patrick.net

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.

DinOR - have you checked the tax assesments for your condo - is your landlord uptodate with his payments? Has he got other offers - or is he getting behind on his payments? It maybe his other offer is the one from the mortgage company - sell or else? I can hope can't I?

DinOR,

I hope he refuses your offer. And when he does, counter with 180k, open for 6 months, and tell him you'll do it with a RE attorney once his listing agreement has expired. That'll save him 12k right there! If he can't move the condo, you might get it for an almost reasonable price.

As for your daughter, man, I feel for you. My parent-in-laws are in a tight bind of housing. They're in the worst situation possible. They own high-end furniture stores and bought their 'dream' house on the bay in early 2005. Right when property peaked, the helocs slowed, and spending has slowed. Since they sell stuff considrably better than IKEA, they start hurting first in their industry.

To top it off... the guy who sold them the property didn't disclose problems with the drainage, and half the cliff fell out from under the house. Now they're in litigation trying to get back enough of the house payment to fix the cliff before the house goes in the drink.

At this point, I think their only viable option is to mail in the keys. The house cost seveal million dollars, the repair work needed is near on another million, and because of the problems, they can't sell the house until litigation is done OR for anything close to what they paid for it, or probably even enough to get out from being underwater, and since it's a high end market, even if they could sell, it takes a LONG time to move houses in the several mill range. No matter what happens, they're going to be out several hundered thousand in legal fees, and if they do Deed-in-Lieu, they'll be out probably a million.

They could have handled one problem or the other (business slowdown or massive repairs and litigation), but both at the same time is about to break them.

At least they aren't trying to sell the house to us! :D

Claire,

Now that is... something I hadn't considered? My guess is that the guy is WAY over extended. He bought several homes in each of the new subdivisions in town (we're right outside of Salem, OR) and THEY are also morphing into rentals. Since (admittedly) these units do have a "water feature" they are among the few he CAN convert to cash on such a short notice. His other homes are "For Sale/For Rent" (and are mostly empty).

I don't care how deep your pockets were when you started, everyone has a 'threshold of pain'. I happen to think the guy (given his circumstances) IS doing the right thing. P_r_o_b_a_b_l_y would've worked a little better LAST YEAR but... better late than never. This is just another affirmation of all our theories. He HAS to do something. Myself OTOH only need to move a few blocks. If it weren't for the wedding I really couldn't care less.

SFBB,

Ouch! My "problems" pale in comparison. That IS the worst possible situation! From their trade to their entry point (2005 peak) and now the repairs! I feel for them. What I'm going through is just an inconvenience and it really has zero financial impact on me, short OR long term. Since we just had the movers take "the big stuff" it only cost $300 (and lunch, great guys).

And I WILL counter w/180k open for 6 mos. (when the listing expires!) LOL!

My wife feels horrible for her parents. There's not a dang thing we can do for them, really. I've even volunteered to be a sign spinner for them on weekend furniture sales. :D But nothing we can do can begin to deal with the ouch they're getting.

The only good thing from it is as a very good lesson on why not to buy too close to your 'edge' of affordability for me and my wife.

As bad as your Monday was, at least you didn't wake up to find that your $525,000 house which had a basement wall made out of Frosted Flakes boxes collapsed.

http://www.burbed.com/2007/05/07/149-mangels-had-frosted-flakes-boxes-as-a-wall/

or even worse - your house is now what's propping up your neighbor's $525,000 house that had a basement wall made out of Frosted Flakes boxes...

My wife feels horrible for her parents. There’s not a dang thing we can do for them, really. I’ve even volunteered to be a sign spinner for them on weekend furniture sales.

Any good deals? My 2nd hand sofa is a real mess.

SFBB,

Wow, is it a situation where they might not be able to even LIVE there? Is that the pits or what? Come home from a busy day or rearranging inventory (and selling very little) to find your home has slid another few centimeters. That has GOT to suck.

I spoke with the property manager and he said even if they close tomorrow (which he doubted) the buyer would have to establish ownership and THEN serve us a 30 day notice. He was a little miffed that he was in no way in the loop and "I" wouldn't have found out about this shifty little stunt had I not been friends with the realtor. (She and her husband used to own the local golf course so cool it all right!)

As bad as your Monday was, at least you didn’t wake up to find that your $525,000 house which had a basement wall made out of Frosted Flakes boxes collapsed.

Frosted Flakes walls - They're GRRRRRRREAT!

DinOR,

They had to get studies done to see if they could stay in the house. Nobody is happy with the situation right now, city/inspectors/parents/previous owner getting sued/etc. I just hope they get it worked out soon, whichever way it works out. No matter what happends, they'll feel better having the issue resolved.

eBurbed,

The best thing is there will be no insurance payoff for that. The guy lifted the house himself off the foundation and the braces buckled. If he'd hired guys to do the foundation work, they might be 'okay' financially.

The best thing is there will be no insurance payoff for that. The guy lifted the house himself off the foundation and the braces buckled.

Well, there is some speculation on Socketsite that this was much easier than trying to get a demolition permit from the city. ;-)