Irvine Home Address … 18 DELAWARE Irvine, CA 92620
Resale Home Price …… $799,000
What a shame we never listened
I told you through the television
And all that went away was the price we paid
People spend a lifetime this way
And that’s how they stay
Oh what a shame.
Words come easy, when they’re true
Words come easy, when they’re true
Robbie Williams — Shame
realtors Debasing Themselves
Soylent Green is People emailed me a link to a story Realtor gimmicks and blue light specials reek of desperation. The story links to a site Real Estate Coupons (http://realtycoupons.com/). 
Real estate coupons!? Please tell me this is a joke. RealtyCoupons.com says it “allows Real Estate Professionals to dramatically increase their Business and Production by offering Coupons for their Real Estate related business.” This is nothing but a cheesy gimmick aimed at despondent agents who think that lowering themselves to this level is going to procure business. What gets me most is that there are actually agents who buy into this and fork over their time and money. Glancing over the coupons posted by agents, it literally reeks of desperation. We do not need to stoop that low.
One of the more outlandish coupons offered is 50% off all real estate services, valid through 07/2012. It’s an agent firesale! Besides the fact you’ll probably go negative giving away half your earnings after factoring fees, taxes and expenses, you might as well strap a mobile police light atop your car, driving around the neighborhood with a speakerphone blaring “Attention Kmart Shoppers!” Who in their right mind wants to be known as the “Blue Light Special” Agent?
For those agents who are even remotely thinking about creating coupons, make no mistake… No client is ever going to have the following conversation with their friends and family:
“Sue is a great agent! You ought to give her a call”
“Wow, she must be an ethical and knowledgeable expert.”
“No, you silly. She accepts coupons! Here‘s one I clipped out for you. Hurry, though. It expires tomorrow.”
Furthermore, real estate coupons are a dangerous path to go down. One day you’re doling up coupons to drum up business, and pretty soon, you find yourself accepting food stamps for your commission. Have some standards, people! If you continue debasing yourself, you are going to find yourself one day blurting out “Yes, I do!” when a prospect asks you, “Can we pay you on layaway?” Where does it end?!
Who goes to realtycoupons.com to look for coupons anyway? If you have to coupon, at least look less desperate by putting on on your Google Places profile, on Yelp or Groupon. Please!
For the love of Lady Gaga, there is no need resort to these foolish antics. Instead of wasting time and money on real estate coupons (and incidentally demeaning your brand), allocate your resources elsewhere to attract clients. Can I get an Amen!?
IHB News
I bought another house in Las Vegas this week. I wasn't planning on buying another one, but the deal was so good, I couldn't pass it up. I picked up a 3,300 SF house with a 3-car garage in a nice neighborhood for $201,700. It comps for $285,000 to $300,000. It will take a few weeks before I get pictures for this one as it is currently occupied. I should have a post on the first property I purchased this week. It is being photographed Monday, and if I like them, I will put up the MLS listing in Las Vegas and profile the property here.
I spent most of the week getting my systems in place to analyze, acquire, and process these properties. As I go through the process with these first ones I will refine my systems to be prepared to process more. I originally planned to put these systems in place before acquiring any properties, but the deals I spotted were just too good to let pass.
The company I work with in Las Vegas has the ability to find last-second dropped bids. The property I bought for $201,700 was $15,000 under my maximum bid price. Since nobody else had a chance to check out the property, I was the only bidder. Banks are pretty stupid when it comes to late dropped bids. They could have gotten a significantly better price if they had given potential bidders more time to research the properties. I can't say it upsets me to profit from the stupidity of banks.
As I mentioned last week, the window is closing on the investment fund. The first property is being listed next week, and when it closes escrow, the fund is closed for good.
Writer's Corner
I went to Mickey's Not-So-Scary Halloween Party on Friday evening. It was a great family event, and a good time was had by all. I highly recommend it. I want to offer a special thanks to Jamie Griffin who gave me the tickets she was unable to use.
I am a Disney regular. We have season passes, and my son and I go nearly every Sunday morning. We like to arrive just as the park opens and go on his favorite rides before the lines get too long. It is the high point of my week, and my son and I have many fond memories of Disney. Sometimes, we go on Splash Mountain first thing, and if there is no line, we stay on the same log and go over and over again. There are some aspects of Southern California life you can't duplicate in other places.
