dapperdobbs wrote:
- quote -

There's an excellent graphic available on nytimes.com showing that
median income/price relationship, for a variety of US metro areas. Think
"three" (or thereabouts), absent a source of distortion (e.g. vacation
communities).
http://www.nytimes.com/2009/04/22/bu...leonhardt.html

As for how - seemingly- so many could afford those pricey homes - well,
I think that's playing itself out pretty clearly right now - "they
can't." Not much different from: how can investors seemingly buy stocks
selling at 50X earnings and still make money?

A source of information I find very useful on this income/price question
is the American Factfinder:
http://factfinder.census.gov/home/sa....html?_lang=en
You can look up detailed statistics about households and their incomes,
for specific counties and many cities/towns. I use this to dispel
clients' notions that "all my neighbors make over $200k." The percentage
is usually small even in affluent areas. And 3X $200k is $600k (see above).

-Tad

Thank you everyone for your valuable contributions :-) I read
overything over twice.

Real estate is an interesting study. There must be some relationship
between incomes and prices, but I can't see how (seemingly) so many
can "afford" homes that are double the median prices. One guy I know
quipped, "The answer is evident in today's markets." Charting
techniques probably apply to real estate, but the fundamentals must
apply as well. One more consideration for potential buyers - check the
insurance rates for the house before making an offer. Localized
hazards may boost insurance costs more than 0.5% of price, annually.

On 2009-04-24 07:10:57 -0700, honda.lioness[at]gmail.com said:

- quote -

If I walk into a store and ask a sales person to tell me all about
computers and software and whether I should buy one type or another,
etc., the sales person is usually willing to spend a good deal of time
educating me. But I would never sign a contract agreeing that I would
buy from that particular store and not shop elsewhere.

Over the years home buyers have been misled as to the status of real
estate sales people. The sales person acts as an agent of the seller,
not the buyer. It is an actual LEGAL responsibility (fiduciary), not
something that is determined by choice from one situation to another.
The relationship between seller and agent is similar to that between a
lawyer and a client, tax preparer and client, etc. The buyer, on the
other hand, has the status of a member of the public to whom something
is being sold.

For example, if a home buyer tells the friendly person who has been
showing the houses, "My bottom line is XXX dollars," thinking the
disclosure is confidential, the agent is legally bound to report that
bottom line to the seller. But any discussion between agent and seller
is necessarily kept secret from the buyer.

Real estate transactions are an area of financial planning where people
can lose substantial amounts of money if they do not understand how the
process works and then hurriedly make unwise decisions. That is also
true in the lending process and applying for mortgages.

honda.lioness[at]gmail.com wrote:
- quote -

One needs to be very careful regarding the broker relationship. In our
case, we never signed anything. The broker was going after her split
from the seller, so even though she spent a lot of time with us, for any
house she showed, she actually represented the seller. This was
discussed upfront. It's also possible to use a buyer broker, whom you
pay, but represents you. They 'cannot' accept any seller money, to do so
is a conflict.

Joe

Don <dwz...[at]telus.net> wrote:
- quote -

Surely you realize it is not this black-and-white. For example, a
buyer is free to suggest to the agent(s) that the seller and s/he are
close, how about they take a small cut in commission?

- quote -

Yes. If a potential buyer asks an agent to do any research, I would
expect the buyer to be willing to sign the usual boilerplate contract
(tim period for which it is valid to be determined by the buyer) with
the agent.

On Thu, 23 Apr 2009 15:05:43 -0500, JoeTaxpayer
<JoeTaxpayer[at]comcast.net> wrote:

- quote -


With Zillow all you get is a price based on other sales in your ares.
These sales are on similar sized houses and can vary wildly.
Thumper

On Apr 23, 4:05*pm, honda.lion...[at]gmail.com wrote:
[snip]
- quote -

And the next day's headline, "Home Prices Plunge" - there isn't a
piece of real estate anywhere that I can't lose money on (lol). Thank
you for your good wishes though :-)

As Joe Taxpayer mentions, Zillow is useful and has 10-year charts. The
Tax Assessor's offices (as Ron mentions) are very useful, and can be
used to some good extent to guess at values, and to check prior
purchases. Some people who bought good construction at the right time
get much better appreciation, and probably had an easier time buying.
Both the above web-resources are useful for estimating an average
price per sf, but as Joe mentions (with his usual sound and practical
advice), the personal value per square foot varies with use. I decided
to rent (2005) in a "hot" downtown area - and discovered the music of
underage girls with fake ID's yelling "YooHOO!!" at 3 am :-( (Not
what I wanted.)

Taking it from the regional associations, I think that becoming
familiar with an area, talking to residents casually, can give a good
idea of what's up. But again, few seem to be overly concerned with
statistics, and I think a decent idea about those is necessary to make
a sound decision before shopping for houses, mortgages, and real
estate attorneys. According to either the BLS (Bureau of Labor
Statistics) or the U.S. Census, in the first half of the 1900's more
people rented, than owned. Realtor.com is really good for listings,
and realtor.org has data but I think is principally for realtors (they
do sell data though, such as various States financial conditions).

