Replies

1. 
   frammer52 | Jun 22, 2009 11:46pm | #1

   Dan, are you guys abandoning your project house?

1. 
   madmadscientist | Jun 23, 2009 12:18am | #3

   Hi,

   Not giving it up just yet....but looking at other options.  We are going to go ahead and finish the design work we're already in contract with and then shop the completed plans out to some quality contractors with less overhead....if the budget is still way outta control...well then we'll probalby call it then.

   The higher end housing market around here seems to be stalling out so who knows.. maybe in a year we can afford a nice big place thats all done?

   And then sell our current place and take at least a $200,000 bath!!! Hurray!!! At least I don't think that we are upsidedown in our mortage..the house being a legal tri-plex is helping with that.

   Daniel Neumansky

   Restoring our second Victorian home this time in Alamdea CA.  Check out the blog http://www.chezneumansky.blogspot.com/ 

   Oakland CA 

   Crazy Homeowner-Victorian Restorer

2. 
   KFC | Jun 22, 2009 11:53pm | #2

   We had our first open house yesterday.  Neighbors report they lost count around two hundred.  Their kids made a fortune selling lemonade.

   k

1. 
   madmadscientist | Jun 23, 2009 12:20am | #4

   Hey you wanna link to the add?

   That great for you guys sounds like you've priced the place right...either that or your so waaaaaaaaaay off that people are coming by for the freak factor...

   One of the houses we looked at last weekend had that going on...brand new house behind a house construction where they wanted over $1mill for each place!!!  I almost felt bad for the realtor...people were just laughing....'they want over a mill and its not for both houses???'

   Daniel Neumansky

   Restoring our second Victorian home this time in Alamdea CA.  Check out the blog http://www.chezneumansky.blogspot.com/ 

   Oakland CA 

   Crazy Homeowner-Victorian Restorer

3. 
   Matt | Jun 23, 2009 01:23am | #5

   Not to get off on to much of a tangent, but $789k for 1471sq ft 3 bed 1.5 bath!!!!  That is really hard to get my head around.  What is the average family income there?  Here it might be $110k with 2 working adults....   A house like you picture might cost $400k tops in the most desirable downtown neighborhood....  In a less desirable neighborhood it might go for $250k...

1. 
   madmadscientist | Jun 23, 2009 06:57am | #6

   Well that is sorta what I am saying with these posts.

   I can tell you that during the height of the market here...maybe around 2005 this house woulda sold with multiple offers.

   I don't think reality has sunk in yet with homeowners in this highish-end market.  The current owners bought the place for ~$500,000 in 2000 and I think now with the market in free-fall that's probably going to end up being a good price for the house again...

   Daniel Neumansky

   Restoring our second Victorian home this time in Alamdea CA.  Check out the blog http://www.chezneumansky.blogspot.com/ 

   Oakland CA 

   Crazy Homeowner-Victorian Restorer

1. 
   davidmeiland | Jun 23, 2009 07:08am | #7

   What about getting your current place into minimum shape for rental of all three units? Then buy something else from someone who absolutely has to sell. Your ability to get / need for a mortgage is going to be the big variable, I think. Housing prices in the neighborhoods you're looking at will fall somewhat, but not a lot farther... that's my guess... unless mortgage rates go up a lot, and then the pool of buyers thins out a lot and prices keep falling. If you are not thinned out by higher rates then you can probably buy fairly low. Since you (presumably) have a mortgage in place on your existing house at principal-residence rates you are probably doing reasonably well there. What's the current rental market like?

1. 
   madmadscientist | Jun 23, 2009 09:31am | #10

   Ya that's not a bad idea but unfortunately it would take more money than we want to spend to fix the place up... Top and bottom floors are gutted and really the middle floor is not offically habitable...and I don't want to be that kind of land lord...

   To us it seems like we could spend $100k on the place and still lose $200k when we sell it or do nothing and still lose $200k...not a very motivating situation...

   I think house prices in my choosen 'hoods still have more to fall...the asking prices really have not come down at all and houses are staying on the market for months....yet the owners are not lowering their prices? Stupid huh?