Housing Bubble News from Patrick.net
Fri Oct 1 2010
Price slide likely to continue as shadow inventory comes to light (chicagotribune.com)
Central Fla. House Prices To Take Major Dive (msnbc.msn.com)
Study Finds Sharp Rise in Mortgages 90-Plus Days Delinquent (nationalmortgageprofessional.com)
Foreclosure postings on million-dollar Dallas houses on the rise (housingwire.com)
Distressed Houses Sell at 26% Discount in U.S. as Supply Swells (bloomberg.com)
More Foreclose Sales Will Drive Down Prices (theatlantic.com)
43% of CA. houses sold in foreclosure (mortgage.ocregister.com)
More than 1 in 3 South Florida house sales are foreclosures (miamiherald.com)
When Foreclosure is a Good Option (money.usnews.com)
Ohio Foreclosures and How They Work (stockmarketsreview.com)
Sale prices lowest on bank-owned houses (pe.com)
More Hawaii houseowners doing short sales to avoid foreclosure (staradvertiser.com)
Kaboom! Referral of Chase to federal prosecutor (4closurefraud.org)
J.P. Morgan Chase to freeze foreclosures over flawed paperwork (washingtonpost.com)
Should Treasury Help Investors Become Landlords? (blogs.wsj.com)
You're going to be paying your neighbor's home-equity loan (dailybail.com)
Highest property taxes in the country (money.cnn.com)
Patrick.net Now Has Health Insurance Forum (patrick.net)
Is it time to be your own landlord yet?
Thu Sep 30 2010
NODs and NOTS continue to stunt California real estate "recovery" (firsttuesdayjournal.com)
Forth Worth Area foreclosures may reach all-time record in 2010 (fwbusinesspress.com)
Census snapshot of S. Florida: Poverty up, wealth down (miamiherald.com)
Florida's 'Amendment 4' Would Give Voters Say on Overbuilding (theatlantic.com)
Case Shiller Index Overly Optimistic and Quite Misleading (boombustblog.com)
GMAC's Robo-Signers Draw Concerns About Faulty Process, Mistaken Foreclosures (propublica.org)
Banks Just Counterfeit Documents… No, Really! (market-ticker.org)
JPMorgan halts 50K foreclosures for possible flaws (sfgate.com)
Lost in the system that took the house (washingtonpost.com)
Government Must Continue To Subsidize Debt-Trap, Bankers Tell Lawmakers (bloomberg.com)
William K. Black on Banking Rackets. Too big to JAIL (dailybail.com)
Iceland ex-PM faces possible charges in meltdown (news.yahoo.com)
Tokyo Landlords Lose Century-Old 'Gift Money' as Rents Slump (bloomberg.com)
U.S. Dollar One Step Nearer to Crisis as Debt Level Climbs, Yu Says (bloomberg.com)
Money manager Bruce Fred Friedman arrested in France, faces fraud charges (latimes.com)
Open Dissent at the Fed: Charles Plosser Philly Fed Opposes QE2 (Mish)
Economic Outlook and the Current Tools of Monetary Policy (minneapolisfed.org)
Prominent Tiburon, CA realtor dead in apparent suicide (marinij.com)
Find cashflow-positive property easily. Free Trial
Wed Sep 29 2010
House Prices to Take Hit Next Year in Many Markets (nytimes.com)
Newport Coast land in foreclosure $6 million (mortgage.ocregister.com)
SF Bay Area Housing Graphs (patrick.net)
5 reasons why renting in California today makes sense over buying (doctorhousingbubble.com)
Hawaii residential subdivision heads for auction (staradvertiser.com)
Foreclosed houses headache for neighbors (but do they want prices low enough to sell?) (thegazette.com)
Case Says Housing Will Grow Slowly After Free-Fall (bloomberg.com)
Tax auctions look 'like government-sponsored loan-sharking' (bnd.com)
QE Engine Revs, Car Goes Nowhere (Mish)
Will quantitative easing 2 bail out commercial real estate market further? (mybudget360.com)
U.S. Household Income Falls for 2nd Straight Year (bloomberg.com)
Savers told to stop moaning and start spending (telegraph.co.uk)
China illegal immigration: Vietnamese pour into China seeking work (latimes.com)
Former bank rep gets the runaround from Capital One (latimes.com)
The Left Right Paradigm is Over: Its You vs. Corporations (ritholtz.com)
Patrick.net forum now has user search (patrick.net)
Thank You Cudick A. ($50) for your kind donation.
