Initial offer on SWFL house?

[LoveBWVVBR]

Well, you're right....those houses should never have been worth that amount. But they were, if only for a short period of time. And an awful lot of people bought them at those inflated prices. And too many others pulled too much equity out of their homes when values skyrocketed. And so it was very real in that regard. As a result....25% of all homes in the nation are "underwater" with respect to the mortgages on them.

I listen to Dave Ramsey on a regular basis, and he gets calls from callers in Florida. Many times they are "upside down" with respect to their mortgages. He usually advises them to stay...wait it out, because in his opinion, that market is going to "bounce back"...."because there's nothing wrong with that economy". He's basically saying that he doesn't think that there's anything "structurally" wrong with Florida, as compared to say...Michigan, which has huge problems. But what I think he's missing is that so much of the economic growth in Florida...a huge portion of it in fact, was due mostly to the housing boom itself. There's a lot wrong with the economy in Florida, and some people will never be able to sell their homes for what they paid for them.

Certain areas of Florida were so overbuilt due to pure speculation that it will be years and years before demand for new construction returns. Same thing in Arizona, Nevada and parts of California.

This might be true in SOME parts of FL, but other parts truly have nothing structural wrong with their economy. I do agree with Dave Ramsey about that part.

 

[punkin]

It's called supply and demand, not really very confusing. If you have 1000 houses for sale and 100,000 people are willing to buy them the price will go up to whatever level the people are willing to pay. If you have 1000 houses for sale and 50 people are ready to buy the owners of the houses will either have to drop their asking price to a level those 50 people will pay or keep the house until either more people want to buy or one of those 50 is willing to go higher. If the owner is paying off a loan that is higher than anyone will pay the owner will either have to take a loss or default. Put all of those things together and you have Florida.

Many people erroneously believe that things have "intrinsic" value unrelated to the market. It helps them sleep better at night.

 

[Purseval]

This might be true in SOME parts of FL, but other parts truly have nothing structural wrong with their economy.

Even a hurricane has a calm center.

 

[LoveBWVVBR]

Even a hurricane has a calm center.

Then I guess that South Brevard is the calm center of FL because I just don't see the trainwreck here unless you count the foreclosures on houses that were stupidly overvalued when they were purchased. Really, plenty of areas of FL are going on as normal. If you aren't buying or selling, what does it really matter? Most of my neighbors have lived in their houses for 20+ years and plan to live in them forever. Life here is the same as it was during the boom. Heck, 3 of my friends are starting new career jobs with great benefits next week (3 different careers, none of them having to do with real estate or construction), so places are definitely hiring here. Every area of FL isn't some poverty-stricken, population churning trainwreck. That may be true in some pockets of the state, but plenty of areas have normal life-as-usual going on just like it's going on everywhere else. Maybe FL looks different from the outside than it does from within

That said, it sure doesn't hurt to make a massively lowball offer on whatever you're looking at in FL right now. The owners might balk, but then again, they might not. It all depends on how motivated they are. You might as well try at least.

 

[Soon2B4]

Definitely hire a realtor, have them run the comps and make your offer based off of that. It costs the buyer absolutely nothing to use a realtor.

Not always true. When we bought our first home, the seller wasn't willing to pay the full amount our realtor wanted. She had a percentage that she charged and they weren't paying it. We got stuck hold the bill for the difference even after the sellers agent agreed to give some of his money. When we bought our 2nd home, non of the realtors understood why we wouldn't use them to search for homes. We searched ourselves and contacted the listing agents.

 

[Kay1]

I think it's too soon to buy in SWFL. I say this as someone who lives in the St. Petersburg/Tampa Bay area and who will likely retire a little south of here, as as someone who's been following the housing bubble for years. I read at Housing Crash Continues every day and he has lots of articles from this area.

OP, have you found an insurer yet? Our mortgage is pretty inexpensive but our payment is high because of the high cost of insuring a house in this area - and we have USAA.

 

[FoggyToad]

Thanks to all for posting your various points of view. It looks like we had a bit of disagreement, but I kind of expected us to be all over the board on this topic. I just appreciated your thoughts a whole lot.

We put in a very lowball (according to our real estate agent) on the house this morning. She didn't say it was an insult to the owners, but it must've bordered on being insulting from what we could detect in her body language and spoken words. She asked if we would be willing to negotiate should they refuse our offer, and we said we would think about possibly negotiating but offered no specific range. Our initial offer was 20% less than the asking price with basically no contingencies other than it came turnkey furnished.

