Hi folks, These are desperate times we are in. Some folks can do everything right and still find themselves in a bind. All we can do is give honest advice and let them make the decisions they need to make.
THE SITUATION
I am scared about refinancing now that the market is even worse. I wonder if I should hold on to the money I was putting down on the house?
Things have changed and my parents are now talking about moving out of Florida.
If I listed this house for $129,000 fully furnished with all the new appliances, new furniture and shed do you think I could sell it? Buyer pays closing costs?
That would give me back the house money, the money for the fence and pay the furniture and appliance bills. Do you think it would come close? With the landscaping (which you haven't seen) and fence and all?
You're listing homes for $90k and that makes me so scared. If I don't have a job next year I am in trouble. I also want to get out of this area. I would have all year to try to sell it, not a rushed deal. However, I feel like if I don't try to sell it now it will be worth $69k in 6 months.
MY RESPONSE
Right now cash is king. If I had the money from the sale of your other home I'd place it in a savings account for the time being. Property values in Poinciana are certainly still declining and much more rapidly that I could have imagined 3 months ago. Most of this decline is due to banks reducing the price of their REOS (foreclosures) to get them off the books by the end of the year. This has caused values to drop an incredible 18% in the 34759 zip code since September.
Homes similar to yours are selling for $48 per sq ft right now. If we just used this figure it would make your property worth 2094 X 48=$100,500. There are currently 15 similar homes on the market priced at $100,000 or less. You paid $120,000 in September which at the time was the best priced home of this style on the market. To sell now will cost you money as it may take as low as $100,000 to get it done. Which is right in line with an 18% decline in property values.
You may be able to refinance at a lower rate that would make it feasible to rent out but I would NOT put any of my cash into the house unless you are certain you will be keeping the house for the next 5 years or more. If, as you fear, you are going to have to move because of your job situation you are better off using your cash to get settled elsewhere.
We can certainly try to sell. Even if you had to bring some money to closing you may be better off trying to sell now than having to sell 6 months from now. Bringing $15,000 to $20,000 to closing is much better than putting $40,000 into the property to lower your payment. Or.....you can stay put. Get a room mate and save their rent money. END
WHAT WOULD YOU DO?
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Wow that is tricky question. I will bookmark your blog to see what the final outcome is.
:)
hhhmm, That is a bummer of a problem and unfortunately the current home owner is stuck over a log.
Sean Allen
Bryant, it's tough for people who got the deal of the year last year to realize it was the deal of, um, last year! But I think that just like prices couldn't continue to increase wildly, they are not going to keep going down forever.
Good points! I have a similar situation.
I agree with your comments. Cash rules the day out here as well.
Wow...18% since September. That just blows my mind...such a rapid decline.
What a difficult situation. I guess I would sit down and crunch the numbers. Can they rent it out to cover the costs of the mortage (refinanced or not refinanced)?
I agree that hanging onto the cash seems to most prudent at this point in time.
You covered it all. The other concern is at the $129,000 if the buyer did not have cash and needed a loan it would not appraise. The bank does not want to see personal items on the P&S as part of the deal. We also have shared with our clients that getting roommates can be a way to keep their home.
My understanding, and your post shows, FLA is taking a huge hit. Yes, cash is king, and if someone doesn't have to move for a few years, I am guessing it is best they dont. Things are scary for a lot of people right now, and I suspect it will get worse still before it gets better.
As usual you're right on the mark. It's a bad situation to be in, but one in which he's not alone. If moving must be done, it would be better to take a small hit now on the price vs. a much larger one went the market declines further.
This particular property was built in 2006 and sold new for $265,000. My customer got is as a forelcosure for $120,000. Now you can buy similar homes for $89,000!!!!! How's that for a decline?
$48/sq. ft. is pretty cheap. Can they build them for that anymore?
I would asy that the bottom would be when you can buy at the cost to build it and get the land for free. I would have to believe that you are probably past that point.
These numbers just boggle the mind! $48/sq.ft.? Unbelievable.
WOW! $48 a square, we should be scooping up those properties, that is, if there is any sort of rental market there right now. We are down $148 per square in some areas- like in Boynton Beach. But in Port St Lucie, I am afraid we may be getting down that low, I will ask Nestor. He does all that! Happy New Year!
WOW! This is scary...but a reality for many. I cannot say for sure what I would do in this guy's shoes...without being in his shoes...but my initial thought is to look at renting the property...if it comes to that. I would NOT sink anymore money into the home. NOPERS. That sounds like a losing proposition to me.
BTW...how's TLW? ~GBU~
hi
Know when to hold them...know when to fold them.
If you do not HAVE to sell- then hold on. Recovery will take time. If time is not on your side, certainly I agree with BB do NOT put anymore money into the house other than paying the bills.
Maybe you should meet a lot of the roommates I've been hooking people up with. I have one person that has 4 roommates now and doesn't pay a dime of his own mortgage.
Wow! $48 a square foot....can it really go lower? I would certainly not invest another dime and try to rent the property if at all possible. Appealing to niche of "roommate type" people sounds like a smart idea.
"Wow! $48 a square foot....can it really go lower?"
You bet it can.....and will. This is just a guess, but BB's market is no longer about value based on replacement cost, but rather return on investment rentals. With the flood of inventory, the rental market has to be stressed so anyone buying has to discount their offer to hedge against "empty months".
I remember some of BB's guests saying $80/sq ft was a great deal and investors should be snapping them up! Not so much of a deal now. Just like the guy who bought the foreclosure based on what it used to sell for instead of what it's actually worth when he signed on the dotted line.
I wonder how many real estate agents are using the 'ol "It sold for XXXX back in '05 so it's a steal at YYYY today!". Reminds me of the 70% off sales.....off of what?
Hang in there BB; your market will eventually recover and you'll be in great shape. All the wannabe real estate agents will be long gone from the business.
Hey Stan, Good to see you. I wish I could say it won't go lower but it will. We are already back to 2001 prices. Isn't that incredible?
I hope all is well with you.
My vote is taking the hit now. Put it on, see what you can get priced aggressively for 3 to 6 weeks,...no go? Broker Bryant doesn't put a ton of money in, the seller agrees to pay Broker Bryant's marketing costs at the time of listing. Then, if it doesn't sell in whatever time period he is willing to call, seller gets the four roommates Todd Clark from clear across the US sets him up with, and call it good.
Yikes, I can't believe how tough your market is...and it just keeps getting worse. I wish sellers here would realize how lucky they are! I get the same sort of questions but not nearly the difficult choices as these. I tell sellers if they don't have to sell and can wait several years or more...do so. If they can rent and break even that is another option which is pretty feasibile here. Give my best to TLW!