Funny Housing Purchase Experiences

[ASAP]

Originally Posted by Watching The World Burn

I forgot - Story 3

This is somewhat unfortunate, because I think the buyers did the right thing, so not really funny, but relates to house purchasing.

Another home on our street just sold a few months ago...well, perhaps as long as a year ago. It too was on the water.

It was purchased by a younger couple (I say this because they are around my age, and the older I get, the more willing I am to consider early 40's to be young...and that goalpost will change further the older I get - just full disclosure there).

Anyways, they did their due diligence as far as I can tell, this was to be their cottage so they aren't going to live here year round, but the home inspection revealed that there was a small crack in the retaining wall that was between the pool and the boathouse.

So, they got an engineering firm in to look at it and they estimated it would cost about $50,000 to fix. The buyers then went to the sellers and as part of the sale price, negotiated a further $50,000 off to remediate the problem which the sellers were fine with and so everyone signed the purchase agreement and the home gets sold.

No more than a year later, the sellers are firmly out of the picture and the crack has widened a bit and so the young couple gets the engineering firm out to do the fix. No surprises here I'm sure, but of course the engineering firm goes "Oh no, this is much worse than before, it will cost a lot more to fix this properly".

So the firm comes back and says they have two options - they can either pour another wall by the existing one, but they can't guarantee that it will hold or that it will last for any length of time - be a bandaid fix at best and will likely cost $100K ish. But basically, no guarantees and might have to excavate the old and new wall if it doesn't work.

To do it properly though, they would redo the retaining wall (which apparently means they would have to tear down the boathouse and rebuild it because that is in the way of the retaining wall) the cost was going to be $1,000,000!

We heard the story from them and were just shocked - I mean, going from $50K to $1M in a year is kind of absurd, especially since they did most things right. Though I think fixing that crack as soon as they took the keys would have been my number one priority in hindsight...I can see why they didn't, because $50K probably didn't make it seem like any major issue.

Anyways, I don't know what they are going to do, be interesting to see. Wouldn't be surprised if they move, but at the same time I think they like it on the street so they might pay to stay.

i think a lot of folks that fomo'd and bought older to have something, anything will find themselves in potentially similar situations

[Watching The World Burn]

Originally Posted by ASAP

i think a lot of folks that fomo'd and bought older to have something, anything will find themselves in potentially similar situations

Agreed - I suspect in a lot of the older homes there are a number of issues hiding in the walls that will eventually come to light!

I suspect they will repair with a wall, simply because the market has changed in Canada a little - cooled off a bit, and I think they'd likely be taking a loss on the house if they tried to sell it now that will cost more than just pouring another wall and hoping.

[Watching The World Burn]

Story number 4

Just remembered this one, which I think I've shared.

This guy that I know through a friend way (IMO) overbought initially based on his life circumstances which was far from financially stable and purchased a $3M home (nowhere near water or anything to make it appealing) about 5 years ago. Anyways, he makes a lot per year so he could afford to make the mortgage payments reasonably easy, especially in the time of record low interest rates. Now this home had to have been 6000-7000 sqft at least I figure.

Well, in the time of the market craze, he and his wife apparently decided that wasn't big enough, so they sold their home for about $4M as I understand, so they cleared $1M so that was pretty good...BUT they wound up buying an $8M...maybe $8.5M property instead.

Property is on 10 acres, is 16,000 sq ft, just an insane house. I have not seen it aside from pictures, though I've spoken to the guy a few times since. Well, as life would have it, there were some struggles and to try to work through them, he had to move about 3 hours away and while he is still working full time, he's now doing a lot of commuting.

So now he's trying to offload this place because there is really no point to it, but interest rates have shot up so much that there is just no buyers. Its been on the market for at least 6-8 months now and still is because I just looked it up.

But he's listed it for $8M so that he tries not to lose much money on it - I can't understand it really because he's just not going to get anyone to pay that kind of money in today's market. And what's worse, I know that he is spending about $3-4K per month on landscaping costs alone, plus all the other ancillary things that come with trying to maintain a property like that so it is in A+ condition for any buyers...plus his property taxes on an annual basis which are no doubt significant. So all these monthly costs are just going to be eating him alive.

This is one guy though that I can't feel very sorry for though - I think he was too concerned with appearances and wanting everything now. Felt like he always thought he was a bigshot and a little arrogant. I believe he is being taught a valuable little lesson and he's eventually going to have to take a haircut on this place. A pretty significant one too I think. Have to say, I've been following this one with interest...will see how it plays out, though I think this is a story that is going to take a year or two.

[dreamingat30fps]

Originally Posted by Watching The World Burn

Story number 4

Just remembered this one, which I think I've shared.