   Daniel Neumansky

   Restoring our second Victorian home this time in Alamdea CA.  Check out the blog http://www.chezneumansky.blogspot.com/ 

   Oakland CA 

   Crazy Homeowner-Victorian Restorer

1. 
   KFC | Jun 24, 2009 07:24am | #11

   I don't think I'll post a link to our ad, if there's anyone who's seriously looking in our area, they've heard of it.  The last thing we need is curious georges adding to the parade.  I was at the house yesterday trying to do some minor work, and there was one realtor after another all day long. 

   I finally had to go pee in my neighbors yard (I asked him if I could) because I couldn't get a break between realtors.  I fart when I pee, and I didn't want one of the milf realtors getting all disgusted...

   I guess our asking price was probably too low, in fact.  We intentionally shot low to generate interest because the house needs some work and has a bizarre layout due to a 1969 remodel (terrible year for remodels...).  But the turnout has been ridiculous.

   We are asking $569k.  It was appraised for partial sale in Dec. 2005 for $610k.  We kind of figured 10% off from 610 is 549, then we put about 20k of work into it to sell, so ask 569.  I think the 10% off was a flawed notion, values probably have been flat since the peak in central Berkeley.

   --As far as your situation goes, what about renting a nice place in the meantime?  There's something to be said for renting, especially when you have a little one (congrats, btw). 

   Then you can make a decision about the triplex in due time, or keep chipping away at it, without living in it.  You gotta do what you gotta do, of course.  If momma ain't happy, nobody's happy, but still...  That seems like an investment that could really pay dividends if you can make it work.  A nice Alameda triplex.  Wow.

   So, anyway- Ferber or Dr. Sears? 

   Just kidding- I'd rather talk politics in the tavern...

   I'm sure you'll figure it out.  There's really only one thing that matters in your world right now anyway, the rest is details...

   k

2. 
   madmadscientist | Jun 25, 2009 09:39pm | #13

   Well it sounds like you priced the place right and will probably get multiple offers...heck maybe you can even get to counter-offer! 

   As far as renting...we have decided to do a couple of simple things to our current house to make it more livable and proabably stay here for the next year. 

   So we are going to throw down lineolum on the kitchen floor, put up a couple of cabinets in the kitchen for dishes, put in a dishwasher and plumb the fridge for water oh and close up the holes in the walls so toddlers can't get in trouble.  I'm also building a ton of utility shelving on the bottom floor so we can get rid of our storage unit and save some money that way.

   As far as baby books...DW has this ginormously huge book she's reading....don't know who  wrote it...

   Daniel Neumansky

   Restoring our second Victorian home this time in Alamdea CA.  Check out the blog http://www.chezneumansky.blogspot.com/ 

   Oakland CA 

   Crazy Homeowner-Victorian Restorer

3. 
   JohnT8 | Jun 26, 2009 09:04am | #15

   My project isn't as large or as upscale as yours, but I found the Schrock cabinets were a nice balance between price and quality.  Also, I think they're made about an hour away from here (in IL Amish country), so nice to not have something from China.

   http://www.schrock.com/

   There is a Shrock outlet in the same town and it used to be a heck of a bargain (people would drive from halfway across the country to pick up cabinets there), but the last couple trips I made there (prior to buying my cabinets from the regular retailer) the prices were up and the selection down.

   And with the obscene prices you seem to have over there, I wonder what difference there would be if you priced the cabs there and then priced them over here in the midwest?  If it was multiple thousands of $$, maybe it would be worth renting a truck, I don't know.  When it comes to home projects, I don't mind going to a little extra trouble if I get something out of it, but I'm not going to do it just to amuse myself.

   A couple friends helped me hang my cabinets.  

    

   jt8

   Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent. Be careful lest you let other people spend it for you. -- Carl Sandburg

   Edited 6/26/2009 2:07 am by JohnT8

4. 
   KFC | Jun 28, 2009 03:06am | #16

   Well it sounds like you priced the place right and will probably get multiple offers...heck maybe you can even get to counter-offer! 

   Yeah, maybe auctions do abound, but the good kind!  We'll see.  Interest doesn't necessarily mean offers.

