What would you do if you were underwater and you were offered a great new job out-of-state?
Asking Price: $1,499,000
Address: 66 Eclipse Irvine, CA 92620
I think it’s high time you knew
Whenever I think of you
My mind blows a fuse
When I look in your eyes
My meter starts to rise
And I become confused
My motor cranked electric goes
When I’m sitting next to you
Electricity starts to flow
And my indicator starts to glow
I, I, I’m just a love machine and I won’t work for nobody but you
Love Machine — The Miracles
To be quite frank, if you pass this up, you will be missing not only
the boat, the limo and party, BUT LIFE ITSELF!!! Buy it and let the
love begin!
I give the realtor credit for having the courage to put that in the description. He just landed some free exposure for his listing…
Corporate Relocation Sales
MalibuRenter emailed me recently and posed the following question:
Imagine you have a house in Irvine. You are offered a good job out of state, making considerably more than you do now. You want to accept the job, but you have a $900,000 mortgage on a home with a market value of $700,000 at most, and you are current on the payments. As far as you can tell, your current job is secure.
What would you do?
The answers have started a lively thread in our forums.
Calculated Risk noted the Housing Bust Impacting Labor Mobility.
According to the Census Bureau,
from 2005 to 2006 (the most recent data), approximately 1.7 million
owner-occupied households, moved to a different county or state. If
approximately 1 in 8 households (the same proportion as with negative
equity) will not accept a transfer now because of depressed home values
that would be about 200,000 households per year that will be reluctant
to accept job transfers.
This will not only impact the earning
potential of these households, but this could also impact the
performance of various companies. A significant majority of households
that migrate have incomes above the median – and negative equity
situations will limit the ability of companies to transfer these senior
employees.
…
One of the strengths of the U.S. labor market has been the flexibility
associated with labor mobility – households could easily move from one
region to another for better employment. The housing bust is now
limiting this flexibility.
That is the macro view, but what of the micro? What would you do in the circumstances above?
Today’s featured property owners are doing what many before them have tried; ask for a breakeven exit and see what happens….
Asking Price: 1,499,000
Income Requirement: $374,750
Downpayment Needed: $299,800
Purchase Price: $1,438,000
Purchase Date: 5/30/2006
Address: 66 Eclipse Irvine, CA 92620
Beds: 6
Baths: 6
Sq. Ft.: 3,700
$/Sq. Ft.: $405
Lot Size: 8,000 Sq. Ft.
Property Type: Single Family Residence
Style: Mediterranean
Stories: 2
View: City Lights, Coastline, Greenbelt, Panoramic, Park or Green Belt, Trees/Woods, Has View
Year Built: 2005
Community: Woodbury
County: Orange
MLS#: S588282
Source: SoCalMLS
Status: Active
On Redfin: 5 day
Corporate relocation foreces sale – this is your good fortune – ONLY LOCATION OF ITS KIND on the Irvine Ranch.The most SPECTACULAR LOCATION in Woodbury! End of cul de sac with sunset, Disneyland fireworks and city lights view on SINGLE LOADED street. The safest family location on the planet. Fantastic for family block parties with plenty of guest parking. Seperate casita with bathroom and own HVAC system. 6th bedroom is huge playroom. Each bedroom has its OWN bathroom. Upgrades galore with wood floors, imported granite counters, stainless steel appliances, extra recessed lighting, custom designer paint,custom stone hardscaping and facade. To be quite frank, if you pass this up, you will be missing not only the boat, the limo and party, BUT LIFE ITSELF!!! Buy it and let the love begin!
foreces? Seperate?
ONLY LOCATION OF ITS KIND?
Is isn’t even the only (1) southeast side property (2) on the boulevard (3) at the end of a cul-du-sac. What makes this property unique?
Coincidentally, this property is listed at 3% over its purchase price — the cost of a buyer’s agent in the transaction. Do you think they will get 3% more than their purchase price? (Hint: they bought at the peak.)
” The safest family location on the planet.”
It’s claims like this that point out the difference between people in finance and those in real estate.
In finance, we have to support claims in advertising. In real estate, they can just make up crap like this and no regulator will fine them.
oh man, could you imagine the carnage if the RE industry was held to the same standards as the finance industry?! And it was enforced?!
Talk about shovel ready projects to put people to work. Lawyers and their staff would be good to go for years.
Yea, if RE was held to the same standards as finance then taxpayers would be bailing out Realtors.