This guy that I know through a friend way (IMO) overbought initially based on his life circumstances which was far from financially stable and purchased a $3M home (nowhere near water or anything to make it appealing) about 5 years ago. Anyways, he makes a lot per year so he could afford to make the mortgage payments reasonably easy, especially in the time of record low interest rates. Now this home had to have been 6000-7000 sqft at least I figure.

Well, in the time of the market craze, he and his wife apparently decided that wasn't big enough, so they sold their home for about $4M as I understand, so they cleared $1M so that was pretty good...BUT they wound up buying an $8M...maybe $8.5M property instead.

Property is on 10 acres, is 16,000 sq ft, just an insane house. I have not seen it aside from pictures, though I've spoken to the guy a few times since. Well, as life would have it, there were some struggles and to try to work through them, he had to move about 3 hours away and while he is still working full time, he's now doing a lot of commuting.

So now he's trying to offload this place because there is really no point to it, but interest rates have shot up so much that there is just no buyers. Its been on the market for at least 6-8 months now and still is because I just looked it up.

But he's listed it for $8M so that he tries not to lose much money on it - I can't understand it really because he's just not going to get anyone to pay that kind of money in today's market. And what's worse, I know that he is spending about $3-4K per month on landscaping costs alone, plus all the other ancillary things that come with trying to maintain a property like that so it is in A+ condition for any buyers...plus his property taxes on an annual basis which are no doubt significant. So all these monthly costs are just going to be eating him alive.

This is one guy though that I can't feel very sorry for though - I think he was too concerned with appearances and wanting everything now. Felt like he always thought he was a bigshot and a little arrogant. I believe he is being taught a valuable little lesson and he's eventually going to have to take a haircut on this place. A pretty significant one too I think. Have to say, I've been following this one with interest...will see how it plays out, though I think this is a story that is going to take a year or two.

I can't wrap my head around how someone who could potentially have "some struggles" would buy an $8M house... like in my mind I would have to be sooooooo set that no matter what happened I would have no problems keeping the house.

I saw some chart the other day of what they (by they I mean some random site on the interwebz) recommend income wise to afford $X house and I was amazed at how little actual money you needed to have to buy multi million dollar houses.

[XutvJet]

Originally Posted by Watching The World Burn

Story number 4

Just remembered this one, which I think I've shared.

This guy that I know through a friend way (IMO) overbought initially based on his life circumstances which was far from financially stable and purchased a $3M home (nowhere near water or anything to make it appealing) about 5 years ago. Anyways, he makes a lot per year so he could afford to make the mortgage payments reasonably easy, especially in the time of record low interest rates. Now this home had to have been 6000-7000 sqft at least I figure.

Well, in the time of the market craze, he and his wife apparently decided that wasn't big enough, so they sold their home for about $4M as I understand, so they cleared $1M so that was pretty good...BUT they wound up buying an $8M...maybe $8.5M property instead.

Property is on 10 acres, is 16,000 sq ft, just an insane house. I have not seen it aside from pictures, though I've spoken to the guy a few times since. Well, as life would have it, there were some struggles and to try to work through them, he had to move about 3 hours away and while he is still working full time, he's now doing a lot of commuting.

So now he's trying to offload this place because there is really no point to it, but interest rates have shot up so much that there is just no buyers. Its been on the market for at least 6-8 months now and still is because I just looked it up.

But he's listed it for $8M so that he tries not to lose much money on it - I can't understand it really because he's just not going to get anyone to pay that kind of money in today's market. And what's worse, I know that he is spending about $3-4K per month on landscaping costs alone, plus all the other ancillary things that come with trying to maintain a property like that so it is in A+ condition for any buyers...plus his property taxes on an annual basis which are no doubt significant. So all these monthly costs are just going to be eating him alive.

This is one guy though that I can't feel very sorry for though - I think he was too concerned with appearances and wanting everything now. Felt like he always thought he was a bigshot and a little arrogant. I believe he is being taught a valuable little lesson and he's eventually going to have to take a haircut on this place. A pretty significant one too I think. Have to say, I've been following this one with interest...will see how it plays out, though I think this is a story that is going to take a year or two.

He'll be lucky to get $5M for it.

[vreihen16]

Originally Posted by dreamingat30fps

... and I was amazed at how little actual BRAINS you needed to have to buy multi million dollar houses.

Fixed that for you.

Of course, one could use said house for business purposes, like a porn producer renting it out for video productions and photo shoots.....

[Watching The World Burn]

Originally Posted by dreamingat30fps

I can't wrap my head around how someone who could potentially have "some struggles" would buy an $8M house... like in my mind I would have to be sooooooo set that no matter what happened I would have no problems keeping the house.

I saw some chart the other day of what they (by they I mean some random site on the interwebz) recommend income wise to afford $X house and I was amazed at how little actual money you needed to have to buy multi million dollar houses.

Really? Might be different in the States than in Canada, here there are stress tests for mortgages where you have to be able to afford a 2% upswing in the current rate, so whatever the prevailing rate, you are looked at as though it were 2% more to see if you can meet the income test.

