UCR Area Sellers Stubbornly Keep Prices Up

All over town, prices are coming down except for right around UCR. A few sellers have come down 10k to 30k, but most are still pricing like it's spring of '06. What are they thinking?

First, most of these houses have an awful lot of debt on them. I looked at one Canyon Crest home's records and discovered that even though the family bought it in the 70's for less than 35k, they recently refinanced it for about 470k. The home is now vacant, so I guess they needed the money for another property...

And then there are the houses that are listed by agents who've never been inside. One such house last fall finally went for about 50k under where it started for a total of 325k. Sounds like a bargain for a 4-bedroom house. However, when I sent inside it and looked up, I saw daylight. Floors and walls were rotted out from old plumbing leaks. The home really needed 100k in repairs to make it safely livable (and not just another case of "let's paint over the dry rot"). The house had been completely paid off for decades, but the old man (now in a nursing home) had been convinced by his agent that it was a gold mine. Whoops.

Another home has been listed at 399k for several months. The out-of-area agent told me that he took the highest and lowest solds, and the sellers picked a price in the middle. This is very aggravating for someone like me who has sold some of the highest priced comps he used. This particular listing has 4 bedrooms on record, but good luck finding all of them. North of UCR, there are a number of houses that were given permits to add a bedroom (without a closet) that had to be entered through another bedroom. While this may have worked in the old days, people no longer consider these bedrooms but rather walk-in closets and (if large enough) studies or sitting rooms. Moreover, this house has numerous illegal additions, including random exterior doors (various heights, no stucco work, rotting wood frames) and a toilet in a closet (that also suddenly has an exterior door). They enclosed the breezeway to the garage (again, allowed in the area) but didn't put in any insulation. The "guest room" is an uninsulated 8 x 10 shed (and yes, there's someone sleeping in there). The backyard is bare dirt and a few pathetic trees, one of which had been attacked with an axe that was still stuck in a branch. The agent told me that even as a fixer, it only needs about 30k in work. So I have to ask, why doesn't he buy it himself? Maybe because no one will! Again, even while the family owes very little on the house (they would have owned it outright except that they refi'ed a couple of years ago), they've been convinced by someone who isn't familiar with either the property or the area that it's worth too much.

What this neighborhood does have going for it is proximity to UCR, an excellent high school, and a mellow "live and let live" community. Due to the rugged hills surrounding it, the area has a natural beauty and a protected feeling. Also, these hills mean that there isn't much more room to build. The limited number of properties is what keeps the value up here. But the small size of the houses by today's standards, plus the poor condition of many of them, make it a hard sell in the current market.

Pitfalls of the Short Sale

I'm beginning to see short sales pop up in our MLS--not as many as buyers are looking for but enough to attract attention. For a buyer, the home can be a good buy at some tens of thousands of dollars less than what the sellers got it for. The lender has agreed to take less than what is owed (provided that the sellers have real hardship). However, the property generally won't be 100k under market.

There are certain matters to take into consideration first, and this can be problematic if the sellers haven't done all their homework.

1) The lender has to approve the short sale and will have final say on the buyer. I saw a house fall out of escrow several times because the lender wasn't happy with the buyer's contingencies.
2) Buyers should remember that if the lender hasn't already approved of the short sale, the whole process may take up to 6 months.
3) If the sellers admit that their income isn't as high (without a job loss or death) as they said it was when they applied for their loan, they may have committed fraud.
4) While the lender may "forgive" the amount of the loan lost, this amount is then considered taxable. For instance, if the lender accepts 50k less, the sellers will have to pay taxes on this amount.
5) In the case of a VA loan, the seller will have to repay the lost amount before being able to get another VA loan.
6) Buyers' agents should be check to see if the dual commission is marked "yes," meaning that the lender will want them to take a reduced commission.

Short sales can be a good buy for buyers who don't have to sell a house first, aren't picky about condition, and who can be flexible. For sellers, it certainly isn't an easy way out, and they need to make sure they understand all of the ramifications.

recycling taken to a new level--your flooring

I try to recycle whenever possible. It's not just about getting nickels for soda cans, either (which go into our little girl's piggy bank). It's also about trying to keep our landfills under control (1. they fill up 2. chemicals that don't belong there leach out into the water, etc.). Anyway, we generally put out very little garbage weekly, and most of what we set out goes to the composting and recycling programs. When we have wood, I break it up for kindling in the fireplace. The dog poop goes into our own compost piles, and believe me, the plants like it.

As I've written before (9/4/06), we have some nice areas here in the Inland Empire that smell ... like manure. Cows, in particular, are a great producer of the stuff, and in the age of farming on a massive scale, we're hard put to use it all. Now, there's an idea afoot to take what's left after cleaning it up and making ... particle board with it. What a great idea--those fibers have survived a cow's four stomachs. It could probably make some resilient floors, and it would be a lot cheaper than imported Italian porcelain tile. Of course, the idea is in the early stages, and we'll have to see what designs they come up with. But it's certainly no worse than making vinyl flooring out of ... compressed, liquified dinosaur remains.

To read the Yahoo News article, click on the following link:

manure article