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A regular buyer cannot buy or sell a home any cheaper than a rehabber. Today it's extremely difficult to even buy a short sale at a price where one can make a profit. But if the rehabber and a regular buyer buy a short sale, they both have the same purchase expenses of closing costs, cost of money, carrying costs, etc.
The only place to buy a home and have that opportunity today is at the trustee sale. If both a regular buyer and a rehabber buy through a trustee sale bid service, they will both pay the same amount. If the rehabber is a repeat customer, then he may pay a slightly lower fee.
The regular buyer is going to pay the same price to purchase and close on a trustee sale home as a rehabber. However, a rehabber who buys lots of homes may have a relationship with a title company where he gets a discount on the escrow fee and title insurance.
The carrying costs are going to be the same for anyone.
The rehab costs are probably going to cost the regular buyer with no rehab experience more money than a rehabber.
At some point the buyer will sell the home. At that time the selling expenses will occur.
The $24,000 profit will be the savings that a regular buyer will have. However, in my example, it will probably be less than $24,000 because the regular buyer will not be able to do the rehab at the same cost as an established rehabber. But whatever it is, that is the payoff for the hard work of a regular buyer doing the work himself. If a regular buyer is willing and able to take on a project like this, then it is certainly a way to save some money.
You're missing my point that when you buy from a rehabber, there's an extra buy/sell transaction they will be looking to recoup the costs from, compared to if you bought it directly. You're not comparing apples to apples.
"I don't think anyone overpays when they are paying 1999 prices for a home today."
Anyone who pays a significantly higher sum for a former REO with new paint and carpet is overpaying.
Quote:
"The excess inventory of inexpensive housing" Tell that to our buyers who are faced with multiple offers on every home they offer, with the winning bids going far above list price."
That was my point, it is silly to overbid when the inventory of foreclosed houses will not be abating. If one honestly believes that vast numbers of underwater Maricopa County borrowers are not in the process of defaulting as we type, then it makes sense. But that seems terribly unlikely to me.
Quote:
"I'm not sure what your "large-scale picture" is, or who drew it."
The larger-scale picture that you mock include the above-mentioned underwater households at various stages of default, both recorded and yet to be recorded defaults. Are there fewer MLS listings fewer in the Phoenix area now? Yep, there are clearly fewer listings. But if bank inventory is not a dominant supplier of houses here for years to come, I will eat my hat. Can someone check the carb count on that?
You're missing my point that when you buy from a rehabber, there's an extra buy/sell transaction they will be looking to recoup the costs from, compared to if you bought it directly. You're not comparing apples to apples.
I wasn't referring to someone buying from a rehabber.
I was referring to a regular home buyer buying a home and rehabbing it himself, compared to a rehabber who is buying to rehab. Their costs are going to be the same, except that the rehabber can do it cheaper. I thought that was what you were referring to.
Interesting post, but I knew the market was going to pick up
Cap,
I can't believe what has happened to that market. 1 1/2 years ago I posted I was purchasing homes in San Tan Valley and just about everybody on this board attacked me like I was some crazy fool. Back then I bought three houses (SFR), one for $42 per square foot, another one for $35, and the last one for $37. As you've shown in some of your other posts, the price per square foot has gone up significantly since then. I think the investment has worked out. I've had renters in all the time and I've had NO problems whatsoever. BTW, I'm not selling its just nice to know the market is going up and not tanking like everybody was expecting to happen back then.
I can't believe what has happened to that market. 1 1/2 years ago I posted I was purchasing homes in San Tan Valley and just about everybody on this board attacked me like I was some crazy fool. Back then I bought three houses (SFR), one for $42 per square foot, another one for $35, and the last one for $37. As you've shown in some of your other posts, the price per square foot has gone up significantly since then. I think the investment has worked out. I've had renters in all the time and I've had NO problems whatsoever. BTW, I'm not selling its just nice to know the market is going up and not tanking like everybody was expecting to happen back then.
I think everyone understood that inexpensive homes were deals even 2 years ago and the competition for those homes were stiff even back then. However, not everyone bought into the idea that the entire market could be judged by what was occuring with inexpensive homes in areas where fire sales were occurring.
Furthermore, I have quotes from realtors on this site that were encouraging people to buy homes as far back as 2007 and using the same arguments they are now (limited supply; don't know how much longer prices will fall; better get it now). I'm not allowed to identify the speaker of these quotes and provide links to their quotes by the mods because it's interpreted as attacking another poster. This is what one of these realtors said in 2008:
March 26 2008: "My personal feeling is that now is a good time to buy because of the supply of great homes at low prices and low mortgage rates, provided that one is going to be in the home for 5 or 6 years. If one may have to sell in 2 or 3 years, then that could be risky. Everyone must assess their own situation as well as the market in the area they're considering. I have about 10 relocating buyer clients that have their community picked out here and as soon as their home sells in their state, they will immediately move here and buy. Several others are here renting until their homes sell. So I see sales across the country as having a positive impact on the sales of homes in the Phoenix Metropolitan area"
Of course, the person above will not hold himself/herself accountable for their failed prediction nor will they remind you of their failed prediction. If you encourage people to buy homes every year, at some point you are going to be correct. There are similar quotes for 2007, 2009, 2010..