I think regional Realtor's Associations have real data that is
probably more useful than the national,

On 2009-04-23 10:10:53 -0700, honda.lioness[at]gmail.com said:

- quote -

True, but the buyer is not obliged to come to any agreement whatsoever
with an agent regarding a commission, any more than a shopper buying
furniture in a store need be concerned with how much commission a sales
person gets from the store's owner. If a real estate agent wants to
take less commission to make a sale happen, that is a matter between
the agent and the seller. Of course, the buyer can always offer more to
make a sale happen, and the seller may always be willing to take less.

- quote -

Yes, agreed. That may be the best plan, provided the agent is willing
to work on that basis. Many agents would like to be the exclusive
object of your attention. You need to avoid getting too focused on one
person so that you have enough time for personal research.

- quote -

Agreed! And FSBOs certainly can be a good way to go for the seller too,
but that is another story.

On 2009-04-23 11:26:32 -0700, dapperdobbs <GeorgeCFL[at]hotmail.com> said:

- quote -

True, and one more thing to keep in mind in addition to what people
already have mentioned: You cannot depend on a lender's appraisal to
match the "real value" of the property. Bank appraisals often come in
very close to the purchase price already agreed on. It is as if the
appraiser is trying to assure everybody that the price agreed on by
buyer and seller is really what the place is worth. In other words,
that the deal should go through without any more delay. Appraisers and
real estate agents are sometimes in cahoots. The appraiser certainly
does not want to offend the agent or broker by coming back with a low
appraisal that would tempt the buyer to back out of the deal. By doing
that the appraiser could lose future business! You will get a far
better estimate of the "actual value" by doing your own research,
looking at comparables, or having a friend in the business to look over
the house before other people are involved.

dapperdobbs <George...[at]hotmail.com> wrote:
- quote -

If you find a real estate agent smart enough to have the answers to
these questions, then I think the next question is why s/he is not in
another line of work. ;-) I am trusting your charm will ensure your
intelligence does not overwhelm the guy/gal who becomes your agent.

"Dapperdobbs Buys a Home" -- I am seeing a great magazine article come
out of this.

dapperdobbs wrote:

- quote -

I've not seen zillow.com mentioned yet. I found it to offer decent data
for my area. Disclaimer - I know others have found areas where it wasn't
accurate, it's not the 'end', just a data point. It does have avg
price/sq ft, tax info, etc.

For me, buying a home was not like I'd buy an investment. I wanted local
public school quality very high, house off main road so I couldn't hear
trucks go by, and other things that I'd call 'quality of life' which the
next buyer may not value.

Joe

On Apr 23, 10:35*am, Douglas Johnson <p...[at]classtech.com> wrote:
- quote -

Trying to address many helpful replies without quoting all ... I see a
lot of analysis on investments (or buying a car), and these tend to be
quantitative. Home purchasing seems to be left to a lot of "emotional
impact", without a great deal of analysis, yet is a huge item in most
people's lives. The differences in real estate analysis for
"investment purposes" you point out is very interesting. Depreciation
also plays a role, as I understand it, and the "fixing up" budget v.
estimated resale price (or improved rental value) would be important
to those who do it as professional DIY-ers.

But for the different "personal occupancy" it's still the objective
statistical analysis I'm interested in learning much more about (as
opposed to 0.5% landscaping and 0.5% staging). There must be reams of
statistics - I've seen some of them, but I had to torture an agent to
loosen their tongue (hahaha!). Agents and commissions notwithstanding,
it seems to me that the first questions should be something like "What
quality of construction / design are you looking for? Are you familiar
with the construction companies? The area demographic trends? The
average price per sf in this and proximate areas v. national averages?
Do you understand why? Have you seen charts of prices? Affordability
indices?" ("Are you feeling lucky today?")

Where does one get the right questions, and where does one get the
answers?! My bet is that most people buy a house without analysis -
like buying Intel at $70 just because the price per share is going
up!!! (Bad joke, eh?) The appraisal is close to the final step, as I
understand it.

Don <dwz...[at]telus.net> wrote:

- quote -

Not when (1) the housing market is slow or (2) the buyer and seller
are close on an agreed price but not quite there. Many agents will
negotiate their commissions further when the buyer and seller are
close.

I am happy to agree to disagree. Just posting my own experiences and
reading.

- quote -

I agree this caveat is appropriate. But it is not true of all agents,
as you noted.

- quote -

I agree. But a person can also look around and have an agent keep an
eye peeled at the same time. Especially since agents may get info
about a house going on the market before a buyer can. My most recent
agent also had better info on comps than I could get on my own.

One should also not rule out For-Sale-By-Owner properties. But for
FSBOs, one should strongly consider a real estate attorney.

On 2009-04-23 08:05:51 -0700, honda.lioness[at]gmail.com said:

- quote -

The commission is a concern of the seller, not the buyer. There is no
reason for a home buyer to pay a real estate agent a single dime. And
bear in mind that if you just walk into a brokerage and ask for an
agent to help you, that agent will be working for the seller, not for
you. It is not a lot different from walking into an auto dealership and
asking for someone to help you look at cars.