The offer expires late on Tuesday afternoon. She felt they should have a bit of extra time since it's the weekend and they're overseas owners.

No, we haven't explored homeowners' insurance yet but she suggested using an insurance broker to find the best deal out there when/if the time comes if we ever reach agreement with the owners of the house. We realize it's very expensive and a huge portion of the mortgage payment. I guess that comes with the territory down here so we're prepared for sticker shock.

 

[LoveBWVVBR]

Thanks to all for posting your various points of view. It looks like we had a bit of disagreement, but I kind of expected us to be all over the board on this topic. I just appreciated your thoughts a whole lot.

We put in a very lowball (according to our real estate agent) on the house this morning. She didn't say it was an insult to the owners, but it must've bordered on being insulting from what we could detect in her body language and spoken words. She asked if we would be willing to negotiate should they refuse our offer, and we said we would think about possibly negotiating but offered no specific range. Our initial offer was 20% less than the asking price with basically no contingencies other than it came turnkey furnished.

The offer expires late on Tuesday afternoon. She felt they should have a bit of extra time since it's the weekend and they're overseas owners.

No, we haven't explored homeowners' insurance yet but she suggested using an insurance broker to find the best deal out there when/if the time comes if we ever reach agreement with the owners of the house. We realize it's very expensive and a huge portion of the mortgage payment. I guess that comes with the territory down here so we're prepared for sticker shock.

Homeowners' insurance premiums are so variable, though. The age of the home, how the 4 point inspection/wind mit. comes out, etc. all affect the premium. Our new house is very close to the open ocean (you can see it from the yard), but our premium is lower than on our current house that is 2 blocks from the open ocean. It has to do with the age of the home. Our current home was built in the '60's, our new home was build in the late '90's. FWIW, I don't think our new premium is bad at all...$3100/year and it includes wind.

ETA - Good luck with the offer! Keep us posted on how it goes

 

[Purseval]

Then I guess that South Brevard is the calm center of FL because I just don't see the trainwreck here unless you count the foreclosures on houses that were stupidly overvalued when they were purchased. Really, plenty of areas of FL are going on as normal.

This being the information age and everything....

http://en.wikipedia.org/wiki/Brevard_County,_Florida

In 2010, almost 60,000 people in the country were receiving food stamps.

In 2010, the Brookings Institution reported that Brevard ranked in the bottom fifth of the nation's top metro areas, based on unemployment, gross metropolitan product, housing prices and foreclosed properties.

Monthly foreclosures have exceeded 746 from January 2009 through October. Maximum monthly home sales were less than 584 during that time frame, creating an accumulating backlog of unsold homes.

Nearly 44,943 new houses were built from 2000 through 2009. This was enough to house 112,000 people. However, only 60,000 people moved into the county, leaving the remaining homes vacant and helping to precipitate bursting the United States housing bubble.

The county's median home price reached a high in August 2005 at $248,700. New home permits fell in 2007 to 1,894, the lowest since 1982.Sales of existing homes fell 19% in 2007 from the prior year to 373 monthly. The median drop in home prices was 50% from 2005 to 2008, from $248,700 to $125,200. However, when choices for smaller homes was eliminated, prices on individual homes fell 25%; down 33% for individual condos. In 2000, the median sale price of homes in Brevard was $100,000. With the collapse in the housing bubble, homes now are often about the same price, with median homes in 2009 selling for $89,400.

In a separate study, a consulting firm determined that house prices in the county were 46.1% overvalued in 2005 at $212,000 average. The same firm determined that prices were 19.3% undervalued in 2008 at $129,400.[123] The average price in December 2009, fell to a new recent low of $104,100. In January 2010, sales dropped to 434 monthly, also a recent low.

In 2008, a number of mortgage insurers blackmarked Brevard, along with a quarter of the total nations zip codes. This was intended to thwart potential buyers who wish to pay less than 20% down on a home.

In 2009 an economist said that the Brevard housing market will not recover until at least 2011.A later analysis in 2009 seemed to agree, saying that the market would fall 41.4% to bottom out by the end of 2010.

In 2008 Brevard expected to have 100,000-300,000 more people by 2020, an increase of 60%.

In 2008, there were 1,550 permits for residential projects valued at $355.45 million. That is the lowest number of filings since 1975.

Annual foreclosures rose from a low of 1,144 in 2005 to 9,228 in 2008.[130] From 2007 to March 2010, there were 25,600 foreclosure filings.

 

[LoveBWVVBR]

This being the information age and everything....

http://en.wikipedia.org/wiki/Brevard_County,_Florida

In 2010, almost 60,000 people in the country were receiving food stamps.