Find cashflow-positive property easily. Free Trial
Tue Sep 28 2010
House prices need to go down (cnbc.com)
Credit Scores May Hamper Housing Inflation (blogs.wsj.com)
Foreclosure Flaws May Slow House Price Fall, Delay Recovery (bloomberg.com)
Calif. houseowner optimism plummets (lansner.ocregister.com)
From $740,000 to $540,000 and still overpriced (doctorhousingbubble.com)
California is in trouble, more forecasters say (latimesblogs.latimes.com)
How Americans' Love Affair with Debt Has Grown (theatlantic.com)
Student loans have terms the mafia would love (studentloanjustice.org)
Housing Cash Flow and Rental Yields (deptofnumbers.com)
Walking away from a mortgage might make sense (mercurynews.com)
Housing less affordable in Ontario (yourhome.ca)
House prices fall across all of England (telegraph.co.uk)
Chinese Property Bust Like Cooking Crabs (bloomberg.com)
China: Proudly Demolishing Buildings Before Completed (zerohedge.com)
Raters Ignored Proof of Unsafe Loans (nytimes.com)
Where Are All the Prosecutions? (dealbook.blogs.nytimes.com)
What the Rich Don't Need (nytimes.com)
Hedge Fund Crackdown May Snare European Real Estate Investors (bloomberg.com)
Failed Banks Graphic (s.wsj.net)
Zombie Bank Song (dailybail.com)
Thank You Damon S. ($20) for your kind donation.
Find cashflow-positive property easily. Free Trial
Mon Sep 27 2010
Denver high-end housing market falling (denverpost.com)
New US House Sales Hold at Second-Lowest Level Ever (bloomberg.com)
August house sales rebound will be short lived (housingwire.com)
House sales on pace to finish year as bad as 2009 (finance.yahoo.com)
Housing Prediction: Bottom in 2014, Then Decade of Stagnation (Charles Hugh Smith)
Only one fix for housing crisis (hotair.com)
Walking away with less (washingtonpost.com)
LA housing bubble not dead yet (patrick.net)
Condo prices plummeted in Florida (gainesville.com)
Gung-ho' house repo agents change the locks even before foreclosure (miamiherald.com)
Tax credits leave housing inventory higher, not lower (newsok.com)
Australian housing bubble debate boils over (au.finance.yahoo.com)
To buy or not to buy? The Japanese Experience (japantimes.co.jp)
Trashing the dollar to save the economy (latimes.com)
What does it cost to produce an ounce of gold? (from 2009) (miningweekly.com)
Shopping Patterns Show When the Government Checks Come In (Mish)
Average property-price gap in US cities varies by more than $1M (guardian.co.uk)
Widening gap between rich and poor Americans (sfgate.com)
The Angry Rich (nytimes.com)
The cost of buying in a flat market
The best case scenario of prices while the banks dispose of their inventory is for prices to remain flat. Even if the banks can manage to engineer that miracle, there is still a cost to buyers who need to sell during the flat period: broker's commissions.
During the last period of flat to slowly declining prices in the early 90s, the most common lie realtors told their victims was that prices would rise 4% to 7% next year. The reason for this particular brand of bullshit is the need to convince a buyer that the commissions will be covered if they need to sell. What happens when prices don't go up?
You lose the amount of the resale commission….
