patrick.net

Now here's an interesting article.

Prime/Subprime mortgage percentages for all CA counties. (For 2005; an associated article notes they don't have full 2006 data yet.)

http://www.ocregister.com/ocregister/money/subprime/article_1681806.php

Would be even more interesting if they broke out Alt-A as well.

Sorry Bap33

I've had it with your insults and narrow minded bigotry. As you can see here from other posters, many of us grew up poor, used various forms of government programs, and have ended up paying multiples more in our share of taxes and contributions to this country. For you to ignorantly blame the "bad decisions" of our parents is insulting. Should my father have known better than to specialize in defense? Who do you think builds the fighter jets for your beloved government's military Bap33 (actually he worked on air to air missile systems)? Should azrob's father have dodged service? I'm not even sure what your point is except to point a finger at kids eating school lunches as dirty welfare parasites. By the way, I may not have eaten the school lunches but my younger siblings did, for many years. But I'm sure Bap33 will enlighten me as to how my 6 year old baby brother was a welfare queen or something equally insulting.

The "Department of Homeland Stupidity" at it again, eh?

Doing away with down payments altogether? Absolutely! WTFN? Pffftt.

Rumblings on the home front, and Mr. D is none too happy. The fellas were invited to the bridal shower (after the gals did their thing) and the in-laws are pecking away at me about the kids taking their "couldn't sell it all last summer McAlbatross" off their hands. After being unable to sell it ALL of last summer evidently unwilling to admit defeat, they rented it out for (I'm told) $900 a month. The kids would probably be paying twice that easily, and daughter #1 calls FIRST THING on Monday morning to assure my week starts out crappy.

I started out in a fairly "contained" fashion but after it was obvious the in-laws had fill't her up with visions of quick and easy wealth I had to act fast. I said (and I quote)

"You guys managed to buy THE ONE house in town that *wasn't* over priced! Now b/c the in-laws want to feed another alligator out at the beach they need to get out from under their current embarrassingly NEGATIVE cash flow property and they want YOU to take their place on the chopping block! Look, this is awkward for me (especially with only 7 weeks to the wedding) but you asked me, and I told you. DON'T DO IT!"

I'll be needing all of your support this week guys so please be patient with me. This would be the mistake of a lifetime and I feel the in-laws are leveraging my daughter's stability with her state job to get out from under a VERY BAD specuvestment. How DARE they! I'm sorry but she's the bread-winner (at least right now) and this is a TON of additional pressure they really don't need right now! They're barely making their bills as is, what are these people thinking?! It's 14 miles round trip in a very hilly area so it's hardly convenient. What could be MORE inconsiderate?

I was getting reduced priced meals (I think it was 15 or 20 cents) for my first 5 and a half years in America. It's pretty much a given when you're a grad student's kid in Oklahoma. If I was less oblivious, the stigma might have stinged more.

I think there should definitely be a health and education safety net, especially for children. Lots of families fall into hard times, that doesn't make them automatic welfare queens. As for the chronic welfare cases - I would suggest removing the incentives to start and reduce their breeding rate.

But if we really want to talk about real welfare queens, let's talk about farm subsidies and ethanol.

If they'd have spent a DIME less they would've been in a mobile home! The next entry point is at least 50K higher and would have about 1/3 to 1/2 the lot size. Even in rural OR it's hard to find anything livable (believe it or not) for under 300k. At 197k they did just fine but now for their own greed the in-laws want to e'f that up b/c it suits "their" needs. Sorry, I'm puttin' my foot down on this one.

Can't you just see this coming? "Gee dad, the lawn tractor needs more to repair it than it's worth so we could use a "little" help. Well... how much is a NEW lawnmower? Well only around _____ but we were thinking _____ b/c we were "behind" on some other bills too. We'd pay you b_a_c_k.....?

Huh-uh. NO. Sorry.

And of course the in-laws know that b/c it was "such a great deal" and such a great "investment" there's NFW the kids could come to THEM for money! So we would wind up subsidizing their lifestyle for oh.... the next 10-15 years? I don't think so.

DinOR,

Sorry to hear about your future in-law troubles. I hope your daughter already knows better.