I was playing around with a mortgage calculator the other day - depending on whether he was using a 25 year amortization (fairly common here) or 35 year amortization, I figure his mortgage has to be at least $5M if not more and if so, his monthly payment was calculated to be somewhere between $22K - $30K!! Per month. And those are actual payments, not the 2% added on...so think about what income he must need when his mortgage renews lol.

We pay under $30K PER YEAR in mortgage payments. Which is why we sleep fairly peacefully at night lol.

Originally Posted by XutvJet

He'll be lucky to get $5M for it.

Yeah, I'd guess $6M tops. And that is probably high. I figure he is going to get taken to the cleaners.

[ASAP]

Originally Posted by dreamingat30fps

I can't wrap my head around how someone who could potentially have "some struggles" would buy an $8M house... like in my mind I would have to be sooooooo set that no matter what happened I would have no problems keeping the house.

I saw some chart the other day of what they (by they I mean some random site on the interwebz) recommend income wise to afford $X house and I was amazed at how little actual money you needed to have to buy multi million dollar houses.

I read somewhere that a vast majority of US housing buyers focus entirely on monthly payment... 0 on amount owed or total mortgage... as we had the 2% rates, this is partially what spurred the insane purchasing. So great, your payment is low but your principal owed is also 800k lol. People have a hard time understanding that and is why you see senior citizens with not paid off homes... and since in the US, you can't take age into account when approving for a loan, this creates a further problem.

The other problem are all of the low downpayment programs that put people into more home that they can afford and here we are. I was in a scenario many years back where I was renting a condo in downtown Miami and the seller wanted to sell it... the buyer called me as a tenant to do some due diligence asking me this and that... turned out the buyer was some 25 year old who just got a job and ended up not getting approved because he didn't even have 10k down lol. This was at a time when I could have bought the place cash lol... I called the owner and asked why am I even talking to this guy and who is this guy wasting your time. Back in the day, buyers like that wouldn't have even been talked to.

[unluky]

Originally Posted by ASAP

I read somewhere that a vast majority of US housing buyers focus entirely on monthly payment... 0 on amount owed or total mortgage... as we had the 2% rates, this is partially what spurred the insane purchasing. So great, your payment is low but your principal owed is also 800k lol. People have a hard time understanding that and is why you see senior citizens with not paid off homes... and since in the US, you can't take age into account when approving for a loan, this creates a further problem.

The other problem are all of the low downpayment programs that put people into more home that they can afford and here we are. I was in a scenario many years back where I was renting a condo in downtown Miami and the seller wanted to sell it... the buyer called me as a tenant to do some due diligence asking me this and that... turned out the buyer was some 25 year old who just got a job and ended up not getting approved because he didn't even have 10k down lol. This was at a time when I could have bought the place cash lol... I called the owner and asked why am I even talking to this guy and who is this guy wasting your time.

HOUSING buyers???? Try just buyers. I known so many people who could not tell you what loan they took out for their car - just the monthly payment. Same with CC bills - EVERYTHING.

This is why idiots and their money are soon parted.

My dad made me read things when I was a kid - and one I always remembered was where they took all the money in the world and divided it up evenly between everyone and in 25 years the rich were rich again and the poor were poor again. I didn't get it as much at the time - but now I do. You can't out earn bad habits/logic.

[dradernh]

Originally Posted by Watching The World Burn

We pay under $30K PER YEAR in mortgage payments. Which is why we sleep fairly peacefully at night lol.

We're at $7K per year and are sleeping quite peacefully, too.

In the late 80s, we were at $51K per year and somewhat anxious. Well, one of us was, anyway!

Originally Posted by unluky

My dad made me read things when I was a kid - and one I always remembered was where they took all the money in the world and divided it up evenly between everyone and in 25 years the rich were rich again and the poor were poor again. I didn't get it as much at the time - but now I do. You can't out earn bad habits/logic.

My dad heard the same thing from his minister grandfather in the early 1930s. The only difference is the minister suggested the money would all have returned to where it had come from between Sunday and Friday in the same week. Generally, I imagine, somewhere between the two is the point in time where the assets could be assumed to have returned to their natural resting place.

[UncleWede]

Entered escrow yesterday on the last property in my father's estate.
Started about 315
Dropped to 299 about a month ago
verbal at 220 from a spec realtor
family written 250, with pre-approved letter at that amount
counter 275
escrow at 262,500

I can't wait for this to be done!

[ASAP]

Update - house 3 has now been lowered by 5k after sitting 45 days and is STILL getting 0 interest... i bumped up my offer to 345k and they aren't budging... now they claim if they can't sell they will rent... mind you these are 75 YO folks who are moving a few states away... sure bud.

