S. Utah Real Estate Problems

[jman]

Deseret News had a article about Southern Utah's housing crisis and Iwanted to know why it's such a hot zone (I mean specifically, St. George) and what the locals have to say about it.

Link to Deseret News Story

[theking648]

what goes up must come down... alot of people bought homes at the peak price.

every thing said was pretty accurate. right now is the best time to buy and the worst time to sell.

i knew a family who lost there house on the 26th of december.

[JP]

Housing just about all over is falling. Florida is being impacted by the slump now.

[rockgremlin]

Behold the nasty consequences of GREED!

[Deathcricket]

I just bought a house 1 month ago. There is soo much inventory here it's insane. The house we settled on was 350, we put in an offer 318 thinking they would counter and we would counter and reach an agreement.

Nope they took our offer that day. DOH! should have offered 300, hehe. Oh well, it's still a beautful house. And it even has a small vineyard.


But I feel really good about buying it, we aren't going to sell our small townhouse in cedar city though. Seems like a really bad time to be selling. So will just rent it out to students (or a young couple) and hopefully they wont thrash it too much. Then we'll sell it in 2-3 years I bet. I think with housing, you can't really think short term and get in over your head. I have trouble feeling bad for people who bought a house (2 years ago) they couldn't afford, expecting their house to appreciate and refinance that ARM loan later on. Seems too much like gambling to me. I do really feel bad for the real estate agents though. But I'm pretty sure the experienced ones probably saw this coming and are prepared for it. The ones that thought "hey I'm going to get into this and make some money" will probably just go back to doing whatever they were doing before they got into real estate in the 1st place. Still sucks for them though. Everyone and their mom is a real estate agent down here seems like.

Edit: Jman I was thinking about this the other day also. Why St. George? I have no clue why so many rich people want to retire here. There are soo many better place to live. We go the parade of homes every year and I'm amazed at the number of +1 million dollar homes out here. Pretty much look on any hill and there is a horde of them all on top of each other staring into each others bedrooms. If I had 5 mil to drop on a house I know I could think of a few better places. Of course these people probably have several homes so that makes more sense I guess. It's good but not great if you're LEET.

[JP]

Behold the nasty consequences of GREED!

Agreed

[Win]

Since I moved here the market has done two drastic changes We bought in April 2004 and got a fantastic deal. Prices rose so fast in my sub-division that you'd get dizzy. Today, there are numerous, beautiful homes for sale, nobody seems interested.

Here's what I see, today. A sub-division next to us that has sold only 2 lots out of over 200. This will now go into bankruptcy and who knows what will happen. A realtor told my wife that 60 percent of Washington Cty homes have mortgages and half of those are sub prime. More bankruptcys coming!

A friend of mines sister has an interest only loan for $400K and the home is worth less than 300k today. What a disaster.

Win

[moabfool]

This was in the "comments" section on KSL.com:

Now is definitely not the time to buy but when it is here are some strategies for getting the lowest price possible. Someone lifted it from another website and posted it on KSL.

When the market turned up in the late 1990's the balance of power in the market shifted. During the last decline, the buyers had an advantage. During the bubble the advantage went to the sellers. The seller's market went on for so long and became so feverish that people have forgotten (or may never have known) what it was like to see buyers in control of the action. The purpose of this post is to re-educate buyers on how to behave in a buyer's market.

Buyers have the Power

As a buyer, you must remember you are the one in control. You are the scarce commodity in the marketplace. The seller is one of many for you to chose from, and they are all desperate. They need you. You don't need them. No matter who you buy from, you are going to leave all the other sellers disappointed because they are going to continue to be trapped in their homedebtor's prison. You can't please everyone, so focus on pleasing yourself.

Screw the Sellers

Don't become concerned with the sellers needs, wants and problems. Does it matter to you if this house is their entire savings for retirement? Do you care if a sale below a certain price puts the seller into bankruptcy? If these issues matter to you, ask yourself this, "Would you give them money if you were not buying their home?" Unless you are running a charity, you should not care about the consequences of someone else's financial decisions. They created their own problems, it is not your responsibility to solve it by overpaying for a house.