Irvine Home Address … 18 DELAWARE Irvine, CA 92620 
Resale Home Price … $799,000
Home Purchase Price … $805,000
Home Purchase Date …. 1/30/2008
Net Gain (Loss) ………. $(53,940)
Percent Change ………. -6.7%
Annual Appreciation … -0.3%
Cost of Ownership
————————————————-
$799,000 ………. Asking Price
$159,800 ………. 20% Down Conventional
4.74% …………… Mortgage Interest Rate
$639,200 ………. 30-Year Mortgage
$160,579 ………. Income Requirement
$3,331 ………. Monthly Mortgage Payment
$692 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$67 ………. Homeowners Insurance
$75 ………. Homeowners Association Fees
============================================
$4,165 ………. Monthly Cash Outlays
-$804 ………. Tax Savings (% of Interest and Property Tax)
-$806 ………. Equity Hidden in Payment
$288 ………. Lost Income to Down Payment (net of taxes)
$100 ………. Maintenance and Replacement Reserves
============================================
$2,942 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,990 ………. Furnishing and Move In @1%
$7,990 ………. Closing Costs @1%
$6,392 ………… Interest Points @1% of Loan
$159,800 ………. Down Payment
============================================
$182,172 ………. Total Cash Costs
$45,000 ………… Emergency Cash Reserves
============================================
$227,172 ………. Total Savings Needed
Property Details for 18 DELAWARE Irvine, CA 92620
——————————————————————————
Beds: 4
Baths: 3 baths
Home size: 2,800 sq ft
($285 / sq ft)
Lot Size: 4,419 sq ft
Year Built: 1985
Days on Market: 66
Listing Updated: 40431
MLS Number: P745761
Property Type: Single Family, Residential
Community: Northwood
Tract: Cs
——————————————————————————
This gorgeously upgraded and expanded Courtside home, full of natural sunlight, has over $100,000 in recent upgrades: dazzling travertine floors, white plantation shutters, crown molding, recessed lighting, a gorgeously remodeled kitchen with golden topaz granite, tumbled stone backsplash and top-of-the-line Bosch appliances, and three FULL elegantly remodeled baths with a spa tub in the master. For an older parent or visiting guest there is a convenient bedroom and full bath downstairs. So much livable space! In addition to the spacious downtairs family room with wet bar, there is an additional big crafts/study room leading to the backyard, another family room upstairs with wood flooring, and an upstairs landing off the bedrooms which is suitable as a T.V. room. Vaulted ceilings and skylights allow maximum vibrant sunlight into the home. This beauty is located next to a greenbelt/walking path, with additional side privacy and frontal privacy with no houses facing it across the street!
Looks like another rental parity house about to be devastated by an Irvine inventory of 840, with monthly Irvine sales of 200 and interest rates sky rocketing any day now. Someone needs to warn the FCB of the imminent collapse.
It’s a very slow fall season for sales. Something is going on. I just saw Chase Merrit, the Newport Beach based fund that purchases bad paper and homes at TD sales and flips for a profit dump the asking price on Ladera Ranch townhome. Chase Merrit droped the price $55k to below their break even. I think they may be running to the exit on some of their flips.
Thanks South County. It is great to know what the smart money is doing.
I wonder what would happen if someone clipped the coupon and walked into the real estate office with a naive look on their face. “Um…I have a coupon?” It’s Christmas!!!
There has been a noticeable drop off in demand. Moreover, in some markets I’ve seen prices follow.
For example, Woodbridge, attached 2000-2600 square foot there have been a number of sales since May, I can’t paste the CMA into this, however, there are two active equity sale properties listed in the low $600’s below rental parity with today’s crazy low rates, one long time owner and another trustee sale buyer trying to sell (flip). They are both fairly nice and based upon the comps available at the time were priced right when originally listed. However, even with rates dropping, they’ve had price drops and have still not sold and there are 1/2 dozen similar properties listed quite a bit higher. It’s likely that they will end up selling for about 5% less than comparables sold this summer and who knows where the properties that are not properly priced will end up eventually selling.
Declining rates and declining prices is not a good sign for sellers or real estate bulls. The X factor will be what happens with supply and whether or not they can drop rates much lower. Yesterday I read and discussed two opposite developments with two different contacts that are both very knowledgeable when it comes to real estate. One discussion regarding banks placing a moratorium on foreclosures as a result of law suits against banks that were not following foreclosure proceedings properly. Another, regarding prominent asset managers recommending to hold off buying real estate in the next few months because they were about to start releasing large numbers of properties. I’ve heard that before, it’s the same old story and only a select few likely know the truth.
