irvine_home_owner_IHB
New member
I'm not sure if it was better to break it up into separate threads but considering how long threads here get... I felt this would be more organized.
This is the story of how I decided to sell our house in a down market and become a renter instead of an owner:
Part 1: Kool-Aid Detox (<a href="http://www.irvinehousingblog.com/forums/viewthread/4017/">http://www.irvinehousingblog.com/forums/viewthread/4017/</a>)
I just realized I didn't explain what "Legend of the FCB" is for those who aren't familiar with the IHB forums. It's basically a theory that FCBs (Foreign Cash Buyers) will continue to buy Irvine houses at inflated prices despite dropping values in other parts of Orange County. The FCBs are different from your normal buyers as they often don't take fundamentals into account when purchasing, they'll have large cash downs (sometimes 100%) and are more concerned about intangible aspects of a home (which direction does it face, what is the street number etc etc). This is not to say that Irvine will be immune from the price drops, but it's a fun theory to throw around when looking at the demographic purchase patterns of Irvine vs other places like Santa Ana and even south county houses.
I personally do believe they will slow down price drops... but that's true for any of the more desirable areas across the nation. Hence... I was hoping that I could get an FCB to buy my house for 2 reasons, a higher sales price... and an easier escrow process.
I am not going to use exact numbers to protect any parties that were involved but most of you should be able to figure out actual prices based on information in different IHB threads. We purchased this house in mid-2005 for about 900k. We were very caught up in the price run-ups and were afraid to get priced out of the market as just the previous year or so... similar houses were priced at about 700k. That was at the top of our price range, had the size and features we wanted and was in a central area of Irvine. The lot was huge and the interior was well laid out but we were missing some things we really like in our other house. The one feature it had that really got me to buy it was the 3-car wide garage. I can't tell you how great it is to have such a wide driveway and that extra garage to put junk in. Living in our current rental house with a 2-car wide driveway just makes me miss that so much more. We really liked our home except it was probably about 500sft smaller than what we really needed. If not for that... we might not have decided to sell, but considering we had been looking to move up for the past 2 years... that cemented the decision to list... even with the inevitable loss of a majority of our down.
To IPO's credit, his original estimate was mid 800k. This was based on a few other sales in the area and seemed pretty accurate as that was what we were estimating as our lowest price to take. In order to hedge our bets... we listed higher. And to add some more insurance to lure some FCBs in... we used a lot of 8s in the price. 8 is a lucky number in Asian culture so were hoping to get some of that intangible pull for buyers. Although I felt it was high, I was ready to do a $20k price drop after 1 or 2 weeks if no offers came in.
We were not present for any of the Open Houses, but our realtor told us that a majority of the traffic were more like looky-loo neighbors checking out the house. I really wasn't enthused by this news and started to wonder if we priced it too high. The following week generated a good amount of interest. The house was lockboxed but agents had to call me to arrange viewing. Although that was a bit intrusive of my day... it gave me an indication of how many views were happening. Many of them were agent previews... a few had actual interested clients. Our agent did another Open House the following week and brought us a buyer whose agent had previewed the house during the week and the clients visited during the Open House. These buyers expressed a high interest but were worried about financing as the list price was a bit higher than their pre-approval. My agent was going to work with them on financing.
As an aside... the hardest thing about this listing process was keeping the home in a staged condition. We decided to use the main hall bathroom exclusively which kept the master bath pristine. But every morning, we had to make all the beds, put away all our toiletries, wipe down the countertops, put away toys and make sure our closets were orderly. This added so much time to our morning rituals it made us wonder if it was worth it and how much longer would we have to continue this routine. It didn't feel like we were living in our house.
During the 2nd week, our agent informed us of 2 lowball high-cash offers, both for 800k and I believe from FCBs. I did not even consider them because of the one party that was working on their financing. They intimated their offer would be in the mid 800k range (IPO's Over/Under). After the 3rd Open House, during Week 3, we received 2 offers. The one for mid-800k and another for low 800k. Our agent advised us to go with the low 800k because they were putting in over 50% cash and since they didn't have an agent, he could cut our commission which would net us more than the mid-800k offer. We were ready to accept as our agent had sent them a offer to sign but for some reason they delayed their response. In the meantime, the mid-800k offer decided to drop the closing costs request and we found out that the cash-heavy offer had to move funds from overseas which would complicate the escrow. So we opened escrow with the mid-800k party and put our listing on Backup Offers. This was 3 weeks after we listed.
Interestingly enough, we still got a few more appointments from realtors and one more cash offer after it had already been put on backup. I guess people want things more when they are already taken.