Pay the Lowest Possible Price

This may sound like common sense, but the behavior of knife catchers over the last couple of years shows otherwise. Don't ask for or take any incentives, and pay your own closing costs. You are paying for this stuff, it is just buried in your loan. You will be paying interest on this purchase for the next 30 years, and you will be paying a 1% property tax on these costs for as long as you own the house. You are far, far better off lowering the price and foregoing the incentives and paying your own closing costs.

Use a Buyer's Brokerage Like Redfin

Redfin and other buyers brokerage typically kick back 2% to you at closing. Work out a deal with them in advance where they will agree to take a 1% commission at the closing so you can lower the price by 2%. Again, you are paying taxes on the purchase price, so you want to make this as low as possible.

Your First Offer is Your Best Offer

This is the most counter-intuitive part of buying in a buyers market. Ordinarily sellers, or more accurately the seller's realtor, try to create a sense of urgency to buy the house. They want you to think other people are looking, there is going to be a bidding war, you need to get your offer in today, etc. Remember, in a buyer's market these ploys are all lies. You are the only buyer, and you can take as long as you want to buy the house. Your task in negotiating is to create a sense of urgency and panic in the seller. This is why you make your first offer your best offer.

Start with a bid at least 10% below asking price; however, it can be less if the most you are willing to pay is less. Lower your bid as follows:

If you are actively bidding on the property, make your offers expire in 5 days. If you are still interested in the property resubmit a fractionally-lower offer after 7 days (make them sweat for 2 days.) Don't make is so much lower as to lose consideration, but make it enough lower that the seller gets the message that they need to come to your price before it gets any lower.

If the seller makes a counter offer, retract your offer and resubmit a lower one. Works the same as the time decay offer above. After you have lowered your offer a few times, the seller may panic and take your offer before it goes any lower. This is what you are after.

Lower your offer $500 each time you speak with the seller's realtor. Every time they communicate with you, they will pressure you to buy. Lower your bid each time they speak with you to send a message that their pressure is not working, and it is, in fact, hurting their client.

Lower your offer $2,000 if the realtor uses one of the standard lies I mentioned above.

If the realtor tells you there is another bidder on the property, immediately withdraw your offer and tell them to call you if it falls out of escrow with the other buyer. Since this statement from the realtor is almost certainly a lie, it will cause them to have to explain to their client why the only buyer around has pulled their offer.

Don't Close the Gap

When the seller starts to counter-offer, it is very tempting to agree to their price to close the deal, particularly if they are below your original offer. Don't do it. In a buyer's market, the seller will come to you. You have the power. However, if they are below your original offer, and if you really, really want the house, you may raise your offer one time, but do not get closer than 1% to their counter-offer. The selling broker makes a 3% commission, and the realtor you have been dealing with probably makes 1.5%. By getting to within 1% of the seller's counter-offer, the realtor can choose to give up part of their commission to make the deal. Since they are desperate as well, you should go ahead and squeeze them. A 1/2% commission is better than no commission.

After you have agreed on price

Just because you have reached agreement on the sales price does not mean you are finished making this deal the best it can be. Go through your inspection sheet and establish holdbacks for all repairs. Make the holdback amount 150% of the lowest qualified bid. Say you are doing this as an incentive for the owner to get this work done before move-in. Also, if there are decorative items you do not care for, use the same holdback procedure for these items. The time to get your granite tops is before you move in.

If you are really tough

For those of you with nerves of steel (and a desire to abuse your power,) I have a few additional suggestions for you:

A week before closing, tell the seller or realtor you are considering pulling out of the deal because you have found another property you like. See if they offer you an additional discount.

