July 20, 2005
Another Offer Turned Down
Stike Two. Well, we were turned down again. We had put an offer on another home in Redondo Beach late last week and found out yesterday that the owners had accepted another offer.
Apparently the home in Redondo Beach went for $30,000 more than the asking price. To make matters even worse, the people who put the offer on the home waived the appraisal clause. What this means is that if the bank lending the people the money for the home appraise the home at a lower amount, the buyers are willing to make up the difference in the form or more upfront money.
Now don't get me wrong, I really want to buy a home in Redondo Beach, I mean we really like the South Bay. I refuse, however, to pay more than a house is worth. Southern California housing prices are already beyond belief. Can anybody really tell me that a 2,400 square foot townhouse in Redondo Beach is worth $850,000? I highly doubt it.
Well, just wanted to vent some frustration. We will continue to look and I guess if we put in enough offers, one will eventually be accepted.
Posted by Dogger at 02:54 PM | Comments (0)
Real Estate Offer - Redondo Beach Update
We put an offer on a really nice home in Redondo Beach last week and an odd thing happened while we were waiting for an answer. To put it simply, our real estate agent disappeared. For anyone who hasn't put an offer on a home before, let me tell you this is a bad thing, especially in a hot real estate market like Redondo Beach.
We had put an offer on a home on a Thursday and were supposed to receive a response by Saturday afternoon. We didn't really think we had much of a chance because we only offered full price, which seems to be an insult in Southern California. Any way, Saturday passed with no word from our agent and by Sunday afternoon we started to become upset.
We left numerous messages with our real estate agent to no avail. The thing that made us nervous was the fact that he had a $25,500 check for escrow in the event our offer was accepted. We finally called the sellers agent and asked if our agent had submitted the offer on the house in Redondo Beach. We were releaved when she said that our agent did indeed submit the offer, however, she quickly stated that the home had already gone into escrow. Boy were we ticked. The selling agent said she had left a message with our agent on Friday morning stating they had a better offer but he never called her back.
It turns out our trusty agent was on vacation with his family. Obviously, this in itself is fine. Everyone is entitled to vacation. He told us, however, that his phone didn't pick up a signal in the mountains and this is why he didn't call us. Fair enough. the question I have to ask is if he knew he was leaving, why didn't he have somebody else in his Redondo Beach office look after our offer? The answer is simple, it didn't occur to him. Today is Monday and we have submitted another offer on a different home in Redondo Beach. Needless to say we are using a different real estate agent who is more trustworthy and who specializes in Redondo Beach properties. Our Southern California real estate quest continues.
Posted by Dogger at 02:51 PM | Comments (0)
July 13, 2005
Interest only Loan
Home Loan Options in California
Now that I have submitted my offer and am playing the waiting game, I need to think about how I am going to finance the home. I have been pre-qualified for the amount I need to purchase the home but haven't decided on a lender or the type of financing.
To be honest with you, I don't have a lot of options when it comes to the type of loan. Due to the ridiculous prices in Southern California and the fact that I don't have a small fortune for the downpayment, I need to go with an interest only loan. This goes against everything I have been taught but I don't have a choice if I want to buy a home.
Also, the fact that I don't want to pay PMI means that I need a piggyback loan or HELOC which will also be interest only. Now within the interest only loans, I need to decide if I want a 5 or 7 year arm and if I want to pay points. Each point costs 1% of the loan so I am looking at 1 point costing $6,800. I also need to determine if I want the second mortgage tied to prime or fixed. If I choose a fixed loan, the rate increases by a point to 7.5%. This is probably the best option because it only increases my payment by $200 a month and gives me the peace-of-mind that my payments won't increase everytime the Federal Reserve decides to increase short term rates.
I am going to take a long hard look at the 5 year arm vs. the 7 year arm tomorrow and whether or not I want to pay down the rate with a point so stay tuned...