If the in-laws were hoping for a bailout from Mr. D. Well, I hope they brought reading materials. Why would newlyweds need a big house anyways?

Do I hear a thread for no bid government contracts?

astrid,

Well exactly! They DON'T need a big house and have no immediate plans for children so to what end is this serving? With a bubble price to boot (they bought it in '05) certainly not the kids. His folks are so far in denial it's really more like delusional. They couldn't sell it and had no choice to rent it....., but it would somehow be a "deal" for the kids? I'm beside myself.

Plus do you know what it takes to keep up a country place with acreage? Plenty, and it never ends.

DinOR

Your dilemma is not to be envied. There are a lot of emotions working against you. It's tough enough to be faced with the possibility your future in-laws are less than scrupulous. But it's never that clear cut, is it? Assuming they're not professional hucksters, they probably _believe_ in their own minds they are doing a favor for the young couple. That's a very tough hurdle to overcome given that everyone would like to see a fairytale ending right now. How do you explain "yes, they *think* it's a good deal, but it's a terrible deal for everyone but them" without sounding like you're just trying to dance for rain on wedding day?

justme,

Thank you. As it happens this is probably a more common scenario than we'd care to admit. Hell... it happened to me! Here I thought we were helping my folks out and all we did was inherit a mess. Big places=a lot of work.

There's no way these kids should be taking on that level of obligation in a downward trending market. Besides my son-in-law is just getting a sense of his place in the world and establishing his identity and purpose. I certainly don't want that defined by being a slave to your place. He needs to be making money, not dumping it into a black hole.

DinOR,

Yeah. I think your in-laws are pretty hopeless at this point. Hopefully, you can pull the kids aside and ask them "if this is such a great deal, why can't they sell it on the open market?" and "do you want to spend your weekends mowing lawn and not much else" and "how do you plan to pay for this WITHOUT MY MONEY?"

Randy H,

And thank YOU sir! Many RE perma-bulls don't recognize the potential damage they are frequently advocating so it doesn't register with them. You're right, it's hard to confront all the mental accounting and attempt to explain that a "discounted price" from a listing price that was never even close to being met isn't really a "discount" now is it? And just who is doing who a favor here?

They haven't even been in their "old" place a year yet. The folks were actually trying to sell the rental for their "wishing price" so doing the kids a favor wasn't a priority then. Why is it a priority NOW!? Well b/c it's eating their lunch and crimping their lifestyle that's why! Since the kids paid 50k down and what time has transpired has been "post peak" the transaction expenses would eat them alive! Didn't the folks stop to think about that? I mean if they couldn't sell their old place what makes them think it'll be a snap for the kids to sell? Sheesh.

DinOR,

The bright side to all this is that it really shows how the kids will react to external pressures and hopefully learn to plan logically for their financial position. They got to learn these lessons sooner or later. I have every confidence that they'll figure it all out with your help.

@astrid,

Thanks astrid. Any words of encouragement are helpful right now. You're exactly right. If anything I'll want to put the fear of God into my daughter by showing her we really *don't know the value of that place now do we?

We know what they paid, what they owe and just by paying that and that alone you are doing them a HUGE favor! Any amount above and beyond that is just absurd. (Me suspects the folks got a wee bit over leveraged in their new McAlbatross) and thus the urgency? Hmm?

Monday just keeps gettin' better. Now my LL decides he wants to sell his LONG TERM specuvestments and I mean right now! So the realtor (also has a unit in our complex) calls me with the "good news". They're asking 220k which is WAY more than I think they're worth but at least it means "he'll" be out of the picture. When I first offered to buy the place back in '05 I offered 180K (10 more than he paid) and the guy pretty much flat refused.

We love the unit and as we plan to spend a little more time visiting and travelling this would pretty much work out and if it wasn't "this" place it would be a place very much like this? I just don't like having my hand forced like this.

Person,

Thanks but that's skibum's all the way! :)

Btw, I KNEW this was coming too (for the record). My wife and I had discussed (at length) this exact probability and what would our reaction to all of this be? As per our estimations this asking price is at least a full 20% over what it should be. To be fair they have spent a minimum of 25k on landscaping and grounds improvement. The one owner keeps trying to tell me that it came out of the HOA's but I can't see a snowball's chance in hell of THAT being a reality.