   The house is unusual enough that many of the hundreds of folks who've come by were probably instantly turned off.  There were 125 brokers here on thursday for the brokers tour, though.  The stack of business cards is like two inches high...

   How does that counter offer thing work, anyway?  I've heard different things about the offer process.  I'd love to have a straight-up auction on the steps, that'd be a hoot.

   k

5. 
   madmadscientist | Jun 28, 2009 09:01am | #17

   How does that counter offer thing work, anyway?  I've heard different things about the offer process.  I'd love to have a straight-up auction on the steps, that'd be a hoot.

   Keep in mind that I am not a real estate pro but I have been involved in a counter offer situation from the buying end.

   Lets say you get 20 offers and 5 of them are all in the same ball park.  You have your realtor write a counter offer to those 5 people and see who bites.  If more than one bites then you do another counter offer to the remaining people at an even higher price....and on and on and on....

   at least thats how it used to work around here at the height of the housing boom.

    

    

   Daniel Neumansky

   Restoring our second Victorian home this time in Alamdea CA.  Check out the blog http://www.chezneumansky.blogspot.com/ 

   Oakland CA 

   Crazy Homeowner-Victorian Restorer

6. 
   KFC | Jun 28, 2009 09:30am | #18

   Interesting.  I get the feeling my realtor will be reluctant to do too much of that. 

   She's already said a few things about accepting the best offer and not trying to push it too far.  Since this is the only house I'm selling, I want to maximize my gain, of course, but I mostly trust her recommendations.  I do think about the 'freakonomics' study on realtors, but I try to put it out of my mind.

   I'm guessing that some of her reluctance to press her/our luck is due to the risk of everybody backing out, and some of it is what she sees as professional honor.  She has already warned me about one or two agents who view offers as only the starting point for dealmaking, a practice she looks down on.

   One realtor I met while I was doing some repairs here mentioned to me that her clients were in contract on another place, but she thought they'd like ours much more, and she might use their inspection as an excuse to back out of the other contract.  That'd be a pretty major PITA for the other seller.

   Another nerve-wracking aspect of the process is appraisal for loan approval.  I have heard first-hand of one sale with multiple offers over asking which got messed up when the bank's appraisal came in significantly lower than asking and offers, and the seller had to chip in to help the buyers get the loan.  What the 'market will bear' becomes fuzzy when the 'market' needs a 90% loan...  it's as much what the financer will bear...

   Until recently, the appraisal was a formality- if the house existed, the appraisal came in at the offered amount.  Now they're being extremely conservative.  If we get a solid offer that is backed by a large down payment, we'll probably take the money and run without pressing the issue.

   I should be feeling pretty confident, but I'm way stressed.  I'll be glad when this is over. 

   k

7. 
   davidmeiland | Jun 28, 2009 07:05pm | #19

   You can counter on price or any other term of the offer.

   You may get an offer that is contingent on buyer obtaining 90% financing, 30 years @ 5.25%. You could counter by specifying 80% financing, 30 years @ 5.5%, and you could require that the buyer respond to the counter with a bank letter stating preapproval for same.

   You may get an offer that specifies closing in 45 days, you could counter with 30 days.

   You may get an offer with an inspection contingency that allows the buyer 10 days to complete the inspection, and you could counter with 24 hours to complete the inspection--a smart move IMO because if they are going to bail on the inspection you want it to happen right away, not after your property is off the market for 10 days. Tell them to get the inspector here right now.

   You could require a response to a counter within 4 hours of presentation, and if the buyers don't agree they are no longer the buyers (done that... your realtor takes it to the other realtor at 10 AM and the buyer is contacted immediately for yea/nay).

   As part of countering any offer you might ask the buyer to increase the level of their deposit.

   Last house I sold there were several offers but two were the highest. The one that was highest had a financing contingency. The second highest (lower by 10K) did not. We took the lower offer. It was August, we wanted the place sold. The offers with few or no contingencies are the ones that are likely to becomes sales.

   Last house I bought was from an owner/agent. I offered low. She countered higher. I offered lower with 4 hours to accept or decline. She agreed.

