Friday, May 30, 2008

Letter to Seller Explaining Your Lowball Offer


We've discussed the
Rise of the Lowball Offer.

Now, genius Ron Lieber of The New York Times actually gives you a letter to include with your Lowball Offer, gently, politely, firmly explaining your position to the seller.

This letter has current national statistics, but you'll want to include Charlottesville's own--the thousands of properties available, the 17+ months worth of inventory, and so forth, which you can adjust according to the date you make an offer.

Dear Seller:

I’m writing to let you know that I would like to make a bid on your property. I love the area and am committed to buying a house nearby. And your home fits my needs.

But given that my offer is well below your asking price, I also feel I owe you an explanation.

First, consider the big picture. Nationwide, home prices in the first quarter of 2008 fell 14.1 percent compared with the same period a year earlier, according to the Standard & Poor’s/Case-Shiller U.S. National Home Price Index.

That’s the biggest decline in the 20-year history of the data. And just in case you’re wondering, during the housing downturn of the early 1990s, the decline was never worse than 2.8 percent.

Not only that, earlier this month, the National Association of Realtors pointed to the huge number of existing homes on the market. As of the end of April, the total number was 4.55 million. At the rate people are buying right now, that represents an 11.2-month supply.

So buyers have options right now. A lot of them. I’m no different. Your home is great, but it isn’t unique. Few homes are. I know this may be hard to hear, since you’ve spent years creating memories here. But you may be waiting a long time if you hope to find a buyer with the same emotional connection that you have.

My mindset is hardly unique. We’ve all been reading the headlines. The accompanying articles appear prominently in major newspapers and sit on the Web pages where people check their e-mail every day. Everyone sees them, and the psychological impact is real.

Has your real estate agent laid any of this out for you? Maybe so, and you didn’t want to believe it. But it’s also possible that your agent, afraid of offending you and losing the listing, simply doesn’t want to initiate that sort of discussion. It may be worth sitting down for a candid reassessment.

It will be tempting to view my low bid as an insult. Please don’t make that mistake. Your home is genuinely appealing, and I wouldn’t have written this note unless I was serious about buying it. Getting a firm offer in this market is an accomplishment. So congratulations!

Oh, and one more thing. You presumably need someplace to move. My guess is that you’ll find these same points compelling when it’s your turn to buy. You just might succeed in buying for a better price, too.

I look forward to hearing from you soon.

Yours Truly,

The Realist

To read the entire article, including a possible response from the Seller, click here.

1606 Grove Road - $380,000.00


MLS #444991
3 Bedrooms, 2 Baths
Year Built: 1953
Sq. Ft.: 2,130
Acre: .50

Like 935 Belmont, this brick Cape Cod has had its MLS description, and price point, modified several times, as it has been on the market for months in the Meadowbrook Heights Neighborhood near C'ville High.

The listing reads, "SELLER IS MOTIVATED!" We certainly hope so. The house has been in the same family for decades; any monies from the sale are sheer profit. The mortgage was paid in full long before some of us here at Real.Cville were even born!

Here's why the seller should be motivated to drop the asking price further:

The listing reads, "Sturdily built home in good condition & ready for occupancy." This is somewhat accurate. But at the last open house in April, the house also needed to have all windows opened for a week to air out the odor of moth balls. The "sturdily built" materials are those from the '50's, when inexpensive pressed board, lightweight doors, and new drywalling were coming into vogue.

And it needs a contemporary kitchen, including all new appliances.

"Great possibilities: standing stairway to 750 unfinished sq ft attic with 3 gables & dormer – would make a great master suite...." While true, add at least $100K to your budget.

"...main level formal living & dining rooms...." If "formal" means "separate" from each other, as opposed to the recent trend of "Great" rooms, well, o.k. then, we'll call it "formal." But there's nothing technically 'formal' about a brick Cape Cod.

"3 bedrooms, 2 bathrooms...." The bedrooms are small, with sliding-door closets, and the bathrooms are outdated. Add some more $$$ to your budget.