I think everyone understood that inexpensive homes were deals even 2 years ago and the competition for those homes were stiff even back then. However, not everyone bought into the idea that the entire market could be judged by what was occuring with inexpensive homes in areas where fire sales were occurring.
Furthermore, I have quotes from realtors on this site that were encouraging people to buy homes as far back as 2007 and using the same arguments they are now (limited supply; don't know how much longer prices will fall; better get it now). I'm not allowed to identify the speaker of these quotes and provide links to their quotes by the mods because it's interpreted as attacking another poster. This is what one of these realtors said in 2008:
March 26 2008: "My personal feeling is that now is a good time to buy because of the supply of great homes at low prices and low mortgage rates, provided that one is going to be in the home for 5 or 6 years. If one may have to sell in 2 or 3 years, then that could be risky. Everyone must assess their own situation as well as the market in the area they're considering. I have about 10 relocating buyer clients that have their community picked out here and as soon as their home sells in their state, they will immediately move here and buy. Several others are here renting until their homes sell. So I see sales across the country as having a positive impact on the sales of homes in the Phoenix Metropolitan area"
Of course, the person above will not hold himself/herself accountable for their failed prediction nor will they remind you of their failed prediction. If you encourage people to buy homes every year, at some point you are going to be correct. There are similar quotes for 2007, 2009, 2010..
Doc, I can assure you that I never go on realtor recommendations for any of my real estate ventures. I look at lots of data and not just sales. As an investor I look at several factors, i.e., for the Phoenix area I know it is a location for lots of winter visitors. There is lots to do in Phoenix, access to all major sports, a major city with lots of money (like Scottsdale), etc. Phoenix will always be a great location for baby boomers in the coming years. As you can see there is much more to it than just realtor recommendations. I think all realtors do their best in trying to help out potential buyers and sellers since that is their job. Realtors aren't putting a gun to anybody's head to buy or sell something. Ultimately, it is up to the consumer to make a conscious decision.
Furthermore, I have quotes from realtors on this site that were encouraging people to buy homes as far back as 2007 and using the same arguments they are now (limited supply; don't know how much longer prices will fall; better get it now). I'm not allowed to identify the speaker of these quotes and provide links to their quotes by the mods because it's interpreted as attacking another poster. This is what one of these realtors said in 2008:
And there were those who "predicted" the Phoenix housing market will drop further throughout 2011. Should they be held accountable?
The 2008 poster saw the market as positive through his/her own "personal experience." It might be an anormaly, but s/he told it as is. Nothing to be held accountable there.
You said " Yep, there are clearly fewer listings. But if bank inventory is not a dominant supplier of houses here for years to come, I will eat my hat."
I am admittedly more positive on the Phoenix RE market than you - I dont understand where you have information to back this particular statement up? Homes in any part of the foreclosure process have been going DOWN dramatically in AZ over the last year.
Yes, new figures came out today that show foreclosure processes are starting to increase again nationwide, this is mainly due to activity in judicial foreclosure states, and those that were affected by the robo-signing scandal starting to move forward again. But neither of those activities applied to AZ, and the stats are still way down on this front in AZ year over year.
I guess there could still be some increase in strategic defaults, by I havent seen any real evidence of that happening, and as each month goes by, even those upside down homeowners have more equity building up, so are less inclined to walk. Combine that with any increase in sales prices and that possibility is lessened even more.
So, where is all this bank inventory supposed to come from?
You said " Yep, there are clearly fewer listings. But if bank inventory is not a dominant supplier of houses here for years to come, I will eat my hat."
I am admittedly more positive on the Phoenix RE market than you - I dont understand where you have information to back this particular statement up? Homes in any part of the foreclosure process have been going DOWN dramatically in AZ over the last year.
Yes, new figures came out today that show foreclosure processes are starting to increase again nationwide, this is mainly due to activity in judicial foreclosure states, and those that were affected by the robo-signing scandal starting to move forward again. But neither of those activities applied to AZ, and the stats are still way down on this front in AZ year over year.
I guess there could still be some increase in strategic defaults, by I havent seen any real evidence of that happening, and as each month goes by, even those upside down homeowners have more equity building up, so are less inclined to walk. Combine that with any increase in sales prices and that possibility is lessened even more.
So, where is all this bank inventory supposed to come from?
Also, can you post pics of some hats that we can choose for you just in case? Might not be high in calories but definitely some fibre content.
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Interesting post, but I knew the market was going to pick up