Three days before the closing, withdraw your offer and say you want an additional $1,000 off. Offer no explanation: You are only doing it because you can. Ask the seller to write you an emotional letter thanking you for purchasing their home. Send back the first one they give you saying they did not praise you enough.
Conclusion

Not everyone has what it takes to implement all of these price-busting techniques. However, the more of these you put into practice, the lower the price you will pay for the home you want. You will never see the seller or the seller's realtor ever again. It does not matter if you offend them. In the end, they will be relieved you bought the house even if you made their lives hell in the process.

[Scott P]

I wanted to know why it's such a hot zone

Part of the reason might be that it's at least partially a retirement and play community. Those places often do suffer when the economy takes a downturn.

Housing just about all over is falling.

Housing prices are skyrocketing here. 3.5 years ago we bought our home for $182,000. We just had it appraised for $325,000 and it seems to be going up every month. Unfortunately that just means we all have to pay more property taxes!

[jman]

Part of the reason might be that it's at least partially a retirement and play community. Those places often do suffer when the economy takes a downturn.

Well aren't their a lot of "play" communities? Why not Moab? Why not Kanab, etc?

I haven't entered the owning-my-own-house-phase of my life and I understand what a Subprime loan is but how does that play into debt and bankruptcy as mentioned above? I mean subprime mortgages pay a higher interest rate (maybe 1% higher than a prime mortgage) - but is it really enough to put people into bankruptcy? Should these people people frustrated with themselves instead of the economy (because of their delinquincy of paying debts or not at all)...? To me it seems hypocritical or a double standard in some cases

Basically, my question is because I still can't understand why there is a huge crisis really, is why so many people are going bankrupt and having so many foreclosures? Does it come down to something like this scenario, guy and wife have a 5digit salary and they figure they want their McMansion which costs $500,000+ but the reality of their incomes just doesn't cover the cost of the loan, property taxes, their schooling (if any), food, gas (especially), etc?

I dunno..it just seems so weird to me....I see all of this pictures of people being so frustrated with the market/economy and blame the goverment, when instead they should point those fingers directly back to them (is that a correct assumption or am I missing the mark here).

To me I see myself getting a small house and going from there if I want to upgrade if I have children, move to another city, etc.. I have no need to buy a 8-bedroom house for my future wife and self, along with my 4 4-wheelers, 6 cars, huge boats, etc....

[Scott P]

Why not Moab?

Good point, and Moab thrives on tourism, but also keep in mind that Moab close to an oil field. That is the reason house prices are skyrocketing around here and for better or worse, it could do the same for Moab in the near future.

Anyway, I was just guessing what might be part of the reason for St. George. There are probably lots of reasons.

I dunno..it just seems so weird to me....I see all of this pictures of people being so frustrated with the market/economy and blame the goverment, when instead they should point those fingers directly back to them (is that a correct assumption or am I missing the mark here).

I agree with all you posted. Too much blame or expectations from the government, not enough personal responsibility taken.

[slickrocker]

Moab doesn't really have the room or the economy for rapid expansion. The town is situated in a long narrow valley surrounded by steep walls, a river, National Parks, BLM lands and Wilderness areas. Most people would love to just build a bypass route for the semis that roar through town, there's just no room.
There is one developer with a plan to build houses up on the Moab Rim with some sort of tunnel leading up to it. Hopefully he'll get flattened by one of the previously mentioned semis.
The economy is seasonal and most of the town likes it like that. If there ever was good, year round employment here it wouldn't be the great place to visit or live in that it is now.

[jman]

I have also read that article and i don't beleive it. I think the housing prices will come down very soon.

Nice, a thread resurrected from the dead!

Lol

[2065toyota]

We are busy but prices are still low enough its hard to make money

[Iceaxe]

As a buyer, you must remember you are the one in control. You are the scarce commodity in the marketplace. The seller is one of many for you to chose from, and they are all desperate. They need you. You don't need them. No matter who you buy from, you are going to leave all the other sellers disappointed because they are going to continue to be trapped in their homedebtor's prison. You can't please everyone, so focus on pleasing yourself.

That's the exact same procedure I used when shopping for my last wife. It's great advise.


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