In 2010, the Brookings Institution reported that Brevard ranked in the bottom fifth of the nation's top metro areas, based on unemployment, gross metropolitan product, housing prices and foreclosed properties.

Monthly foreclosures have exceeded 746 from January 2009 through October. Maximum monthly home sales were less than 584 during that time frame, creating an accumulating backlog of unsold homes.

Nearly 44,943 new houses were built from 2000 through 2009. This was enough to house 112,000 people. However, only 60,000 people moved into the county, leaving the remaining homes vacant and helping to precipitate bursting the United States housing bubble.

The county's median home price reached a high in August 2005 at $248,700. New home permits fell in 2007 to 1,894, the lowest since 1982.Sales of existing homes fell 19% in 2007 from the prior year to 373 monthly. The median drop in home prices was 50% from 2005 to 2008, from $248,700 to $125,200. However, when choices for smaller homes was eliminated, prices on individual homes fell 25%; down 33% for individual condos. In 2000, the median sale price of homes in Brevard was $100,000. With the collapse in the housing bubble, homes now are often about the same price, with median homes in 2009 selling for $89,400.

In a separate study, a consulting firm determined that house prices in the county were 46.1% overvalued in 2005 at $212,000 average. The same firm determined that prices were 19.3% undervalued in 2008 at $129,400.[123] The average price in December 2009, fell to a new recent low of $104,100. In January 2010, sales dropped to 434 monthly, also a recent low.

In 2008, a number of mortgage insurers blackmarked Brevard, along with a quarter of the total nations zip codes. This was intended to thwart potential buyers who wish to pay less than 20% down on a home.

In 2009 an economist said that the Brevard housing market will not recover until at least 2011.A later analysis in 2009 seemed to agree, saying that the market would fall 41.4% to bottom out by the end of 2010.

In 2008 Brevard expected to have 100,000-300,000 more people by 2020, an increase of 60%.

In 2008, there were 1,550 permits for residential projects valued at $355.45 million. That is the lowest number of filings since 1975.

Annual foreclosures rose from a low of 1,144 in 2005 to 9,228 in 2008.[130] From 2007 to March 2010, there were 25,600 foreclosure filings.

I'm sure that you can find bad statistics on every area. Brevard County is a big area. I live in south Brevard. Admittedly North Brevard has been hit hard by the pending closing of KSC, but that's not in our immediate area. Our area goes on as normal. There are jobs to be had, houses are still selling (albeit for lower prices), and the mall is still packed. There are foreclosures in our area, mostly of houses that sold for stupid prices at the peak of the market (like our new house did).

Those statistics do make me wonder if we're selling our current home too soon, though. Maybe we should sit on it for a year I still don't know what a recovery would look like in the housing market, though...no way should it ever go back to where it was.

 

[lost*in*cyberspace]

We recently listed our home and almost everything spec about our home is incorrect in zillow.

You do know that you can register on Zillow and make corrections?

OP - You need to discuss this with your real estate agent.

 

[Purseval]

Those statistics do make me wonder if we're selling our current home too soon, though. Maybe we should sit on it for a year I still don't know what a recovery would look like in the housing market, though...no way should it ever go back to where it was.

We bought a house in NH in December of 1984 and closed on it February 1985. Between the time we put a deposit down and moved in the value of the house went up $50,000, meaning if we would have waited until we transferred up to shop we would have been priced out of the market.

The bottom fell out of the New England housing market starting mid to late 1985. I had a coworker who bought his house in 1985 and gave it back in 1987 when it was worth less than half of what he paid.

We lived in that house for 14 years and sold it for the same $50,000 profit we made in the first 2 months. Housing markets can take a long time to recover.

 

[dvcgirl]

We bought a house in NH in December of 1984 and closed on it February 1985. Between the time we put a deposit down and moved in the value of the house went up $50,000, meaning if we would have waited until we transferred up to shop we would have been priced out of the market.

The bottom fell out of the New England housing market starting mid to late 1985. I had a coworker who bought his house in 1985 and gave it back in 1987 when it was worth less than half of what he paid.

We lived in that house for 14 years and sold it for the same $50,000 profit we made in the first 2 months. Housing markets can take a long time to recover.

Oh, this is very true, and this market will take forever to recover in certain areas. Some people won't see it in their lifetime.