I guess the owner finally got fed up with the not only the hemorrhaging negative cash flow but also the taxes, HOA's and the add'l assessments for one of the owner's constant pet projects. It finally got to him. I know for a fact the couple that lives below us won't be able to afford to buy their unit and I'm pretty sure they'll start looking to move the minute they get wind of this? So I suppose we'll be buying without knowing who our new neighbors below us will be.

I realize this isn't going to drum up any empathy from CA's but 220K is WAY too much in OR. Similar units (o.k not on the river) would go for 180-190k tops. Of course with mental accounting in full force every seller wants 2005 + "normal appreciation". I know this guy won't take a dime less so what's the point? I already tried that and he wouldn't budge. Wish me luck here guys! :)

DinOR,

Are condo's selling so well that you couldn't just let him try and sell it to others first? Or would you get takers straight away at that price - could you bluff him? Every month that it's his he still has to pay a mortgage payment right and HOA's? Plus, he has to buy you out of your lease doesn't he? Don't make it easy for him!

”I started out in a fairly “contained” fashion but after it was obvious the in-laws had fill’t her up with visions of quick and easy wealth I had to act fast…”

DinOR,

I can’t imagine how your in-laws are able to justify trying to dump their failed specu-vestment on their own family. They may display “the best of intentions” on the surface, but the very idea that they haven’t imagined “what’s in it for them”, is insulting. And trying to win you over on the idea too? …amazing.

Fast forward a couple of years when they’re sitting pretty again, but Son and wife are living under crushing debt, upside down in a property that saps any extra income, if there is any. Will “Mom & Dad” answer the phone? How will a Christmas visit go?

Please find the words and appropriate temperament to get you important message and your educated perspective on this, through to your daughter. If they choose to pass on the “deal”, any resulting harsh feelings between Mom & Dad In-law and Son and new wife, will fade quickly. But the resentment following a deal like this will last a lifetime.

My dad once told me, “if you lend someone $20.00 and never see them again, consider it a bargain.” At the very least, this “family deal” presents an awkward situation for all involved. They know what they’re doing. Shame on them for creating it.

BTW, Am I missing something, or is this situation really as offensive as it feels?

Of course with mental accounting in full force every seller wants 2005 + “normal appreciation”.

Too bad this line of thinking tends to be very over-powering.

Claire just had a great suggestion.

DinOR: if I asked (gods forbid!) my parents for lawnmower money, there's a 90% chance they'd manage to find one of those ancient push-mowers to happily present to me instead.

DinOR,

Depending on your daughter's temperament, I would suggest caution in your approach to steering her from making the purchase. Although you would be correct in the coming years, she might not appreciate being wrong, and being reminded of that fact every time she thinks about the house or you.

I would lay it out for her as if she were a client. Bring up all the risk factors, work out the numbers, and then give her your recommendation. Or better yet, have her call the Dave Ramsay show and ask for his opinion.

Claire,

My sentiments exactly. I'm told however that there IS another offer on the table so this has but shouldn't come as a "bomb shell" to us. I feel awful for the Mrs. b/c she had the spare bedroom all arranged for her mother ( who has never been to the states). I'm praying real hard that this guy doesn't accept my offer b/c I feel 220k for this place is beyond ridiculous. One way or another, he'll be out of my life so the more distance I can put between myself and these "investors" the better off I'll be.

The realtor just left and she agreed it is probably an unreasonable asking price but neither of us could figure out the guys logic? He wants 220k (but was renting for $850 a month?) It doesn't make sense and couldn't continue. After the mortgage, taxes, HOA's, rental manager fee of 6-7% it had to have been a HUGE black hole EVERY month. So much for "deep pocketed investors".

So much for “deep pocketed investors”.

So deep that there is a hole in their pockets.