Of course, I’m in the car business so I have no right to complain about bailouts…
”The safest family location on the planet.” sounds like puffing, then again the city of Irvine claims it all the time so maybe not.
As for the “ONLY LOCATION OF ITS KIND”, there is a fundamental legal significance to real property being unique. Real property is treated differently than “goods” because goods are reproducible ie can be made identical. The law sees every single piece of real property on the plant as completely unique..even if you have two pieces of property with the same stucco box right next to each other – they are in different locations. So the realtor is not making any bold claim. They are just being stupid by stating the obvious, kind of like: hey everyone the sky is blue…now give me my 6%.
That’s very rational. But what about the claim that if you don’t buy this property you will miss LIFE ITSELF (caps in original)? Ai yi yi. All caps + ridiculous claim = desperate realtor.
If the relo package is sweet enough – who cares?
http://www.sandiegohomes4u.com/ReloNego.htm
Assistance in the sale of your current home:
company assumes responsibility for monthly payments, taxes and insurance until the home is sold; price guarantee – if sold by the employee, the company will pay the difference between the net selling price and a specified price; alternative price guarantee – if employee cannot sell the house within a specified period of time, the company will buy it at a specified price; company will pay commissions and other costs of sale.
Assistance in the purchase of a new home:
company to pay rent of temporary quarters until a permanent home is located;
buy down the interest rate; company may offer low or no interest loans. A salary level commensurate with any increase in cost of living between the new location and your old location.
“What would you do if you were underwater and you were offered a great new job out-of-state?”
1. Stop paying for the underwater house.
2. Start looking for another bubbly house near new job with close to 100% financing.
3. Go back to step 1 if bubbly house pops.
Amen.
There are many people in the corporate world that view moving as the path to advancement and promotions (whether that be relocating for current company or changing companies). Many companies have nurtured this with a pace of internal promotions that does not match that the titles they give new outside hires.
I don’t think we have yet to see how the housing bubble/crash will impact this. Will the companies start promoting from within, will companies give relocation packages that compensate for losses on housing – seems that they can only do so much, will people who can move due to flexibility in housing become more desirable?
More likely companies will say “Suck it up. There’s a lot of people doing more work for the same pay.”
People are so used to getting what they paid for they have no clue to what many have been through in the past. This has happened to us twice. WE rented the home and still lost but at least we could deduct the losses. This is what you do you rent your home.
We rented one of our homes in Florida for two years when we moved to Ca in 97′. It costs us even more to rent it after paying for the pool, yard and appliance contracts. It was our responsibilty which people here have no clue about when you sign a contract.
We lost over all on both homes but gained on the third home–that is what finance is all about folks sometimes you win and sometimes you don’t.
But the credit is still 825. And that no one can take away from thirty years of paying my bills.
And the benefits of that is lower insurance bills, easy credit with low rates, and NO one asking me for payments because I always paid what I owed.
Walking away on a debt in not necessary when you can rent it.
Your honorable attitude about paying off the debt you agreed to is commendable. But with all due respect this last bubble was way bigger than what you probably dealt with. There are people throughout So-Cal that are underwater by many multiples of their annual income. It’s pretty cavalier to just tell people in that kind of situation to “suck it up” and keep paying.
The point is there are other alternatives to just leaving and not paying on your contract. Renting is what you do so you can take your losses off your taxes. If you leave now you have no recourse but to lose your downpayment and credit rating. And then hope you can buy another house in another state where the same thing could happen again. There is never a guarantee when you buy something that it will have future increased value.
If you buy a stock it’s the same deal. You are stuck with it and if it goes up you win. Goes down you lose.
I think I have to agree with bigmoneysalsa. Do the math on this one, tlc, and then see if these people could do what you did? Keep in mind that their income is probably nowhere near being able to afford this house under any non-bubble, non-toxic mortgage scenario. How much could they realistically rent this for? Are they in an ARM or some other loan that’s going to go to sky-high payments in a few months? How much negative cashflow will they be able to shoulder?
I don’t know their specific situation, but I can’t imagine this working out as a rental.
-Darth
I rent out half this size for 3k a month–so figure at least 5k maybe even more for a six bedroom home. That is brand new. I am in a old home.
Renting underwater gives you even more tax loss.
You have to look at this as an asset, it could go back up, you could pay it off in years of renting it while living in another state, you would have write offs. Leaving it you achieve nothing but a huge loss.