Posted by Dogger at 10:55 PM | Comments (1)
Redondo Beach Offer
Well after 2 months of looking we are finally pulling the trigger. My wife and I found a 2,600 square foot home in Redondo Beach within our budget. We are putting an offer in this afternoon and then we will play the waiting game. I already told my wife not to get too excited because I know there will be multiple offers on the house and I refuse to get into a bidding war over a piece of property. Granted it is the nicest house we have seen in Redondo Beach (and trust me we have seen everything on the market) but my philosophy is that if we don't get this one we will get another one. After all, we aren't in a hurry to move away from Santa Monica, but I would like to stop throwing money away (paying rent).
The one thing we have going for us is that it appears that the Redondo Beach housing market has slowed down a bit. I think a month or two ago this house wouldn't have lasted a day on the market. Don't get me wrong, I'm still offering full price on the house, but my agent said he didn't think we would have to go higher than the asking price. This is funny because I think it is common in almost every other state to bid less than the asking price and then have the sellers counter your offer. In the South Bay, however, if you really want a house, you need to offer full price to even be in the game.
I am going to see the house in Redondo Beach one last time this morning before the offer is submitted, just to make sure this is what we really want to do, but at this point I think I'm going just to see if there are any glaring defects I didn't see the first time around.
After that, the offer goes in and the waiting game begins. More to come.....
Posted by Dogger at 09:42 AM | Comments (0)
June 18, 2005
Redondo Beach Real Estate
Today we decided to venture south in our endless search to find some real estate we can call our own. We actually viewed six homes in North Redondo Beach which is part of the South Bay. The homes we looked at were actually right on the border of Manhattan Beach and Hermosa Beach. I would much prefer to live in either Manhattan or Hermosa Beach but unfortunately these areas are a little too rich for my blood.
Out of the six homes we saw, we actually liked three of them. The one we liked the most is brand new but it is out of our price range (well they are all pretty much out of our price range). It is a 3 bedroom 2.5 bath townhome selling for $967,000. The other two we liked are going for $849,900 and $849,000. They are actually within a block of each other and have the same floorplans. The big difference is that one has Brazilian hardwood floors and the other has wall-to-wall carpeting.
My wife really liked the one that had the hardwood floors and I think I am going to talk with my lender on Monday to see what type of loans are available. I also liked the house a lot, my only concern is the commute to and from work. I think I'm looking at a 45 minute ride both ways which really isn't that bad considering there are people who spend over 3 hours a day in their car in Los Angeles. At this point is a wait and see scenario. I don't want to overextend myself from a financial standpoint so our decision will be based on what my lender tells me next week. More to come....
Posted by Dogger at 08:50 PM | Comments (1)
June 16, 2005
California Housing Bubble
I'm starting to get really worried about the real estate situation in California. Prices are out of control, yet people continue to buy. Many are predicting that the real estate bubble is about to burst, especially in Calfornia. My goal to find a place close to work is pretty much unattainable. Unfortunately, my office is in Santa Monica, which happens to be one of the most expensive housing markets in the United States.
We decided to look in both West L.A. and the South Bay but as in Santa Monica, you don't get much house for your money. It's a sad state of affairs when $700,000 gets you a fixer-upper at best. Even at $700,000 financing is tight. All these no-interest loans and other creative financing is great when the market is hot, but what happens when the California real estate market implodes? What happens when tens of thousands of people owe more on their home then what its worth? I think I know what happens, the bubble bursts, prices decline rapidly and foreclosures go through the roof. The question on everyone's mind is when will this happen and how do I avoid becoming a victim.
Many so called experts are predicting that the California real estate market is close to bursting, but then again, they've been saying this for years. To be honest with you, this whole situation has me very concerned. I make good money and I can't afford a home. The homes I can afford are questionable at best and no where near my office. If I want to buy a home I have no choice but to use "creative financing" which probably means a five-year, interest only loan. Then, to cap it all off, I run the likely risk of owing more on my home then the home is actually worth. All of a sudden, renting doesn't seem like such a bad option. Stay tuned.