MtViewRenter,

True dat. She's very sensitive and it immediately became about me transferring "our" perceptions on to her! That's when I backed down and took a calmer approach. I said, look, take all of the personalities out of the equation and we still can't make the numbers work. She focused on the convenience issue (or lack thereof) so you're right. At that point it really IS like working with a client. Also you don't want to create an environment where she's going to want to do it just to spite you?

Arghh! (I'm surrounded by "playahs")

Steveoh,

You are correct sir! Asking these "playahs" to think long term is like asking a bear to sh1t in a toilet. My LL needs relief from his UTTERLY FAILED specuvestment so he wants to sell like a month and half before our daughter's wedding. My in-laws need relief from their UTTERLY FAILED specuvestment so they're trying to pawn it off on the kids creating LONG TERM PAIN for them!

DinOR - are you on month to month then - or yearly lease - could you delay your landlord until after the wedding and your mother in-laws visit - me thinks he thinks he has you over a barrel.

HOWEVER, do what makes you happy - you at least know what you are doing - what price happiness - after all?

Monday just keeps gettin’ better. Now my LL decides he wants to sell his LONG TERM specuvestments and I mean right now! So the realtor (also has a unit in our complex) calls me with the “good news”. They’re asking 220k which is WAY more than I think they’re worth but at least it means “he’ll” be out of the picture.

Uh oh, you kinda just proved the NAR's point about how if you rent, you're subject to the whims of your landlord. :(

@Claire,

Much thanks. We were on a lease for the first year but now just go month to month. I seriously doubt this guy will accept our offer b/c he was SO OFFENDED by our low-ball offer earlier. He also gave us his word that he would *not put it up for sale without notifying us (so much for his "word"). This is his "big pay-back" so I don't want to ruin it for him. When it's all said and done there are any number of ways we can go that are equal to or better than where we're at right now.

There are subdivisions full of other UTTERLY FAILED specuvestments for rent. Realistically, how long could anybody continue to have a 1-2% ROI? At some point you have to throw in the towel (and he did so strategically right before summer). This is SO NOT OVER!

eburbed,

That IS true. Our last bubble sitting residence was sold out from under us but other than moving it was hardly a sacrifice. For a supposedly "high end" condo there's only ONE phone jack in the entire kitchen/LR/DR. We can't have Direct TV (TM) and it's only a ONE CAR garage. Nice view but that's about it. Pray with me brothers that this half hearted offer *not* be accepted!

Just got off the phone with the property mgr. and he has several nicer 3bd/2.5 ba's (also on the creek) for $950. I'm quaking.

Just got off the phone with the property mgr. and he has several nicer 3bd/2.5 ba’s (also on the creek) for $950. I’m quaking.

[Mutters incoherently about having to pay $1200 a month for a 700 sqft 1br/1ba in an awfully run down building in the bay area.]

Besides my son-in-law is just getting a sense of his place in the world and establishing his identity and purpose.

Um, isn't that something you do in college?

DinOR - you could always withdraw your offer? Or is there something else going on? (Arm twisted behind back?)

eburbed - ditto with the muttering - $2400 for 3 bed 2 bath, not great condition!!!!

DinOR - I would think that your offer will be accepted - from your account it seems it's over "true" market value.

Claire,

No arm twisting here. My wife was actually a little miffed I even dignified this whole process by responding with an offer at all!

Oh, and before all the RE perma-trolls start coming out of the woodwork with their schaudenfraude, we've bought places that had really great neighbors to begin with only to have them slowly replaced by real sh*theads. So your points about "being at the whim of your LL" or it being worth paying the premium for the "stability" of "ownership" will fall on deaf ears.

This is a pure case of "weak hands", an inability to negotiate for higher rents b/c of a WEAK rental market and just a spiteful move in general in retaliation for a low-ball offer. Cut and dried.

Family deals are bad news in this market. My aunt tried to sell me my grandmother's old place in the country for $180K, and she was sure that was a fair price. I wasn't so sure, so I let her put it on MLS. They've had two offers around $120K, and just accepted the second one.

It's a shame the place had to go out of the family, but what could I do? It's difficult to underbid your grandma's house without looking as though you are trying to steal from family, and if I'd paid $180K, that would've been family stealing from me. Bleh.