Even visiting this asset is a write off. Best to get to your accountant before you walk away and ruin your credit.
Like I said, do the math. Let’s assume rent of $5K/mo. If their loan is for the full $1.5M, their monthly housing cost is over $10K!!! That’s in a 30-yr fixed mortgage at 5%, and it’s extremely unlikely that they are sitting on a mortgage that stable or favorable. Odds are that they have been paying $6-8K/mo for the past few years and are now looking at payments in excess of $15K/mo. Even in the unlikely event that they are in a low-interest, 30-yr fixed, can they shoulder at least $5K/mo in negative cash flow? That’s $60K/yr and $600,000 over 10 years! Even after 10 years, it probably still won’t be worth $1.5M. Would you have been able to take that kind of cashflow hit when you rented out your first house? Even if you had been able, would you have been willing? Come on now, be honest. These are an entirely different league of numbers than the ones that you likely dealt with a couple decades ago. We’re not talking a few hundred dollars a month here.
-Darth
If people can buy these homes for 1.5 and are paying for them at this price range than why can’t they rent them at this same price? What you are missing here is many are paying this today and they can matter of fact many are paying much more.
Think about how many homes are in this price range at one time the majority were at least one million.
I remember a RE agent telling me in 05′ that I would not find one house under one million anywhere in Newport, Irvine or Laguna–that is a lot of people who can pay.
What part of HOUSING BUBBLE do you not understand?
Sorry to put a blunt point on it, but the whole point of this meltdown is that they could NOT afford these prices. They got silly loans for WTF prices that were WAY above anything that they could truly afford. The stupid lending is mostly gone, and it’s completely gone for the high-end homes like this one.
-Darth
I agree with bigmoney on this one. It all comes down to math…if you are going to be hopelessly upsidedown for years to come, why not walk away. At this point, who cares if it is moraly wrong. Do you think Wall St. had any morals by allowing this mess to happen, while making billions in profits.
There was a contract for the home purchase. If the buyer fails to make payments, the lender gets their property back. This should be no different than buying a car and failing to make payments on it…the bank sends the repo man to get their car back.
I agree with you. Take your lumps and protect your credit. If this guy knew he was going to stand behind his loan agreement, he would have put more thought into the purchase.
Responsible people are not walking away from their homes.
Is there really a relocation? Maybe relocation sounds better than “I can’t afford my house and I am looking for the next fool to bail me out.”
A large number of people commute to Irvine for work.
It’s unfortunate that the high cost of housing is a barrier preventing them from living here.
Why? I don’t want to live in a place where absolutely everyone can afford to live. That’s not racist or snobby, it’s simple self-interest and protection of my family. Drive through Santa Ana or Westminster if you want to see the downside of living in a place that everyone can afford.
-Darth
It is the very definition of snobby. Too bad that you are so full of fear. I like to live in a place where there is a diversity of incomes. There are plenty of nice places in Santa Ana — I never cease to be amazed by it, and the rotten attitude of people in Irvine. Plenty of nice people too. What a narrow-minded, useless veiw. By your observation, the whole of Europe is a total trashcan.
Oh, the irony! I lived in Germany for 6 years (2000-2005). My wife is German. I’ve been back there twice in the past 3 years. There was no place in Germany that I ever felt unsafe (except for this one time when some young punk Turks decided to pick a fight with me on the subway in Heidelberg).
Some close friends of ours live in a nicer neighborhood in Santa Ana (the one across the I-5 from the Main Place Mall). As soon as you step outside their small neighborhood, it’s a complete ghetto. You’re welcome to keep Santa Ana to yourself. I’ll try to contain my disappointment if you choose to leave us Irvine residents and our rotten attitudes alone.
-Darth
Also, it’s not just about crime. It’s about infrastructure and amenities. Low housing prices, high vandalism and crime rates, and corrupt or inept city management translate to very little of what people love about Irvine: nice streets, great parks, lots of bike trails, clean, efficient, orderly, etc.
-Darth
“It’s about infrastructure and amenities”
Do you like my plan? I save my money and just drive over to Irvine when I want my Irvine fix.
When I am home, I am surrounded by other sensible people that can’t see the value of over-extending ourselves.
Win Win
brea: “Do you like my plan? I save my money and just drive over to Irvine when I want my Irvine fix.
