices are low enough for the cashflows to work, this is a good idea. Still, it takes a while to change bad habits.
REOs with renters in them are really rare, bordering on non-existant. Occasionally the bank will let the previous owner stay for a period of time, but the banks basically never rent them out to unrelated parties. The banks have absolutely no interest in becoming landlords (although, if one thinks that property values will recover in a couple years, that might be the correct financial play). Now, short sales with renters in them are fairly common, although the bank doesn’t get the rent money-the guy who is not paying his mortgage does. So, not only is the short seller not paying the mortgage, he’s making money in the process. That’s even more offensive, in my mind, than an owner-occupant not paying rent. (Although it sucks for the renter, who is the only person involved who has done nothing wrong.)
If I was a big bank I would create a partnership with other big banks to withold RE. At this point the banks are the biggest RE owners who are selling today (i.e. they can collectively control the market). If they get smart, they can manipulate the market through holding volume to maintain prices for as long as possible. That will minimize their losses over the longer term. This type of collusion is what cannot be factored in price or valuation models.
Aside from any legal problems, such collusion would require fairly good compliance from members of the cartel. That’s hard to do.
There are other problems. In areas where prices are dropping rapidly, there is a big incentive to sell now. Even in areas where prices are dropping slowly, empty houses have negative cashflow. They can also get trashed pretty quickly, and be worth much less. In some parts of the country, leaving a home unattended with no utilities means having a teardown within a year.
That’s one advantage SoCal (and Arizona and Nevada and Florida) have over, say, Detriot or other places where it freezes-no damage from leaving the utilities off over the winter. Although, most of the REOs I’ve seen have had both the power and water on when I was inside the house. Maybe they shut it off before they put it on the market, although that can cause problems. For instance, the city of Riverside is starting to go after houses with dead or overgrown lawns, so that means they have to have a gardener come out and trim things, and leave the electricity and water on and have the sprinkers on a timer. In fact, it looks like the banks are actually installing new sprinkler timers in some of the houses around here.
Lots of money (electricity, water, gardener, not to mention things like taxes) that needs to be spent keeping up an empty house. I’m sure those costs add up quickly if they just sit on the thing.
not FL. within a few months of no AC, you get mold
IR,
Can you explain the financing here?
On 10/1/2004 they refinanced with the Option Arm for $325,000. Same day they opened a HELOC for $50,000.
Subsequently, they opened a stand alone second for $77,000. Did this pay off the HELOC?
Then there was an additonal second for $135,000. Did this pay off the HELOC? The other second? How can you tell when they are paid off by the additional loans?
Usually, subsequent refinances wipe out previous loans. For instance, the stand-alone second probably wiped out the HELOC because the lender for the stand-alone would not want to be in third lien position on their note. It is possible that the lender for the stand-alone would knowinly take third lien position because lenders were pretty stupid, but ordinarily they would not do this.
As a rule, whenever you see a refinance of a first mortage, all other mortgage claims are refinanced out because a first mortgage holder will never take second position. Whenever you see a second refinance, it will take out the other seconds. This is why you almost always see the refinance amounts growing larger. The borrower has to take out the previous mortgage and increase the dollar amount to obtain any cash.
Thanks for that explanation — I always wondered about that too.
I have noticed that the low end properties seem to get foreclosed on quickly while it takes a lot longer for the higher end.
I tend to believe the banks are witholding inventory for a number of reasons.
1. Too much fraud invlolved by all parties.
2. Do not want to saturate an already saturated market.
3. Are hoping/praying/bribing for the return of “Mark to Model” accounting.
4. Want to post a few good quarters to sell some stock, pay off some debt before dumping more toxic loans.
5. Current executives can squeeze in some bonuses during the couple of good quarters before dumbing more garbage on the taxpayers.
We should report all those people who hosts Realtorspeaks, and hold them accountable for what they have done.
This way we will reduce amount of victims in the future and promote good moral behavior, so that Realtor with good moral values can be rewarded.
I tell my kids to be more concerned about smiling friendly people in nice clothes than your average common criminal. I am 46 years old and have never been robbed, mugged or had anything of significance stolen by a stranger.
On the other hand…..
Wealthy people wearing suits have lied and cheated me out of tens of thousands of dollars. The Bernie Madoffs of the world are more common then you think.
So true!
My favorite Realtard-speak phrase today: It’s not a price reduction, it’s a “price improvement”. As in: “It’s a great time to buy with all of the recent price improvements”.
My .02
SGIP
A house you featured last week, 59 Emerald, is in escrow as of 4-11-09. I saw it on Ipoplayers list.
You say –
“Realtors have developed their own language and sales techniques to manipulate buyers. “ 6%!
It shows YOU are still living in fantasy land, intoxicated by the kool-aid. If you charged 2% or flat rate I’d be a believer. Right now I see no difference between you and Sally the Realtor.
Honest pay for honest work. I would not begrudge a 6% commission to an honest realtor who balances his clients’ interests with his own. I believe IR was referring to those who would resort to manipulation to make a sale at any cost, regardless of the harm caused to his client. There’s a big difference.
And you probably will not see a difference until we get clearance for an alternate commission structure from the DRE.
Irvine Renter:
What do you mean “…an alternate commission structure from the DRE?” I was under the impression that r.e. agents and brokers were free to charge whatever commission they wanted to. What is the function of the DRE in setting commissions?
It is complicated, but the methods we are considering will require DRE approval. I cannot say more than that.
I assumed that the commission comments were addressing the fairly common 6% commission charged by r.e. agents and brokers in California. It sounds as if I unwittingly happened into the middle of an ongoing discussion whose basis I am unfamiliar with.
nice video
re: foreclosure inventory not on the market
I am not so concerned with the reasons why the properties are not coming to market quickly. They will. And I have a new phrase, “pent up supply”.
This is a story about the lack of success in CA with the “produce the note” strategy, if anyone’s interested: http://mortgageservicingnews.com/newsletter/stories/?story_id=56
Another false hope is crushed.
An excellent summary. I’ve assumed that the basis for at least some of those suits was that the defendant bank may have sold the loan and thereby recovered its investment while simultaneously parting with the documentation to the new note buyer and simply servicing the loan. Were that the case, locating the new buyer would seem critical – and perhaps impossible if the loan was now part of a CMO – hence the suit.
This house is UGLY.
> I don’t know what is going on with this floorplan. Is there really only 1 bedroom and 3 baths? I think that is a mistake, but I don’t know.
Yeah, the description may be decent, but the photos sure do a poor job of illustrating the layout and details of the property. You’d also think there’d be a photo of the “in-ground Jacuzzi spa with waterfall framed by bricks” that they lead with.
IMHO, The bottom lines are:
1. Is the house truly affordable? Without come on interest.
2. Is the market going up or down? A gold rush can push every thing up in a local market.
3. Do I have an alternative place to live?
At over $300 sf: 1. No., 2. likely way down, 3. Yes conditional answer for some. With the high divorce rates and location restrictions on place of residence, #3 is sometimes limited. It also causes a higher demand for housing units (two units needed instead of one).