Next: Part 3 - Problems with Escrow and More
<a href="http://www.irvinehousingblog.com/forums/viewthread/4059/">http://www.irvinehousingblog.com/forums/viewthread/4059/</a>
This is the story of how I decided to sell our house in a down market and become a renter instead of an owner:
Part 1: Kool-Aid Detox (<a href="http://www.irvinehousingblog.com/forums/viewthread/4017/">http://www.irvinehousingblog.com/forums/viewthread/4017/</a>)
I just realized I didn't explain what "Legend of the FCB" is for those who aren't familiar with the IHB forums. It's basically a theory that FCBs (Foreign Cash Buyers) will continue to buy Irvine houses at inflated prices despite dropping values in other parts of Orange County. The FCBs are different from your normal buyers as they often don't take fundamentals into account when purchasing, they'll have large cash downs (sometimes 100%) and are more concerned about intangible aspects of a home (which direction does it face, what is the street number etc etc). This is not to say that Irvine will be immune from the price drops, but it's a fun theory to throw around when looking at the demographic purchase patterns of Irvine vs other places like Santa Ana and even south county houses.
I personally do believe they will slow down price drops... but that's true for any of the more desirable areas across the nation. Hence... I was hoping that I could get an FCB to buy my house for 2 reasons, a higher sales price... and an easier escrow process.
I am not going to use exact numbers to protect any parties that were involved but most of you should be able to figure out actual prices based on information in different IHB threads. We purchased this house in mid-2005 for about 900k. We were very caught up in the price run-ups and were afraid to get priced out of the market as just the previous year or so... similar houses were priced at about 700k. That was at the top of our price range, had the size and features we wanted and was in a central area of Irvine. The lot was huge and the interior was well laid out but we were missing some things we really like in our other house. The one feature it had that really got me to buy it was the 3-car wide garage. I can't tell you how great it is to have such a wide driveway and that extra garage to put junk in. Living in our current rental house with a 2-car wide driveway just makes me miss that so much more. We really liked our home except it was probably about 500sft smaller than what we really needed. If not for that... we might not have decided to sell, but considering we had been looking to move up for the past 2 years... that cemented the decision to list... even with the inevitable loss of a majority of our down.
To IPO's credit, his original estimate was mid 800k. This was based on a few other sales in the area and seemed pretty accurate as that was what we were estimating as our lowest price to take. In order to hedge our bets... we listed higher. And to add some more insurance to lure some FCBs in... we used a lot of 8s in the price. 8 is a lucky number in Asian culture so were hoping to get some of that intangible pull for buyers. Although I felt it was high, I was ready to do a $20k price drop after 1 or 2 weeks if no offers came in.
We were not present for any of the Open Houses, but our realtor told us that a majority of the traffic were more like looky-loo neighbors checking out the house. I really wasn't enthused by this news and started to wonder if we priced it too high. The following week generated a good amount of interest. The house was lockboxed but agents had to call me to arrange viewing. Although that was a bit intrusive of my day... it gave me an indication of how many views were happening. Many of them were agent previews... a few had actual interested clients. Our agent did another Open House the following week and brought us a buyer whose agent had previewed the house during the week and the clients visited during the Open House. These buyers expressed a high interest but were worried about financing as the list price was a bit higher than their pre-approval. My agent was going to work with them on financing.
As an aside... the hardest thing about this listing process was keeping the home in a staged condition. We decided to use the main hall bathroom exclusively which kept the master bath pristine. But every morning, we had to make all the beds, put away all our toiletries, wipe down the countertops, put away toys and make sure our closets were orderly. This added so much time to our morning rituals it made us wonder if it was worth it and how much longer would we have to continue this routine. It didn't feel like we were living in our house.
During the 2nd week, our agent informed us of 2 lowball high-cash offers, both for 800k and I believe from FCBs. I did not even consider them because of the one party that was working on their financing. They intimated their offer would be in the mid 800k range (IPO's Over/Under). After the 3rd Open House, during Week 3, we received 2 offers. The one for mid-800k and another for low 800k. Our agent advised us to go with the low 800k because they were putting in over 50% cash and since they didn't have an agent, he could cut our commission which would net us more than the mid-800k offer. We were ready to accept as our agent had sent them a offer to sign but for some reason they delayed their response. In the meantime, the mid-800k offer decided to drop the closing costs request and we found out that the cash-heavy offer had to move funds from overseas which would complicate the escrow. So we opened escrow with the mid-800k party and put our listing on Backup Offers. This was 3 weeks after we listed.
Interestingly enough, we still got a few more appointments from realtors and one more cash offer after it had already been put on backup. I guess people want things more when they are already taken.
Next: Part 3 - Problems with Escrow and More
<a href="http://www.irvinehousingblog.com/forums/viewthread/4059/">http://www.irvinehousingblog.com/forums/viewthread/4059/</a>