In my opinion the number one problem with agents (from a buyer's point
of view) is that they tend to limit your range of choices to what they
want you to buy. Their main motivation is not to find you the house
that best meets your needs; it is to induce you to buy the property
that maximizes their commission.

Agents and brokers use various tricks to get you to look at the
properties they are most eager to sell for one reason or another. So I
say look around on your own first without the help of a real estate
brokerage, and bring an agent (the seller's agent) into the picture
only at the last moment when you are ready to make an offer.

I certainly do not claim that all brokers and agents are dishonest but
am convinced the number of questionable ones is so great that it is
risky for a buyer to go that route.

dapperdobbs <George...[at]hotmail.com> wrote:
- quote -

Three resources:
-- www.realtor.com has a link for examining recent sales in a
neighborhood and current asking prices. It tries to offer laypeople a
way to start doing comparables. Though I am betting you know about
this already.
-- Get an agent who immediately offers to run comps for you. Comps are
your best tool for computing a fair offering price, especially if you
are purchasing a home where the homes are very similar in size, age
and layout. Last I heard the going commission is 5 to 6%. If two
agents are involved, they usually split this 5-6%. If one is involved,
s/he gets the entire 5-6%. It is not going to hurt you, financially,
to get an agent. Personally I prefer the independent agents. They seem
more honest and work harder. The big national firms' people are slave
labor and tend to be arrogant and to be candid not that bright.
-- misc.consumers.house , though it is a tad top heavy with real
estate agents so beware some biases.

dapperdobbs <GeorgeCFL[at]hotmail.com> wrote:

- quote -

No difference in quality, big difference in kind. For a rental, you are going
to want to know things like local rents and vacancy rates. You will want to
value the house on discounted cash flow as well as comps and replacement costs.
You will also want to do much of the things in the list below as well.

For a personal residence, you will want to make sure you can get an insurance
policy on the property and the cost. You will want to get an inspection by an
inspector you find and pay yourself. If you have a friend knowledgeable about
construction, ask if they'll look it over as well.

You want copies of the last year's utility bills. Get a list of comps in the
neighborhood, both for sale and recently sold. Go through them if possible and
adjust the prices up or down on features and condition. Research the local
schools if that matters to you.

Get prequalified for a mortgage. Don't forget to shop around for it. Find out
what your income taxes will be with and without the purchase. Make a list of
likely expenses (furniture, fridge, lawn mower, repairs, upgrades, replacing old
appliances, carpets, painting...). Do a detailed budget for at least the first
year.

If this is your first house purchase, get a lawyer to review the contract.
They're pretty standard, but you should have him/her explain what you are
signing. Get a draft closing statement and have him explain it to you.

Drive your commute at the hours you will be doing it.

I'm sure there is more, but that is what is occurring to me now.

-- Doug

On Apr 22, 4:01*pm, dapperdobbs <George...[at]hotmail.com> wrote:
- quote -

You need to decide what are your current and future requirements.
Size, location, bedrooms, bathrooms, kitchen, etc.

You can usually see the prices that have been paid recently for houses
through the assessor's office, so an appraiser isn't going to help
much because it gets expensive to do for every house that you're
looking at.

I recently had my house appraised to see what I could expect to get
for it.

After you find a house that meets your requirements you try to
negotiate a reasonable price contingent on a building inspection,
appraisal, and getting financing. The building inspection will tell
you what may need repair. The appraisal says how much a bank should be
willing to lend against the house. And the bank will determine if your
credit is good enough.

--
Ron

On 2009-04-22 14:01:41 -0700, dapperdobbs <GeorgeCFL[at]hotmail.com> said:

- quote -

In addition to the desirable things you mention above, do a lot of
research on mortgages. Shop around. Here is an excellent place to get
information about mortgages, mortgage brokers, etc:
http://www.mtgprofessor.com/ A slight difference in interest rates and
fees, points, etc. can save you more in the long run than a reduction
in the asking price of the house. Negotiate with lenders as well as
with sellers!

Personally, if I were shopping for a house, I would not use the
services of a real estate agent. I would do lots of searching on the
internet and even driving around city streets looking at what is for
sale. When you find something you like in an area you like, call the
listing agent and make an appointment. If it meets your needs, make an
offer. If not, then, when the agent says "Can I show you something
else?" say "No thanks," leave, and resume looking on your own.

Of course, if you are extremely busy and do not have much time to get
up to speed, the above advice would have to be modified to some extent.
The less the better!

On Apr 22, 6:24*pm, Douglas Johnson <p...[at]classtech.com> wrote:
- quote -

For personal occupancy - is there a difference in quality of research
if it's for investment?

On Apr 22, 3:01*pm, dapperdobbs <George...[at]hotmail.com> wrote:
- quote -

A thorough inspection by a competent, independent appraiser whom you
pay for yourself.