When I am home, I am surrounded by other sensible people that can’t see the value of over-extending ourselves.”
Whatever works for you. I prefer to walk out my front door to enjoy Irvine and come home to it each night. I work out of a home office, so I can take a “coffee break” and walk or ride my bike down to the park or the lake or one of the neighborhood shopping centers.
It’s worth it to me, but to each their own.
-Darth
I love Irvine. I grew up there in the 70’s and spend about half my time there now but I have never been able to justify the prices. I bought in Riverside and paid off my house in 13 years (That is what makes me snotty about my plan).
The commute is a drag and August is hot but does that justify 3 times the price of housing? I may buy a cheap condo when prices bottom, but maybe my husband’s job is long gone by then.
Obviously, plenty of families think the prices are worth it but they also don’t get to experience the path they did not take.
Enjoy. I do see the appeal.
Give it a rest. You are afraid of brown people, and there is nothing whatever to do in Irvine. It is boring vanilla-ville, unless you are thrilled by spending money at a strip mall. I like to go looking at houses, but my wife and I agree — we will never look in Irvine. It is a great place to work, if you like office parks. I cannot imagine living in a more boring place. I usually have a cartain appreciation for the orderliness of the facade, until I meet someone like you who has to feel so much better about his boring choices by putting down places like Santa Ana. Always with a subcurrent of racism too. Absolutely disgusting. Are all of your neighbors bigoted too?
I wondered when some nut would bring this up. “Give it a rest. You are afraid of brown people”
Yes, LC, me and all my neighbors are racist bigots. I get together with my Persian neighbors, my black neighbors, and the Filipino/Hispanic couple next door on weekends to burn a cross and lynch some brown people. Sometimes we eat babies just to mix it up. It’s a wonder my 5-month-old son has survived this long!
Now that you’ve had your prejudice confirmed, would you mind leaving this blog alone and peddling your nonsense elsewhere? I’d recommend the comments section of the OCR: it’s fertile ground for your mindset.
Thanks in advance,
-Darth
Don’t mind LC, Darth. This same joker was on here a year or more ago pounding his chest about how Irvine was “not that different from Hemet”. Yah, whatever buddy.
I still think that Northpark looks exactly like parts of Corona. Don’t let me disturb your slumber. Pay $1 million for a mass-produced tract home, in a dull, beige Irvine.
And there are parts of Hemet that look exactly like Irvine. And you can buy a newer 3000 sq ft house for $189,000. If you don’t think that is news you can use, just ignore it. Don’t mis-quote me.
“What would you do if you were underwater and you were offered a great new job out-of-state?”
It would have to be so “great” as to more than double my income to make-up for the loss of the Mrs’ income (who knows how long her search might take?). Not sure we want to be landlords, so we’d probably sell it and bring cash to the closing.
This house is in Woodbury and it has a “coastline” view? Oh, that’s what picture 20 is. How cool is that?
How funny!
The coastline picture is so misplaced.
The agent should’ve included a “view” of the 5 freeway instead and the empty office park.
Well, if you notice on the satellite picture, just across the streets seems to be a nice small runway. You could use your personal helicopter or ultralight (deluxe of course) to fly down to the coast and enjoy life.
After all, anyone with such a McMansion would also have the Range Rover, Bimmer, Benz and ultralight (deluxe) jet plane.
Nothing like Living La Vida Loca out on the range over the Irvine Flats.
“What would you do if you were underwater and you were offered a great new job out-of-state?”
Easy answer: walk away.
Assuming that I was stupid enough to buy a house at WTF prices and finance it with an exotic mortgage, that is. Or unscrupulous enough to dig a giant MEW hole. Either way, stupid or unscrupulous, I’d have no qualms about handing the keys back to the bank.
-Darth
…proud to be neither
A doctor vacationing on the Riviera met an old lawyer friend and asked him what he was doing there.
The lawyer replied, “Remember that lousy real estate I bought? Well, it caught fire, so here I am with the fire insurance proceeds. What are you doing here?”
The doctor replied, “Remember that lousy real estate I had in Mississippi? Well, the river overflowed, and here I am with the flood insurance proceeds.”
The lawyer looked puzzled. “Gee,” he asked, “How do you start a flood?”
Many in the generation now entering their thirties were taught that they did not have to save and wait; home ownership was an entitlement granted by easy money. Nobody thought to rent for mobility because you could always sell your cash cow for more and move when you wanted. The mindset was remarkable in that it was both very common and very wrong.
