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jackie..a few questions.
i had an offer accepted on a short sale monday. it had been on the market for six months, and was told the bank was going to drop the hammer in a few weeks. the bank kept lowering the price, but about the same amount as the market was going down. so it was allways a little overpriced. it’s a 2 year old house an investor bought at the top of the market, and i assume with bad financing. he paid 280k, the bank eventually lowered it to 240k. i offered 210k, and the bank accepted within 3 days with no counter. it’s 1750 s.f. in a neighborhood of bigger and expensive homes, on the best side of town. no work is needed, and it still smells new.
i have listened to the last 2 conference calls, and both times i heard with prices still slideing, it makes no sence to buy now.
i’m in central calif. where the prices have slid 20 to 25 % already. asuming 7 to 8% more this next year, i will be in this house a little under market, but not low enough to resale and break even. which is ok with me on this house, as it will be one of my long term holds. as it stands, with 10% down, and 6% bank financing, after expenses, it will show 200.00 neg. cash flow, which is o.k. with me as i have other income.which brings me to my 2 questions…
i do not wish to share my profits (future) with anyone. you advise not to use the banks money, but to find private money.
on this deal, i don’t think my purchase discount was deep enough to attract any private money that could compete with the bank…as much as i hate to deal with them.
second, as i am only puting 10% down, i have to deal with p.m.i. i was watching suzie orman on larry king a while back.
she said to buy p.m.i up front for 1% of the loan amount from some company…forgot the name, and might be a government agency. said it was a whole lot cheaper.any thoughts?…
thanks robert
Robert,
You’re getting your terminology a little mixed up. A short sale is something that happens BEFORE the house is foreclosed on.
It sounds like this house is an REO property ( already owned by the bank)
Don’t do the deal! It is too skinny. If the market slid 20 – 25% this year in CA, what makes you think it will only slide 7 – 8% more next year? The reality is that there will be a LOT more foreclosures in 2008 than there were in 2007 so you should anticipate an even bigger drop in prices. And that makes this deal not good.
How many times has Jack said don’t buy houses if you have to go to the bank???
Go you the Learning Annex and click on Jack’s Q & A. Listen to Jack’s responses from people who did go to the bank and are now in a huge mess trying to get rid of houses.
If you buy using private money, you can almost always work things out and there is no such thing as PMI, loan applications, disclosing personal informatin, revealing details that could later get you in a loan fraud case, or having to do deals inside the box.
I assure you that there are much better deals out there than this one. And next year the deals will be even better.
Jackie
p.s I don’t know where you can buy PMI outside of closing. It is better to avoid it all together.
Robert
Don’t forget about buying subject to the mortgage. I bet there are a lot of peopel who will just deed you their house in CA
No loans
Loan is not in your name
No realtors
Reduce your acquisition cost.Lots of great benefits.
But, you need to get something that will cashflow. Avoid negative cashflow deals OR restructure them so they will cashflow ( without getting bank financing)
Jackie
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