Regardless, rental parity has been created by really low interest rates in most areas now, yet we still seem to have falling prices and less demand in many areas. However, if a home is priced right and shows well there will likely be a buyer for it and even multiple offers. Furthermore, there are neighborhoods that have even been propped up and seen appreciation as a result of the low interest rates and lack of supply, a couple of neighborhoods in Irvine in particular. I think that one thing that everyone can agree on is that as long as there is demand if supply is restricted prices will remain stable regardless if they are in line with incomes or historical norms or not. Moreover, even if rates stay low and get even lower in the short term the likely hood of seeing any meaningful appreciation in the next 5 years is low.
Supply…Demand seem to make rational sense…
Yet.. no sales, low sales volume.. Go Figure..
The answer is that economics is a BS science that belongs in the humanities. What you are looking at is psychology and a changing herd entality. The herd doesn’t behave rationally. The herd can chage direction fast. The bankers and investment houses can’t control the herd. If the bankers are selling at or below acquisition price it’s because they don’t want to get out of the herd risk, not because they don’t think the properties are worth that in the long term. People are worried about their jobs. CA teters on the brink. Getting into real estate in the next 12 months is very risky. I predict volumes will stay frozen for a while. I predict that price expactions will remain highy speculative while the herd decides what to do.
This is a valid point that should not be overlooked, particularly when it comes to the real estate market. The herd mentality allowed the bubble to inflate and is causing come markets to overshoot a rational bottom.
On Real Estate Coupons, Redfin has it on most homes listed there if you go via their partner agents.
Question for all, what is your take in current market on working directly with the listing agent over making offers? I am finding it quite successful in terms of respnse and 1st priority treatment you get as listing agent ends up double ending the commissions.
Example 2; Proper pricing and negotiation strategy
The IHB Group worked with a qualified buyer looking to purchase in Northwood Point for under $1,000,000 in January of 2010, frustration begin to set in because nice properties that were priced right in this area were selling quickly and often had multiple offers.
IHB recommended visiting a property listed at $1,070,000, $70,000 over the buyer budget. Shevy’s experience has proven over and over again that properties listed too high often end up as the best deal for his buyers if not marketed and negotiated properly because many people will overlook the property or choose not to offer of the price they are willing to pay is too far below the list price. Moreover, with few showings and little to no offers sellers become more motivated and desperate and are often willing to take less, if not given the proper advice this can cost them thousands of dollars.
IHB recommended an offer price of $950,000. After submitting this offer the seller immediately countered at $995,000. At which point the buyers countered at $960,000 and the negotiations stopped because the sellers did not respond. Shevy explained to his clients that as long as the listing is priced too high, it’s unlikely it will get many showings and highly unlikely it will sell. However, that they needed to watch it closely because if they lowered the price to $999,999, they would likely have multiple offers and sell quickly, Shevy estimated that with his sales, marketing, and negotiation strategies, it would likely sell for around $1,030,000.
A couple of weeks went by and the property remained listed at $1,070,000, getting very little attention. Shevy followed up weekly and after two weeks went by the listing agent indicated that her sellers were motivated and ready to come even lower than $995,000. A final price of $985,000 was reached without the property ever being marketed at $999,999.
Do you always refer to yourself in the 3rd person?
The listing agent’s fiduciary duty is to the seller and to get as much money as they can for the property. Unless one is dealing with shady agents, which is not out of the question, the best offers in regards to price and terms will get priority. When there is a lack of supply and really high demand there can be benefits if one’s only goal is to acquire a property regardless of price. However, in today’s market, most buyers want a deal and are better off finding a good agent that can provide value add, sound advice, and guidance once the offer is accepted.
The average buyer will only complete one transaction every 7 years or so, while the average active agent is only completing about 4 transactions per year in today’s market, our team will complete over 60 transactions this year and as a result we have a wealth of knowledge, experience, and relationships with active agents that is applicable today. Each transaction we complete helps us to gain experience, form relationships with active listing agents, and learn which directly benefits our clients.