"Big sunny yard...." While accurate, the property parallels the 250 Bypass. The traffic noise is significant enough to make some people never want to set foot in the yard. Nor could the land be used, therefore, as a kitchen garden--unless a soil swap was performed by experts.

And the high tension wires and transformers hovering above the house? This is not a property for those concerned with radiation generated by electricity--which is anybody who has children.

On the other hand, if you're one of those tech-forward home buyers who plans on installing robots...this could be the house for you.

Suggestion: Drop the price to the median for 2004, since we're heading backwards in time in this market: $240,000.00, in our humble opinion.

606 Lexington Avenue - $329,000.00


MLS #453606
3 Bedrooms, 2 Bath
Year Built: 1920
Sq. Ft.: 1438
Acre: .17

We love the North Downtown area, always have, always will (it will never be the laughingstock that our old love, Belmont, has become), but come on: let's be realistic here, too, with the house prices.

The listing reads, "Rare offering on Lexington Avenue in wonderful neighborhood of renovated homes. Charming home has been in the Craft family for many years--now ready for a new owner with vision."

"Rare offering" - What? 744 Lexington is for sale right now--MLS #451324, at $374k. While overpriced, it's immediately liveable.

"Renovated Houses" - There are several nicely done houses nearby, but there are also several shacks that haven't been touched, including the one that shares this house's garage.

"...has been in the Craft family for many years" - Means the place has been in stasis for decades.

"...new owner with vision"- Means prepare to sink $100-$200K into the place.

As if this isn't enough: from the back yard you can see the Martha Jefferson Hospital Parking lot. It's a nicely landscaped parking lot. But for how much longer will it be merely a partking lot? Martha Jeff is moving to Pantops in 2010. No one knows what will happen to the property. Construction? College Dorm? Corporation?

Like 935 Belmont, the asking on this property should be $199,000.00. In our humble opinion.

Update: 708 Park Street


Just today, as we made our usual rounds of Our Fair City, we saw this:

708 Park Street
is Under Contract.

We'll bring you news on Who, What, When, and, of course How Much as it's available.

Thursday, May 29, 2008

Is It Better to Buy or to Rent?

Use this handy-dandy calculator, created by David Leonhardt, to help determine whether buying a home is a prudent financial decision.

And remember, we're still not at Bottom. Prices will continue to fall. Objectively, there's no way they can't: there's simply too much supply and not enough demand here in The Hook.

Wednesday, May 28, 2008

Drop in Home Prices Accelerates to 14.1%

"Putting Off the Bottom"
No, we haven't suddenly become a naughty blog. Instead, this Wall Street Journal subheadline explains the behavior of American consumers: new data indicates that "Fewer Americans Plan to Buy Soon, Putting Off the Bottom."

Prices for existing homes nationwide declined 14.1% from a year earlier.

Home prices nationwide are now 16% below their peak in the second quarter of 2006. Prices rose almost 90% from the beginning of this decade to that peak and now are at levels seen in the third quarter of 2004.

Despite the declines, prices are still almost 60% higher than at the start of the decade.

Yes, you read that correctly: prices are still almost 60% HIGHER than at the start of the decade.

('Splains alot, doesn't it. About overvaluing, greed, irrational exuberance, bubbles, etc.--but does little to really wrap our minds around how we're going to get out of this mess....)

In a survey of 5,000 households by the Conference Board, just 2.1% of respondents said they plan to buy a home in the next six months, down from 2.5% last month and 3.4% in March.

To read the complete WSJ article by Sudeep Reddy, click here.

Housing Prices Continue to Fall

Unless you've been living under a rock, or really practicing too much yoga, you're well aware that housing prices everywhere are falling. But here's a concise explanation of why this trend will keep going:

Video: Standard & Poor's David Blitzer explains why housing prices are expected to continue to fall.

This is a recap of the latest numbers from the 20 City Case-Shiller Index, which analysts consider indicative of the health of the US housing market.

Of course, a local RE agent will remind you that C'ville's not on the Index. The intelligent response to this is "Duh." The City is too small. It merely has a bubble equivalent to that of any major city. And as in major cities, the bubble is bursting.