8. 
   sunsen | Jun 28, 2009 08:38pm | #20

   "Last house I bought was from an owner/agent. I offered low. She countered higher. I offered lower with 4 hours to accept or decline. She agreed."

    That's funny.

9. 
   davidmeiland | Jun 28, 2009 10:52pm | #22

   My realtor and the seller/owner/agent had offices directly across the street from one another. I made the initial offer and it came back, countered a little above what I wanted to pay, a couple of days later. I got the counter via fax around 9 AM. I called my realtor and said that I would like to reply, but wanted to know by lunch. She looked out her window and said "Your seller is in her office, her car is there". She faxed me the counter, I signed it and faxed back, and about 20 minutes later it came back again as a done deal.

   I don't see why these things need to drag out too much.

10. 
    sunsen | Jun 29, 2009 01:18am | #23

    I think I misread. I thought you offered lower than your original offer so she lost money by making the counter offer and not taking the original bid. That would have been kind of funny.

11. 
    davidmeiland | Jun 29, 2009 01:55am | #24

    No, but you could counter lower than your original offer if the seller changed something. Suppose I offer $200K, 45 day close, inspection contingency, financing contingency. You accept but ask for a faster closing. I counter at $195 and agree to a 30 day close with no inspection contingency.

12. 
    KFC | Jun 29, 2009 06:51pm | #25

    In our case, inspections probably won't be a huge issue. 

    We hired Dan Szumski (a notoriously picky P.E.), Alan Block (a known thorough general inspector) and Structural Repair to do structural, general, and pest/termite inspections prior to showing, and laid it all on the table.  I'd be very surprised if any buyers find anything not reported/disclosed. 

    Almost every realtor who's come through has had a story about some deal that fell through because Szumski was the buyer's structural inspector. 

    My biggest question is about pricing. 

    We aimed low, and will probably receive multiple offers (fingers crossed).  I have a feeling our agent is going to strongly push for taking the highest solid offer without making any counteroffers to competing buyers.

    Part of me understands her disinclination to muddy the waters at offer time, but another part of me can't help but wonder if 5 or 10 thousand bucks more just isn't worth the hassle to her, as her commission on 5 or 10k will only be a couple hundred bucks.  I work way too hard to bring home 5k to just let it go easily.

    We'll see.  It may all be moot- if we only get one offer, this is all pointless suspicion/distrust of realtors on my part.

    And your point about financing contingincies may end up being more relevant than anything else.  Lender's approval/appraisal is a huge issue these days.

13. 
    davidmeiland | Jun 29, 2009 07:54pm | #26

    When are offers due? Has anyone contacted you to say they are bringing one?

    You can take your realtor's advice, but as far as I'm concerned you can also instruct them as to how you want to proceed. I would be looking carefully at your buyer's financing requirements--if they have plenty of cash for a down payment and are pre-approved for a loan at a realistic interest rate then that's one good thing. Interest rates seem fairly volatile right now, and I would expect a 30 year fixed conforming to be at 5.5% or higher. If they are stipulating 5% or something low, forget it.

    Sounds like you have eliminated the inspection issue.

    You can certainly counter with a higher amount. Honestly I don't know how common that is, if there aren't multiple offers and differences among the bidders. When we sold our last house we took the second-highest bidder and countered them up by $10K, to get them closer to the highest.

14. 
    KFC | Jun 29, 2009 10:34pm | #27

    Offers are due tomorrow, after open houses the last two sundays and broker's tour this past thursday.  interest has been unbelievable, hundreds and hundreds of people.  folks have driven from marin.  there just isn't much inventory for attractive (if odd) houses in decent (not great) neighborhoods at decent (not very low) prices.

    the place is unusual enough that it is hard to say how many offers we'll get out of the three or four hundred folks who excitedly came over.  a number of them were instantly turned off by the bizarre floor plan, tiny kitchen, etc.  Still, I expect we'll get ten or more offers.

    our realtor is guessing there'll be a bunch in a tight range, with a couple of outliers above and below.  she says we'll probably just pick the most solid of the few high outliers.  she is (so far) not recommending countering to the pack.

    that said, no one is supposed to be formally presenting offers yet, so who knows.

    k

15. 
    davidmeiland | Jun 29, 2009 10:48pm | #28

    We asked that offers be presented in person on a given day between 10 and 6. That way people call to set up a time, and you know what's coming...

