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Did You Say You Wanted to Buy a Home at a 40% Discount? Off of Which Year???

December 15, 2011

You watch a lot of HGTV, do you?  You read where buyers can buy homes at large discounts, 40% discount, right?  So, I have to ask – 40% off of which year?  40% off the peak of 2007 or 40% off fair market value now?

I am inundated with buyers all asking the same questions, and expecting that they are going to score that “deal”,  the one where they bought a home at a huge discount that they read about all the time.  Ok, let me fill you in – yes, there are almost 40% discounts off the peak of 2007 – we  are down to 2002-2003 prices now in some areas.  But to get a deal at 40% off todays fair market value?  Nope, won’t work, no matter what anyone says. 

Yes, I can get you a bank owned home for up to 10% less than what it is listed at right now, and I can even get you 3% closing costs back in that same purchase.  A short sale all depends on the days on market.  A bank wants to get the highest they can get, and that is what the latest sold comps show is happening in that one particular neighborhood, or close to it.  But the longer it stays on the market, the more they are willing to negotiate.  They still won’t pay for repairs or termite, but they will budge on price – possibly about 5% below what they started at.  They will only give money back at closing if their net figures come in high enough, otherwise that’s something else they will not willingly pay.  A Standard Sale – don’t even ask!  If you low ball standard sales, you will be lucky if the seller even looks at your offer, let alone be gracious enough to make a counter offer for something more reasonable.  They have equity in their home, they have value in their home, and they will be so insulted that you may be lucky if they even talk to your real estate agent again.  Yes, you can place lower offers if your real estate agent has shown that comparable properties have sold for less and if you can justify that lower price.

There is an article in the Orange County Register today that  bluntly states “to put the market in perspective, last month’s $400,000 median price was 38% below June 2007’s peak price of $645,000.  So, I guess I could ask again – 40% off of what year?  This article shows that we are only 38% below the peak, not the 40% you were hoping for……..

I love watching HGTV – Property Virgins is a good one – but realize that most of these programs are not filmed in Califoria, let alone Southern California.  They are filmed in Canada and back east, where property values are a lot different than in the OC.

One Comment leave one →
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