Sunday, May 25, 2008

1318 Oxford Place - $429,900.00

MLS #451803
4 Bedrooms, 2 Bathrooms
Year Built: 1952
Sq. Ft.: 2,000
Acre: .31

This house is on lovely Oxford Place, and is right next door to 1318 Oxford Place.

1316, however, is priced considerably higher. How does the difference of $155K really account for 700 sq. ft.? Does 1316 Oxford Place have 18k bathroom fixtures? Or, our other favorite feature, robots?

Saturday, May 24, 2008

1316 Oxford Place - $584,000.00

MLS #453654
4 Bedrooms, 31/2 Baths
Year Built: 1952
Acre: .57

This house is on pretty Oxford Place, the one-way horseshoe street that jogs off and back to lovely Oxford Road, in the Rugby area. Just by looking at the pic, and knowing the neighborhood, and realizing we've been in a Bubble, the price doesn't seem to be anything to blink at. Right?

Except: What the hell is going on across the street?

We don't know. As you drive down Oxford Place, almost immediately to your left it's like you're in Belmont or Woolen Mills, back in the day: there's overgrown foliage obscuring an abandoned house and dead cars w/tags expired in 2003. The place is so abandoned that we can't even see a number on the house--we can't even look it up.

AND THEN THERE'S THIS:

1318 Oxford Place, is for sale, too. That's right, the house next door. And both are empty.

But to make things even MORE interesting:

1316 Oxford Place is owned by the same folks as 611 Avon Avenue.

Are you thinking what we're thinking?

611 Avon Street - $494,000.00


October 1 update: August price drop to $465K; went on CL to find a tenant mid-August; now rented.












MLS #453656.
3 Bedrooms, 2 Bathrooms
Year Built: 1912
Sq Ft: 2,000
Acreage: .19

Say, does this rehabbed Victorian come with its own crack pipe? Because that's what you'll need to revive yourselves, folks, when you realize this is another example of what a Half Million Dollars can get ya here in Belmont. Makes 702 Belmont seem--almost--reasonably priced.

The realtor's description reads, "The charm of yesterday with every modern convenience--new wiring, heating, plumbing, roof, and appliances."

Well, we certainly hope everything is modern, at this price. The house should be entirely digitized, wired for technology not yet invented. It should have robots.

This baby sold in June 2007 for $235,000.00.

Don't bother whipping out your calculator: That's a difference of $259,000.00 from Current Asking Price.

You could buy two houses in some parts of Charlottesville for these numbers. You could buy a farmette out in the County for this price, and still have enough for your Hybrid.

What the description doesn't say is that this property is ONE HOUSE from the corner of Monticello and Avon. One of the busiest intersections in C'ville. Sadly, there's no front lawn to buffer you.

And you'll also notice, at that OH, recent nearby gang tagging. Look closely at telephone polls, garage walls, and fences.

Garrett Square is just one block away.

Mortgage of about $2,800 a month, with your good credit and 10% down.

Wednesday, May 21, 2008

Charlottesville #14 Most Overpriced Market: Moody's Economy

Moody's Economy has declared Charlottesville to be #14 on the list of Most Overpriced Real Estate Markets in the nation.

But you already knew that, didn't you?

The company determines an “equilibrium price” for the market based on its analysis of long-term supply and demand trends. The ranking “highly overpriced” indicates that the current market house price is more than two standard deviations above its historical relationship with the equilibrium price.

To see Laura Rowley's take on this, click here.

Tuesday, May 20, 2008

You May Still Be Able to Sell, If You Realize It's Really 2004

Wanna Buy A Home?
By Floyd Norris, Chief Financial Correspondent, NYTimes

Back in Econ 101, I learned that if you cut the price of anything, the supply will shrink and demand will grow.

It isn’t working in the home market these days.

The report on existing home sales today shows that — for the first time since they started keeping the data in the early 1970’s — the median price of existing home sales is lower than it was three years earlier. (I use three-month moving averages to compute the data.)