16. 
    davidmeiland | Jul 01, 2009 12:26am | #29

    OK... you're either at the Triple Rock celebrating multiple offers over asking, or you're at the Triple Rock drowning your sorrows......

17. 
    KFC | Jul 01, 2009 06:35am | #30

    Heh heh.  Triple Rock rocks, that's for sure.  The cool thing about their beer; even as ridiculously strong as it is, it never gave me a hangover...  I woke up still drunk a few times, but never hungover.

    I messed up in my previous post- offers are tomorrow (wednesday).  I've lost track of the days of the week.  I've been going seven days a week trying to finish the last pieces of work and get/keep the house purty for open houses.  Formwork and steel inspection on the crawlspace retaining wall tomorrow, pour thurs.

    We already got an early offer Monday from a San Jose agent for 575.  We're expecting ten or so more.  Lots of folks coming by for a last look, and three contractor types came by today to weigh in on the cost of work for buyers before their offers.  I figure that's a good sign, you'd have to be fairly serious if you were writing checks for roof inspections, etc. prior to offers. 

    I expect we'll do pretty well with the offers (knock wood), but this isn't over by a long shot.  I'm very nervous about appraisal/loan approval for the buyers, assuming there isn't a 600k cash offer in there somewhere. 

    And it's an odd house- even with very full disclosure and reports, I could see someone getting buyer's remorse after they sign a contract and trying to weasel out.  I'll be stressed until the check clears, I guess.

    I think I can post the ad now, check it out if you want a chuckle about Berkeley fixers going for 600k... Bay Area house prices off 30%?  We'll see.  I might have to eat my words, but I doubt it.

    http://www.2417jefferson.com

    k

18. 
    davidmeiland | Jul 01, 2009 07:43am | #31

    Nice website. I can't remember where Jefferson is but Berkeley has always been hot and you'll probably cash in.

19. 
    KFC | Jul 02, 2009 03:32am | #32

    So now it's getting interesting.  Just spoke to the realtor, and she says we have 575, 580, 595 (twice), and 605.  All contingent on appraisal/loan approval.  One of the 595's has 30% for the down payment, all the others have 20%.  Two more offers coming, supposedly.

    She's concerned about the appraisal/loan approval, and is pushing the 595 with 30% down, pending the other two.  I doubt she'll recommend counter offers.  I'm not sure what I'll lobby for.  My wife is co-owner, and will probably take the realtor's side over mine, if we disagree...

    k

20. 
    davidmeiland | Jul 02, 2009 03:41am | #33

    Anyone attach their pre-approval letters? I would immediately ask everyone to clarify exactly where they are in the loan approval process, whether or not they need to sell other homes, etc. The person with 30% down would appear to have a stronger position and I might counter them at $605K since you were offered that. Or, counter the $605K person at 30% down and see who wants to play. In either case you could also include a deadline for removal of finance contingency. Give them X number of days to secure the loan or pull out. Fortunately for you there are still at least a few months of prime selling season if somehow no one from this batch can pull it off.

21. 
    KFC | Jul 02, 2009 03:46am | #34

    Yeah, that's in line with my thinking.  I expect my wife and the realtor will press for the bird in hand, as it were. 

    Thanks for bouncing the thoughts around.  Gotta go to the realtor's office and see these things for myself now...

    k

22. 
    KFC | Jul 02, 2009 07:35am | #35

    Ok, back from the realtor's.  620 is the high offer, we're trying to see if a couple of the others want to come up.

    You mentioned pre-approval letters- they all have that.  The potential issue is appraisal and loan approval for the price and property, not the dollar amount for the individual's creditworthiness.  They all have contingincies for appraisal and/or loan approval.

    So, imagine they offer 620, with 20% down, and have pre-approval for up to a 650k loan.  But, the bank's appraiser then says the property is only worth 580.  They then are excused from their offer, and the dance begins again, but now everyone can use the low appraisal as leverage.   And appraisers are being extremely conservative right now.