[unluky]

Originally Posted by ASAP

Update - house 3 has now been lowered by 5k after sitting 45 days and is STILL getting 0 interest... i bumped up my offer to 345k and they aren't budging... now they claim if they can't sell they will rent... mind you these are 75 YO folks who are moving a few states away... sure bud.

This is the way - never get emotional about buying something - you know the math does not holdup - hold the line!

[ASAP]

Originally Posted by unluky

This is the way - never get emotional about buying something - you know the math does not holdup - hold the line!

the thing is that i went up over 20k from original offer because I know what these people are holding and what comparable homes are selling for... this is borderline new construction which reduces insurance rates a lot in FL...and its all brick which is rare here... if there were other similar homes, i wouldn't even consider talking to these people

[UncleWede]

Ah, insurance rates.
After 2 days in escrow, I got a cancellation for reason other: fire rates are just too high in this area.

You KNEW what the rates were before you made an offer

[ASAP]

Originally Posted by UncleWede

Ah, insurance rates.
After 2 days in escrow, I got a cancellation for reason other: fire rates are just too high in this area.

You KNEW what the rates were before you made an offer

yea insurance here is absolutely wild at this point... a new construction home up to 5 or 10 years w a solid roof and solid construction may cost $2k per year in insurance... over 10 years and you may be looking at 6k or even more... people's rates are going up +50% YoY

[UncleWede]

Fire insurance has come down to only about $6500/6 months.

My dad dropped it several years ago when it was about twice that. Since he had paid it off, there was no obligation to carry.

[ASAP]

Originally Posted by UncleWede

Fire insurance has come down to only about $6500/6 months.

My dad dropped it several years ago when it was about twice that. Since he had paid it off, there was no obligation to carry.

wow that price is insane... i wouldn't joke around about fire insurance though... i am guessing the concern is wildfire but random house fires can start at any moment and I would consider that to be more important than even hurricane insurance here

[dreamingat30fps]

Originally Posted by UncleWede

Fire insurance has come down to only about $6500/6 months.

My dad dropped it several years ago when it was about twice that. Since he had paid it off, there was no obligation to carry.

[vreihen16]

Originally Posted by UncleWede

Ah, insurance rates.
After 2 days in escrow, I got a cancellation for reason other: fire rates are just too high in this area.

You KNEW what the rates were before you made an offer

I can tell you a similar story from here that's funny to me because of the stupidity.

One of the people on our street owned a 1920's house, with taxes around $2.5K/year. They tore the house down, and put a pre-fab of the same dimensions on the lot. What they failed to realize in their goal of having a shiny new house is that our town taxes shiny new houses at 4-5 times the rate of older homes. Their property taxes instantly shot up to $11K/year, and they were foreclosed on within a year because their monthly tax payment exceeded their mortgage payment.....

[M-technik-3]

Originally Posted by vreihen16

I can tell you a similar story from here that's funny to me because of the stupidity.

One of the people on our street owned a 1920's house, with taxes around $2.5K/year. They tore the house down, and put a pre-fab of the same dimensions on the lot. What they failed to realize in their goal of having a shiny new house is that our town taxes shiny new houses at 4-5 times the rate of older homes. Their property taxes instantly shot up to $11K/year, and they were foreclosed on within a year because their monthly tax payment exceeded their mortgage payment.....

Then you have those that know everyone and have money to wash the hands. There is a house a 1/2 mile from me that is 4 times as large as mine with 2.65 acres and I have .37 acres. My house is valued by the town at 195K at 1625 Sq feet and the said house is 4600 sq feet and is valued at 395K

Lets just say my house is a dump compared to that house and my house is a decent looking cape. Depends on how you wash the hand that inspects.

[Chick Webb]

Originally Posted by ASAP

i am guessing the concern is wildfire but random house fires can start at any moment and I would consider that to be more important than even hurricane insurance here

Yes, it's wildfires (think Camp/Paradise, Tubbs, CZU, etc.) that are the concern and many that live in the so-called wildlands or even on the urban-wildland interface are getting cancellation notices and/or refusals to renew because of the underwriting risk of insuring these properties. Not that the actual risk is different - although some would blame climate change, others 100+ yrs of forest mismanagement, or both - but now the perceived risk is higher, and the insurers can't profitably sell their policies to re-insurers. They are not willing to carry the liabilities on their own books, so they are exiting the market, leaving only the state-run FAIR plan as an option.

Unfortunately, like many such insurer-of-last-resort plans run by state/federal governments those are invariably underfunded (high premiums are politically unpopular), and mismanaged (competent government employees being few and far between). So ultimately the taxpayers of California are going to be on the hook for replacing the homes that have been built/rebuilt when they burn again. And, burn they will because fire is endemic in the West. In Paradise, for example, they'd had something like 20 large fires in the two decades that preceded the "big one". And the town is being rebuilt as I type this. So it's only a matter of time.