But sales continue to fall, although you can make a case that they have been moving in a narrow range for several months, after applying seasonal factors. The rate of sales is now almost 30 percent lower than it was three years earlier, something that was last seen in the 1980’s. [bolding ours! --Real.Cville]

And the number of existing single family homes for sale rose to 3.9 million in April, easily beating the record set last summer.

The closest thing to a glimmer of hope in the report is that the pace of single family home sales seemed to pickup in the West. “This would suggest that perhaps the intense downdraft in prices in troubled markets, some of which is being dictated by foreclosure activity, is beginning to draw in buyers,” said Stephen Stanley, Strategist at RBS Greenwich Capital.

Perhaps that is the beginning of a trend. And perhaps not. There is no such trend visible in condo sales, in the west or elsewhere.

The prime selling season for existing homes starts in May and runs through August. Nearly 40 percent of the year’s sales take place in those four months. If sales fail to pick up this summer, it won’t be for lack of available homes.

Wednesday, May 14, 2008

708 Park Street - $529,000.00

MLS #438793
4 Bedrooms, 31/2 Baths
Sq. Ft.: 2,930
Year Built: 1965

The above photo is shot from the side view on Lyons Court, not the front on Park Street.

The house is a nice one, full of renovations, lots of room, and fine touches--as the listing tells us, it's a light, airy space, has a huge gourmet kitchen opened to living room and fireplace, and a first floor Master. Plus, it's "walking distance" to the Downtown Mall (though why anybody believes this is actually an asset is fodder for another post).

But it's right there on Park Street, with hardly a lawn buffer, unlike many of its neighbors.

When the City of C'ville can no longer justify the current overvalued RE tax assessments and will have to drop them so the office isn't rioted by angry homeowners, we think this house will be the revenue-generating toll booth admitting traffic North through Park Street for the nearby 250 Bypass, and Rio Road (since that #$%@&* Parkway is never going to be built...riiiiiight?).

This house has been on the market for at least six months (we've lost track and our calendar), and the sad little "Price Reduced" sign doesn't tell the whole story.

The CAAR listing gives a bit more information: The house has been reduced by $323,000.00 from Original Asking.

The last transfer of ownership was 11/2006, with a purchase price of $426,000.00.

529k - 426K = 103k.

The property was overpriced at first asking, which helped to stall it on the market.


Poor little house!

Tuesday, May 13, 2008

Lowball Offers On the Rise

Have you heard about what's going on over in Greene County?

Apparently there's a buyer making offers as much as $90K below Seller's Asking.

We all know that Sellers are the last to adjust to the Current Market, which is a Busting Bubble.

But how many buyers have caught on that it's time to Lowball?

For more information, read this article.

Buyers, start makin' yer lowball offers. What can it hurt? It might get our market moving again.

Monday, May 5, 2008

APRIL NUMBERS

April, 2008

The C'ville/Albermarle "Area" Real Estate Figures look something like this:

149 Sales

Average of 114 Days On the Market

2599 Properties Available

17.44 Months Supply

The numbers speak for themselves.

935 Belmont Ave - $375,000.00


















MLS #453087
3 Bedrooms, 1 Bath
1,332 Sq. Ft.
Year Built: 1925
Acre: .09

Jackpot! This is a terrific example of the Charlottesville Real Estate Bubble and The Belmont Bubble.

This is not a $375K house.


The price is laughable, yes, but it's also insulting to Common Sense:

This property has been on the market and on our radar at least since last November, 2007. It's been for sale in various permutations as House + Lot, House alone, Lot alone, House Reduced, Lot Reduced, House & Lot for sale, and currently, "Price Reduced!" for House and Lot.

*The "Lot" is what other folks call a yard.
*The house, even according to the CAAR listing, needs "extensive renovations."
*Virginia Industries for the Blind--a factory--is a stone's throw away.
*The Belmont Apartments--Section Eight Housing--is right behind this property.
*Across the street is Clark School. Anybody who spends 375K on a house, plus $100-200K on renovations is, believe us, not going to want to send their chilluns to Clark--so the school, and the twice-daily loud smelly school buses, are simply annoyances.
*While the 700 & 800 blocks of Belmont Avenue have had some good renovations, only two houses up this block, the green stuccoes on the corner, have been rehabbed, as has a 4-unit apartment house. Just next door to 935 is--well, you'll see what's on that porch. The block has a long way to go--if it ever even gets to gentrification.

