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  1. #1
    Gus
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    Default Selling a Single Family Home Near Miami Design District (Pics)

    We just learned our landlord is selling the house we rent.

    We'd consider buying the place, but the $345,000 asking price is unrealistic.

    Since purchasing it is out of the question for us, allow me to tell you about this gem located in the heart of Little Haiti, on the off chance you are looking to buy a house in Miami...

    CASE STUDY: Buying a Single Family Home in Miami

    In April of 2001, our landlord purchased this charming, 2 Bedroom, 1 Bath home with Central AC for $207,000.

    Last year, she refinanced the first mortgage for about $350,000 on a negative amortization adjustable mortgage.

    Because she refinced against the "estimated" apraised value of the home, our landlord now owes about $330,000 on this home which sold for $80,000 in 1998.

    She is trying to sell a small house near the Miami Design District that's worth maybe $210,000 for $345,000.

    Sadly, many home owners in Miami are finding themselves in similar situations.

    What do you think, will the house sell?

    Should we be searching Craigslist for a new place to live?

    If the house doesn't sell, what happens if our landlord can no longer pay the mortgage?

    Is anyone interested in purchasing a 975 square foot house in Little Haiti? It ain't a fancy, South Beach condo, but Michelle, me, the cats, and wild chickens are happy here.

    She put the home on the maket for sale by owner.

    Interested buyers can call me at (305) 754-2206 Ext. 22 :)
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  2. #2
    Gus
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    Here's an update on the house: it's still for sale. In the past 30 days...

    - Victoria's car was burglerized out front at 2pm.

    - the owner decided to paint the exterior.

    - there have been 3 showings with no interested buyers.

    The good news...

    Michelle and I started looking at houses for sale near the Miami Design District.

    We've seen at least 20 houses in Morningside, Miami Shores, El Portal, and Biscayne Park. There is a lot of inventory on the market. Most sellers are motivated. (it's fun to use real estate slang in a buyer's market)

    With so many risky loans out there, and so much competition on the market, smart buyers are going to find some great deals.

    A real estate agent told us there are 180 houses for sale in Miami Shores alone.

    These are my favorites...

    South Beach 2 Bedroom Condo For Sale in 4 Unit Building, $239k.

    Biscayne Park 3 Bedroom House For Sale By Owner, $440k.

    El Portal 3 Bedroom House For Sale, $440k.

    Miami 3 Bedroom Designer House with Huge Backyard For Sale, $456k.

    Miami Shores Large, 3 Bedroom House For Sale, $565k.

    Miami Shores 3 Bedroom House With Pool For Sale, $565k.

    Out of the 20 houses we saw, I was surprised we liked so many. All of them had been re-done, they had nice curb appeal, and good size yards.

    Is this the bottom of the market, or is it just the beginning?

    I should also point out, we've been looking at real estate for 3 days and have only seen 1 other shopper.

    Another important note, many real estate agents are tying to sell their investment properties.

    I think it's a good time for buyers to start shopping around and educating themselves about what's for sale. There should be a number of open houses taking place each weekend. Take a drive and see what's out there.

  3. #3
    Gus
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    I forgot to mention, if you see a home you like, before making an offer, read the comments in this post at Critical Miami:

    "Think people – this will not “bottom out” until these prices are back to “affordable” levels. I am not saying that they we will ever go back to the what they were back in 2001/2002/2003, but prices are still way too high and unaffordable.

    My block alone has 7-8 houses with “for sale/for rent/for anything, lets make a deal PLEASE” signs.
    The anonymous commenter goes on to offer these home buying tips...

    TIPS FOR BUYERS:

    1) WAIT WAIT WAIT
    2) If you are desperate, do not be afraid to offer 10 – 12% LESS than the asking price. Before that was called “low-balling” Not anymore! Worst thing that can happen is they can say no.
    3) DO NOT BUY A CONDO
    4) AVOID INTEREST-ONLY / ARMS – If you CANNOT AFFORD IT, THEN NO!
    5) Make ABSOLUTE certain you can afford the mortgage payment. Use any mortgage calculator on the internet BUT DO NOT FORGET TO ADD IN: a) Roughly 2% property taxes (at least for now)! b) insurance – Roughly 1%
    Mr. Anonymous explains it like this, if you decide to buy a $350k house, your mortgage will be:
    Principal+Interest = $ 2,042.50 (30yr-fixed/5.75%)

    TAXES = $7000 (or $583.33 per month)

    Insurance = $3500 (or $291.67 per month)

    TOTAL MONTHLY PYMT = $2917.50!!!!

    And that's for a REGULAR 3/2 house/townhouse. Nothing fancy, super or luxurious."
    Thanks for the tips, Mr. Anonymous. I will take your advice and keep shopping.