When we are approached directly by a buyer, the first thing we tell them is that our duty is to the seller. Because of this duty we have an obligation to get the seller as much money as possible for their home in the time frame that we have established with our client. We have a knowledge advantage over 99.9% of random buyers that are looking for a special deal by approaching us directly. Educated buyers, have a good feel for the comps and if they understand the process and the contracts there can be a rational argument that they will benefit. However, most of these types of buyers will likely end up paying more if they choose not to have representation while potentially take unnecessary risks through the transaction they may not even know they are taking, particularly if they are represented by an agent that only cares about their commission, especially those that have a fiduciary duty to the seller on top of that.
Moreover, because we provide a unique value add that our clients can see when they sit down with us we have had a number of clients switch from Redfin and other real estate services. In addition, we do not work with people that are working with multiple agents. However, we also do not request a buyer broker agreement, we only ask that our clients tell us if they are not happy and choose to work with someone else so that we can improve what we do. Moreover, because our number one goal is our client’s satisfaction, if they are not happy or do not feel we provided value add we would refund a portion of the fee.
Redfin’s web site has superior usability to most web sites for that I commend them. However, in my opinion, their discount model is a gimmick to get business. Good agents prefer to earn business through superior service and value-add. An agent from my office that did extremely well during the bubble but could not make it on her own after the bubble burst went to work for Redfin, what does that tell you? Most good agents will offer discounts to their clients if appropriate and offer superior service and value add first and a discount second, if appropriate. On many transactions a good agent will offer part of their fee towards closing costs, to buy their clients rate down, or to make the deal work. However, in some situation a good agent has provided unique value-add or put in excessive amounts of time and they have earned their fee. Here are a couple examples of transactions we have provided value add on.
Case Study; 23047 Via Pimiento B4, Mission Viejo, CA MLS# S602289
This property was foreclose on by JP Morgan Chase On 06/29/2009 and listed it as an REO on 9/4/2009 at $173,300 with Coldwell Banker. The property fell out of escrow twice because high HOA delinquency prevented buyers from obtaining financing. Shevy Akason and the IHB, found a lender that could finance property in the community despite high delinquency and instructed his cash investor to buy the property closed on 11/24/2009 for $157,000. The investor, per the instruction of The IHB and Shevy Akason put circa $6000 into the property and Shevy relisted it on 1/11/2010 and sold it for $200,000 with a close of escrow less than 60 days after the list date on 3/1/2010.
In this case the IHB group could have saved the bank over 15% and a lot of time if they would have listed it with the IHB, allowed them to recommend repairs/upgrades and allowed them to utilize his real estate expertise to foresee financing issues in this community and find a lender that could lend. Moreover, the buyer saved over 15% on the purchase by using the IHB group.
What’s your take on a few detached condos in Oak Creek (92618) 3bd/2bth currently for sale? Do you think you can get $100k+ knocked down from those prices?
Hi Joe;
Email me at sales@idealhomebrokers.com and I will complete an IHB fundamental valuation analysis and do some more research and we can meet and discuss it. This will give you a clearer picture on those specific properties. Ultimately, for those two specific properties in the short term it will come down to determining their equity position and motivation level. Motiviation level can be slow to change, however other times it will change weekly and sometimes daily, we will discuss.
Sorry, above message was for Chris, sorry, not sure where I got Joe 🙂 it’s too early in the morning.
We recently bought with Redfin, and it went quite well and we got our SFR at a price $15000 less than our lenders appraisal. However, we knew the area well and exactly what we wanted to pay. Redfin was a bit impersonal, but it worked well for us.
I was working with Redfin however, I was not confident that they were submitting my offers in a timely manner after a lost a couple of deals. Finally I called the listing agent directly and sure enough, they did not get my offer until way after I had signed it and it was too late, what made it worse is I would have had the property. I contacted The IHB and after only looking at four properties I found the right property. Their services were superior and because we only looked at four homes the discount was the same as Redfin.
IR, it is not clear how I can invest in the “fund”. Can you please provide info or a link? Private email is fine. I like what you do and want to invest.
Joe
Joe,
Email me at sales@idealhomebrokers.com
Ever notice how when an individual writes a bad check, that’s fraud.
But when a bank official signs off on 8,000 mortgage foreclosure documents per month without reading or verifying any of them, that’s “flawed paperwork”?
Fear not, the taxpayer will help out with the millions or billions the “flawed paperwork” will cost the banks.
It’s a moral hazard punishable by law to write bad checks….unless you are a bankster or politician.