The Belmont Expert, John Sweet, must surely know that nearby houses, which are in much better shape and much better blocks, sold in the Fall of 2007 for the Mid-$200's.

So whose idea is it to let 935 languish on the market?

Newsflash: Belmont will never be the Rugby Road area: it's never going to have pretty houses everywhere you look.

*Belmont will always have the aluminum-sided shacks that were built when other dingalings sold their yards.
*It will always be near The Ghetto unless the City paves the various ghettos over.
*It will always be in transition--it's never going to achieve gentrification, now that the Belmont Bubble has burst.
*Nor is Belmont going to be an "artists' haven" or a "diverse culture."
*A yoga studio, a tapas bar, a soft-jazz joint, a coffee house w/SoAm pretensions don't diversity make. Rather, they contribute to the stratification of the neighborhood: the haves vs. the have-nots.

There's too much old working class & poverty and new, bourgeois money at odds here.

Ask yourself, Who ruined Belmont?

935 Belmont should be priced at $199K. In our humble opinion.

Saturday, May 3, 2008

REAL C'VILLE: About Us


Greetings. Welcome to one of Charlottesville, Virginia's newer blogs, concerned with the local and national Real Estate Bubble.

As our blog description tells you, we're

"A marketwatch for the "big" season of May-August 2008, compiled by C'villians who aren't attempting to sell you anything. For bemusement purposes only, it's a small contribution to the zeitgeist. We welcome your input, especially when you want to tell us why we're wrong."


We're interested not only in the local and national housing bubbles and collapse of the housing market, but also the impact on the local and national economies. Obviously we're interested in the "credit" crisis and (criminal?) mortgage "products," but also defaults, foreclosures, displaced families.

Besides the tragic consequence of losing a house, declining values impact many more mortgageholders, those who find themselves "under water," owing more than the house is worth, which number nationally is, May 08, many millions of mortgageholders. 70% of the United States economy is comprised of consumer spending. When housing values decline, people owe the bank, HELOCs are due, the house-as-ATM-machine idea disappears.

We're interested in how all this is going to affect affordable housing, realistic housing valuation, future mortgage writing, consumer spending, employment, urban planning, the tax base, city services--and, of course, politics during this election year. We're also concerned, with good reason, that the current Economy is going to render the United States the "former" Leader of the Free World.

Additionally, we're fascinated by the idea that many locals believe Charlottesville is a "protected" market, due to the presences of the University of Virginia and National Ground Intelligence Center, plus the influx of "outsider" cash (including trust funds) and land speculators: and therefore don't believe the crises beyond the borders of Albemarle County have anything to do with us.

Each week we'll feature individual existing properties, typically avoiding new construction. Most of the properties will be in the City, but some will be in the County. We'll link to local news and blogs. We'll offer links to national news sources and blogs.

Our blog is "anonymous" because we're not experts--and because it's not about "us." Sure, it's about presenting opinions, "facts," and "information" that you probably won't find in the local news media or, for that matter, on local RE blogs. But it's not "personal." We know there are many out there in Our Fair City who think as we do: they just don't have the extra hour or seven per week to manage a blog.

We will tell you this, though: While the blog will be primarily written by one or two voices, others will have regular input. We are college educated, and some of us took graduate degrees; we're native and imported; some of us are single, some are married with children. Among us are homeowners, renters, and at least one impatient prospective buyer waiting to see a glimmer of the "bottom." Within our ranks are a far-left liberal and a blood-red conservative, plus some folk in the middle.

We welcome your input. Please email us at real.cville@gmail.com. While emails technically become the "property" of Real C'ville, we will do our best to respect your request to publish/not publish a point or query, and to do it, if you request, "blind."

We look forward to seeing you at the Open Houses.