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    Gus,
    Remember as a buyer you are now "King" you are finally in the drivers seat regardless of what anyone tells you or leads you to believe.. The wheels have turned and will only be turning more in your direction. Take your time and do not get emotional about your purchase. Keep very cool and be sure not to share your emotions with any agent or with sellers that you come in contact with. This is your chance to get a great deal. I also suggest you use the technique of presenting multiple "low ball offers" until you are able to find the right deal. My suggestion is that your multiple contracts/offers have something special about them. A quick inspection period with no Financing contingency and very quick closings could make a real seller think twice about passing on a real buyer like you guys. stay focused and work hard and I assure you that you will be successful at finding a great opportunity.

  5. #5
    Gus
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    Thanks, Lyle, I appreciate the encouragement.

    This morning, I was thinking of the story you shared with me about selling your condo at Blue. I'm sorry you had to sell it at a loss. What I found refreshing was your outlook on the deal.

    Since this post is about buying and selling a home, would you be open to sharing your experience with our readers?

  6. #6
    Jim
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    I have a problem with the expert advice: "Avoid Interest Only/Arms".

    What's that? Why "avoid" any product?

    That's like saying avoid "tennis shoes". Tennis shoes are great when someone's playing tennis.

    There are specific mortgage products that fit well with specific situations.

    It's too much of a generalization to advise to avoid any certain product.

    Read the article in MONEY magazine in April when the reporter questions if banks prefer clients to pick any specific mortgage product. The answer is they don't. It's like saying does Sears like it better if you buy a Washer or a Dryer. (Do you think there's some guy sitting up in a little room somewhere keeping track).

    Come on Mr Anonymous....give everyone a chance to evaluate every conceivable product based on their own particular situation.

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    Gus,
    I understand you recently made a "Low Ball" offer on a new Home. did my suggestion of making this type of offer work? :question:

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    I agree with you Jim. Why close doors. A lot of people will not be able to buy otherwise. Plus, assuming one was to get into a mortgage with a variable 5 year rate, when that time comes(5 years later) the homeowner will have options, of which usually none are to lose money. Maybe refi, maybe relocate, maybe the rates dont even change much....
    Also, I am aware that subprime lenders have tightned up a bit in S.Fl. I am ok with this. There were a lot of people applying for loans and going trigger happy with their pens, wasting a lot of peoples time. Now only those with a great credit score will be able to go 100%. Another sign of the market correcting itself...

  9. #9
    Jim
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    Alberto,..yes trigger happy is a perfect metaphor for the way people tend to sign when terms and properties appear perfect.

    Trust me, there's 100% still out there and it's from both the non-conforming and the conforming lenders.

    Score adjusted upward about 20 points to obtain the 100%, but theres still all kinds of programs and niches which if they aren't available today, you can bet someone will step up and fill them just to capture "market share".

    There's no panic out here from lenders, they just have to strengthen their weak portfolios before they "bulk em" and try to pass them off to Wall Street.

    Good luck, and remember brother if you can sell em, we can .......finance em.

  10. #10
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    Lyle,

    I'm sorry it has taken us so long to respond to your question. The low-ball offer didn't work with this house due to some Relocation issue. The seller wasn't willing to lose a dime, however, he wasn't trying to make a dime either. We just weren't willing to go any higher.

    Now we're playing the market. We'll keep an eye on the properties we like, lay down some offers, and get the perfect house for the perfect price. Right now, it is definitely not time to buy a single family home unless you can really make a deal. Patience is the name of the game.

    Everytime I walk out of a house, I think, "well, that house is worth about $200K less than what it's on the market for". I can't wait for the time when people start getting real and realizing that houses just don't increase in value $400K in 6 years. Do they????

    If a house was built in the 40's and increased in value to $175K in 1999, what gives selling the house in 2007 for $630K? That is crazy talk! :gulp:

    We'll keep you posted.

  11. #11
    Gus
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    Time for a case study update. The house has been on the market for 3 1/2 months:

    - 1 person came by to look at the house (he may have been high on cocaine).

    - a pathetic realtor showed up at the front door, unannounced, telling me he found my dream home, and we have to go see it RIGHT NOW. (he may have been high too).

    - somebody wheatpasted a scary warning about my neighborhood below the for sale sign on the wall that separates the house from the sidewalk.

    THIS AREA'S CORNER IS VERY DANGEROUS BY GANG MURDERS PARKING THEIR CAR TO KIDNAP PEOPLE ABOUT 10:30, 11PM, OR LATEST. WE NEED MORE SERVICE OF SECURITY
    Aside from that, the house is still for sale by owner.
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  12. #12
    Suzanne C
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    You know, the house is really quite charming....but yeah, the gang murderer sign did scare me a little yesterday...

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    It's a shame about the landlord.

    Is it possible to 'low ball' the landlord or can she not take the loss in value?

    Good luck with it all,
    Lee.

  14. #14
    Gus
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    This Case Study is now closed.

    The house in question is still for sale.

    Michelle and I have moved out and purchased our first home!!

    We've gone 19 miles south to a beautiful area of Miami called Palmetto Bay Village.

    Conclusion
    Buyers need to shop around and search for a good deal. Broaden the area you are looking in. See lots of houses. Don't rely solely on your real estate agent. Get involved in the process. Michelle found our house for sale without the help of a realtor, and got us 3% back at the closing.