There was a bit of a housing bubble in Orlando in the early 90s (thanks to the S&L crisis). The house we bought in 2004 for 370K was sold new for 250K in 1990. It sold *eight* years later for the same exact price. We bought from the second owner who realized roughly 8% appreciation each year (most of it in the two years prior to our purchase though). Still, that's roughly 0.65% per month....and by the time we bought and the market took off, it was appreciating at a rate five times that number on a monthly basis.

And the S&L crisis was nothing compared to what we've seen these last few years....not even close.

 

[dd50]

We do have a realtor and she seems very competent and knowledgeable. However, she is the listing agent on the property we like the most. Therefore, she is representing both buyer and seller which seems a bit awkward and muddies the situation we're in. We can put 20% down and do a conventional loan. We have an 800 on credit. We don't have a current mortgage as our home up north is paid for in full. This would be a second, retirement home for us. Any other thoughts? TIA!

You can look at current sales on Zillow but don't use them for any thing else.

Is it a forecloser or short sale?

 

[BellePrincessBelle]

We bought a house in NH in December of 1984 and closed on it February 1985. Between the time we put a deposit down and moved in the value of the house went up $50,000, meaning if we would have waited until we transferred up to shop we would have been priced out of the market.

The bottom fell out of the New England housing market starting mid to late 1985. I had a coworker who bought his house in 1985 and gave it back in 1987 when it was worth less than half of what he paid.

We lived in that house for 14 years and sold it for the same $50,000 profit we made in the first 2 months. Housing markets can take a long time to recover.

This is very true. We bought a house in the late 90's that had been built mid 80's from the original owner. We bought it for 3k less than he paid new. We sold it a few years later for almost 90k more than we paid. The housing market can be a fickle beast.

 

[silmarg]

We bought a house in NH in December of 1984 and closed on it February 1985. Between the time we put a deposit down and moved in the value of the house went up $50,000, meaning if we would have waited until we transferred up to shop we would have been priced out of the market.

The bottom fell out of the New England housing market starting mid to late 1985. I had a coworker who bought his house in 1985 and gave it back in 1987 when it was worth less than half of what he paid.

We lived in that house for 14 years and sold it for the same $50,000 profit we made in the first 2 months. Housing markets can take a long time to recover.

In a similar vein, we bought our house in 1998. The prior owners bought it in 1986 - which was a real estate boom in the northeast. We paid slightly less than they did ten years earlier and due to a HELOC they took out to buy a car, they walked away from the closing with $2k - after 10 years of mortgage payments.

If they held off selling for two more years, the house value doubled and they could've walked away with 250k.

Sometimes its better to be lucky than good (at least that's how I view my side of the deal)

You can look at current sales on Zillow but don't use them for any thing else.

Is it a forecloser or short sale?

Zillow is not accurate on that score either. Zillow's web site lists that my home was "last sold" in 2004 (at twice what I paid for it in 1998).

That said, I think Zillows current estimate for the value of my home is in the ballpark.

 

[punkin]

Sometimes its better to be lucky than good (at least that's how I view my side of the deal)

I sometimes think that's true with everything in life, not just real estate.

 

[silmarg]

I sometimes think that's true with everything in life, not just real estate.

Amen brother (or sister - as the case may be)

 

[Luvchefmic]

We are house hunting in SWFL. We have found a house that we would like to make an offer on but have no idea what our initial offer should be. Is there a rule of thumb to follow? A certain percentage of the asking price?

Is Zillow.com an accurate, trustworthy website with information that can be believed or is their info way off base?

IMHO WAY off base....shows someone that has never owned our house as contact for more info...I called to find out why? They never heard of the address and didn't know why either also shows more than a 50 % house & land value DROP since we bought ....the value they gave me on zillow which I only checked out of curiousity was back in Oct 2008...3 months after we had gone to closing ! I have not checked recently but I can only imagine the value they would state now 2 yrs later

 

[Luvchefmic]

I'm sure that you can find bad statistics on every area. Brevard County is a big area. I live in south Brevard. Admittedly North Brevard has been hit hard by the pending closing of KSC, but that's not in our immediate area. Our area goes on as normal. There are jobs to be had, houses are still selling (albeit for lower prices), and the mall is still packed. There are foreclosures in our area, mostly of houses that sold for stupid prices at the peak of the market (like our new house did).

Those statistics do make me wonder if we're selling our current home too soon, though. Maybe we should sit on it for a year I still don't know what a recovery would look like in the housing market, though...no way should it ever go back to where it was.

I never rely on wikpedia quotes for ANYTHING, go to your own county web site for info, wikpedia isn't reliable because anyone can post anything they want there and then its a "fact"...don't think so