Posted by Dogger at 09:32 PM | Comments (1)
June 13, 2005
L.A. Real Estate Search - Day 1
Ok, after 3 hours I'm tired and frusterated. We actually wound up going to 4 homes; one in Santa Monica and 3 in Mar Vista which I guess is considered West L.A.
The nice thing about looking for a home in L.A. is that there is so much real estate available that you go out with the intention of looking at one place and you end up finding other homes on the way. The place in Santa Monica which is only a few blocks from where we live was definitely nice and somewhat affordable considering it is in Santa Monica. It was a 3 bedroom 1 1/2 bath built in 1940 for $875,000. The problem with the house was that it was only 1200 sq. feet which is way too small for 2 kids and a dog.
Next, we went to look at our second option in Mar Vista. The house was in a nice neighborhood and was in relatively good condition. It also had 4 bedrooms which is something we could definitely use. All of the homes we have lived in (at least homes we have purchased and not rented) have had 4 bedrooms. This is nice because it allows us to use the fourth room as an extra bedroom and computer room.
The only problem with the house was the price. The asking price is $915,000 but the real estate agent was quick to point out that the sellers we anxious and would probably be willing to come down a couple thousand dollars if we were serious. I felt much better after this comment, yeh right.....on to the next home.
On our way to what was supposed to be the third and final house of the day we came across an open house sign. We followed the signs until we came upon a very big house. The funny thing was it was by far the biggest home on the block. In fact, it was probably 1500 square feet bigger than the next closest home. I told my wife she could go in if she wanted to but that I wasn't even going to waste my time. I bet her it cost around $1.4 million. She said she wanted to go in so I told her I would wait in the car with the kids. She was gone for about 10 minutes and as she was approaching the car she just grinned. My guesstimate was actually low. The house was going for $1.8 million. Considering the neighborhood, I thought the price was high even by L.A. standards. I mean the house was 3600 square feet but $1.8 million, come on.....Well at least my wife was able to get 2 tootsie rolls from inside for my kids.
The last house we saw isn't even worth mentioning. It was old, dirty, on a busy street and over priced. One word can sum up our day; FRUSTRATING. The LA housing market is so out of touch with reality that I really don't know what we are going to do. Well, actually I do know, we will go back out next weekend and continue our real estate search.
Posted by Dogger at 09:51 PM | Comments (1)
June 12, 2005
L.A. House Search
Los Angeles Real Estate
When we moved to Santa Monica we decided it would be a good idea to rent for a year instead of purchasing real estate right from the start. This decision was based on the fact that we aren't familiar with Southern California and didn't want to rush into making a bad real estate decision. We are now 3 months into our lease and are starting to regret the decision to rent. This series of entries will cover our quest to purchase a home in the greater Los Angeles area.
Our desire to purchase a home sooner rather than later is based on our fear that we are being priced out of the market. I was somewhat aware of the astronomical housing prices in Los Angeles but even I was surprised when I started taking a closer look. I saw a segment on the local news last week that stated that only 17% of Californian's can afford to purchase an average home. An average home is defined as costing $550,000. Boy I would like to find me an average priced home. We haven't seen anything below $750,000. The funny thing is that $700,000 doesn't get you much real estate in Southern California. In other states this amount will get you the house of your dreams. In California you'll get a 1500 hundred square feet home with 2 or 3 bedrooms that was built somewhere between 1940 and 1980. I guess what I'm trying to say is you won't get much. This is a pretty hard concept to grasp considering that this is a ridiculous amount of money.
Any way, to get back on topic, I'm going to blog about my house hunting experience in order to let other people who might be getting into the same situation what to expect. Today we are off to 3 homes. One is in Santa Monica and the other to are in West Los Angeles. Our real estate agent sent us info on all three and they range from $800,000 to $875,000. I'll let you know how it goes.
Posted by Dogger at 04:23 PM | Comments (0)