“Many in the generation now entering their thirties were taught that they did not have to save and wait”
This is what I see. I am disgusted by the posters blaming the baby boomers. Prices can’t rise without willing buyers. The younger generation, as first time buyers, were taking the biggest plunge because they were not trading homes with inflated equity. I am amazed that there were so many willing to take such big risks.
Well, I’m in my mid-thirties now and still renting for mobility, but I’d been sort of priced out of the market by the bubble anyway. My grandparents went through the Depression, so maybe it is a generational thing, because I surely thought all those online mortgage ads back in the day were complete scams and drinking the Kool-Aid never appealed to me.
Cash flows get crimped due to delinquencies, property values and foreclosures causing the global economy to limp through difficult times.
Financing of properties is going through a huge restructuring process and the pricing should readjust to the new trends affordable by people. This transition is causing a lot of industries and job sectors to be totally wiped out.
Due to various disconnects in the industrial chain, job markets in various segments are down, property owners are sunk in debts and lenders are skeptical to lend and bail out people from the difficult situation. The income to afford to repay loans is declining highly.
Only when the restructuring gets stable and the pricing reconciles and reaches an acceptable and affordable level, the industry is expected to recover. With the housing market in great trouble, moderately-priced apartments have become the core buy.
This is a great opportunity for cash-rich buyers who are the main beneficiaries of this financial crisis. They can take advantage of the weak dollar value and buy properties in busy cities and centrally located areas.
Read More: http://www.housingnewslive.com
Sell it Short baby, Sell it SHORT !!!!!
Banks get the asset back, Bank gets $$$ from Uncle Sam, Homeowner suffers for 10-20 years??? Short Sale !!
I doubt that they’ll suffer for 10-20. Probably more like 2-5. The credit industry has learned absolutely NOTHING from this entire economic crisis. There are still large segments of the credit and finance industry that still have short memories and low standards except where they are forced to have otherwise.
-Darth
FYI: You don’t need to sign your comment at the end, since your name already shows up in the “Name (required)” box.
Yeah, I know. It’s a reflex from posting on The Motley Fool discussion boards. It’s also a tip to other posters on how you’d like them to refer to you if they decide to shorten your name. After all, I wouldn’t want everyone calling me Ferret, right? 😉 Darth is so much more dignified. 😀
-Darth
How about “Mr. Ferret”!
Yeah right. Sell short and and pay taxes on phantom income. Bad idea.
[b]Vero Beach Real Estate[/b]
If I could not rent the house in Irvine, then I would rent the one in the new location until the house in Irvine sold. Besides if there is a family involved, then it would keep the wife in her job without having to search for a new one where we moved to. Besides the new higher paying job could only be temporary.
I have seen the scenerio play out twice where the new job lasted only a couple of years. Best to keep things simple if you can.
The agent forgot to mention the view of the sky, sun and moon.
So arson might solve their problem? If all the underwater people simply torched their homes (in completely safe, undetectable ways that didn’t endanger their neighbors), that would get them some insurance money (assuming their premiums were current), and might get surplus houses off the market. A win-win!
Now that I think of it, I’m surprised there isn’t more arson on underwater properties. Maybe there aren’t that many current insurance policies on them.
I was wondering about that “coastline” view in Woodbury, too, since it’s 15 miles from the beach and Woodbury is as flat as the California job market.
On the upside, they have six bedrooms, each with a bathroom, so you could rent this out to six “seperate” families as the Depression gets worse.
That is an interesting idea. It could be a multi-family complex. The McMansion has now evolved into the new duplex for the early 21st century.
Can someone recommend the best site to get property records, such as last sale, total debt, equity withdrawal, etc, etc…
I am new to IHB and will appreciate your help!
Best Regards
It varies by your place of residence and the the county that does the deeds. Usually the county court system has the mortgage records- i.e. “deeds of trust”, “security deeds”, or other such documents.
try:
http://www.netronline.com
This is a good listing page for just about everything you are looking for. I get my property records from the tax assessors office. They give last sale, sq ft., year built and the owner name. Most cities rely on this data too so it is best to get it from the source.
The secretary of state is a good place to get corporate data or LLC info. Most states let this office handle these things. It can vary though so call around. If the corp is in Delaware, be prepared to fork over some cash. Last time I tried to get a record from there it was 20 dollars a corp. Hope that helps.