    So, even though I expect we'll do quite nicely, I won't relax until the check clears...  it ain't over til it's over. 

    k

23. 
    davidmeiland | Jul 02, 2009 05:38pm | #36

    Can you use something like Zillow to see what recent comparable sales there are in the area? That's what the appraisal is going to be based on. With that many offers in a tight range, I'd say the value is pretty clear. If you had one outlier at 600 and everyone else was at 525 then I'd say the value was 525. All of the offers are coming from realtors who presumably know what things on the market are worth.

    Edited 7/2/2009 10:40 am by davidmeiland

24. 
    KFC | Jul 02, 2009 11:17pm | #37

    Unfortunately there aren't a lot of comps.  The mid range of the market has been eerily quiet.  Everyone has just been hunkered down.  Two obvious (if not completely accurate) comps within two blocks are 621 and 550.

    Plus, this is an unusual property, with some bizarre elements from the 1969 remodel, and an exact comparison is virtually impossible.  There'll be a large element of fuzzy logic going on.

    I don't entirely know the new appraisal process, but apparently there's a pool of available appraisers that the bank draws from.  They specifically do not use local appraisers, to avoid undue influence from realtors and mortgage brokers. 

    So we may get an appraiser from Stockton, or Richmond, or some other hard hit area.  They'll know somewhat about the better market in Berkeley, but they may or may not know why one street is significantly better than another 1/4 mile away the way a local guy would.

    And, according to our realtor, they're almost always erring on the low side, as the pendulum has swung far to the conservative side.

    k

     

     

4. 
   JohnT8 | Jun 23, 2009 09:03am | #8

   If that place brings $700k, your place should bring, what... $1.4..$1.5??

   And what did you learn about the permit process while touring this house?  wink..wink...  ;)

    

    

   jt8

   Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent. Be careful lest you let other people spend it for you.
   -- Carl Sandburg

1. 
   madmadscientist | Jun 23, 2009 09:27am | #9

   That place is all pretty and nice kinda the opposite of mine...

   I'm pretty damn sure that someone will narc on these houses for all the unpermitted work and either the new owner will have a huge mess to clean up or the places will fall outta escrow if the current owners can't do it.

   I wish my place was $1.4 it is at least twice as big....fat chance

   Daniel Neumansky

   Restoring our second Victorian home this time in Alamdea CA.  Check out the blog http://www.chezneumansky.blogspot.com/ 

   Oakland CA 

   Crazy Homeowner-Victorian Restorer

1. 
   JohnT8 | Jun 25, 2009 06:24pm | #12

   I don't know... I looked at the other toured houses in the blog and it seems to be that the other houses would be a motivation to keep working on yours.  LOL, better the wreck that you know that a new one!  And you've put so much work into yours already... 

   Have you given us a house update in the other thread lately?  I see where you got some quotes... wheeeew!  Reminds me why I do so much of the work myself.

    

    

   jt8

   Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent. Be careful lest you let other people spend it for you. -- Carl Sandburg

   Edited 6/25/2009 11:27 am by JohnT8

1. 
   madmadscientist | Jun 25, 2009 09:43pm | #14

   Ya the hope is that we can find a place that is not a wreck and that we can afford....

   Still working with the original design-build firm to finish the plans...

   Unfortunately it looks like the only thing we can afford to do is to have me shepard the plans thru planning and then through the building dept to get the permit....at that time then I won't really need a GC...I think all I really will need is a quality framing crew and a good roofer...its not the way I wanted to go but money wise its the only thing that we can afford. 

   Daniel Neumansky

   Restoring our second Victorian home this time in Alamdea CA.  Check out the blog http://www.chezneumansky.blogspot.com/ 

   Oakland CA 

   Crazy Homeowner-Victorian Restorer

5. 
   andybuildz | Jun 28, 2009 08:58pm | #21

   My guess is that the taxes will be around $15-16000 a year plus all the little add on taxes they don't come right out and tell you about.

    

    

    

   http://www.cliffordrenovations.com

   http://www.ramdass.org