    Sellers need to wait for the market to change, or list the property at a price that shows the few buyers out there you're motivated to sell.

    Thank you all for following along on this little journey.

    I'm sure there will be more journeys about homeownership to come.

    For starters, we have some big pink flowers growing in our backyard that my neighbor says are poisonous. Does anyone happen to know what kind of flower is this?

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    Gus, glad you found your home finally. Sounds like you have a lot of good advise for those of us following in your footsteps.
    Would you say the real estate market continues to drop and be a buyers market?
    Again, the prices in Miami seem so overly inflated for what you get.
    It looks to me that $350k gets you a very old (40's vintage) house with little sq ft. A note of almost $3k/month puts your annual salary in the $9,000/month range to qualify, that is over $100k/yr.
    Am I missing something here?

  16. #16
    Gus
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    Thanks, flyingman. I'm happy this discussion didn't scare you away.

    I think real estate prices will continue to drop. There's just too many houses for sale and very few buyers. No kidding, every residential street you drive down you see multiple "For Sale" signs.

    I also keep reading about rising foreclosures at Eye on Miami.

    Combine that with the 50k new condos that are coming on the market in the next 18 months.

    You said...

    Again, the prices in Miami seem so overly inflated for what you get.
    It looks to me that $350k gets you a very old (40's vintage) house with little sq ft.
    How many bedrooms do you need?

    We spent 3 months looking at 3 and 4 bedrooms in Miami Shores, Morningside, Weston, and Palmetto Bay. The cheapest house we saw was in the low $400k.

    If you decide to move here, I recommend renting first.

    Thanks again for posting.

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    Hi Flyingman! I defintely would heed Gus' advice and rent first. The market is going to continue to drop. If you buy the first house you like with an inflated price tag, I'm afraid you will have buyer's remorse. It pays to shop around and make sure the area you move to is the one you and your family will be comfortable. Honestly, I've lived here for a long time and Palmetto Bay is the first area I have lived where I feel like I could grow old here and be happy.

    It looks to me that $350k gets you a very old (40's vintage) house with little sq ft. A note of almost $3k/month puts your annual salary in the $9,000/month range to qualify, that is over $100k/yr.
    Am I missing something here?
    We felt that same way. I don't know of many people that make over $100K/year and it just doesn't seem right that you have to make that much before you can afford a house. It definitely would take 2 incomes in most cases. I think it's all about paying to live in "Paradise".

    A mortgage of $400K, with a 6% interest rate will run you about $2,600. That's pretty affordable and worth becoming a buyer over a renter. It's the taxes and insurance that make it painful. There are plans to help lower taxes back to the early 2000's rate but I don't now how much that will save overall. Until it goes into effect, it's not worth the speculation.

    Taxes are approximately 2% of the house value. So on a $400K house, figure about $7,000/yr. Our insurance is $4,700/yr. It doesn't hurt so bad if you know that every year, you will have to come up with at least $10,000 to pay the taxes and insurance. Monthly, you are looking at $3,575 with mortgage, taxes, and insurance.

    Bottom line is unless you find a great deal, renting is the way to go.

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    Gus, I will need a 4br home, 2-3 baths, 2 car garage, min of around 2,500sq feet or higher.

    If you apply the rule of thumb of what (?) 36% of your gross income for housing to qualify for a loan.
    Without a significant down payment a $400k home requires an income in the $120k/yr or higher I would assume. And I have heard the property taxes in Miami have gone Loco!

    I have not yet accepted the position, they are waiting for me to decide, and the housing situation (such high prices) has me second thoughts about accepting.

    It is a good job, good pay, but again I would hate to have to not be able to enjoy because I am strapped paying a large note on a home.

    I guess there are lots of folks that had plenty of equity and were able to move up into these larger more expensive homes, but to see a home like the one you were renting asking $345k, really sounds rediculous to me. Who has that kinda money?

    In the end I realize that housing markets are all relative. Coming from Houston where $350k will get you a really nice, new, 4/3, 2 story, with 3,500+sq ft about 30-45 minutes from work, so I have to just recalibrate my expectations.

  19. #19
    Gus
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    Quote Originally Posted by flyingman
    to see a home like the one you were renting asking $345k, really sounds rediculous to me.
    Don't let the asking price fool you. The house we were renting was horribly overpriced to sell. I can't imagine it ever selling for more than $175k.

    To give you an idea of how overpriced, we purchased a 3 bedroom, 1,900 square foot house on 1/4 acre lot with a pool in a great neighborhood for $100k more than the house in Little Haiti.

    Coming from Houston where $350k will get you a really nice, new, 4/3, 2 story, with 3,500+sq ft about 30-45 minutes from work
    Based on your description, it sounds like a $350k house in Houston is a comparable to a $600k house in the nicer areas of Miami.

    Yikes! I'm starting to sound like the host from that real estate TV show "What You Get For the Money".

    I suggest visiting first to see if the lifestyle works for you.

    You can make it a vacation.

  20. #20
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    As they say, it is what it is!

    Today is cut bait day, have to give my answer to the job offer by end of the day. I'm thinking I'm gonna like Miami!

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