Friday, October 22, 2010

Let's play a little game

Pick an MLS® listing and make an offer that if accepted you'd do the deal today. Provide reasons why if you want, or don't. Just a silly little exercise to spice up the weekend.

No caveats, but this game won't go over well if you make 50% low-ball offers and comments degenerate into a discussion of reality.

Here's mine:

She's ugly as sin, but that's where I'd like to start to make her ours.

Original list price: $579,000
Current list price: $539,000
2010 BC-assessed value: $446,000

House square footage: 2560 finished, 273 unfinished
Lot size: 9000 square feet
Built in 1963, has 2-bed suite with separate laundry and meter

I'd do the deal at: $450,000, slightly more than 16% below the current listing price. Why I'd do it?
  • it's a project to make it right for my wife and I
  • the location, while not perfect, would likely work fine for the duration of our home-owning lives
  • the suite income at that purchase price will be more than half the mortgage costs*
  • the mortgage cost, without accounting for suite income, based on 20% down, 21 year amortization at today's 5-year non-discounted posted rate (5.29%) is manageable ($2,289/month) given our current incomes 
  • the actual mortgage product we'd use (closed variable at 3%* @ $1800/month) would allow us to make an extra $400 per month principal payment while maintaining other savings allowing us to reduce the mortgage to 16 years
The house isn't a dream home, she's not perfect and we can find all kinds of reasons why we'd never buy her at today's price, but if we could do that deal and she passes inspection, we'd very likely pull the trigger.

What deal would you do?

UPDATE: must read in the G&M today The long shadow over Canada's housing market (H/T OMC)


Dave said...

So whats holding you back??? call marko and make the offer.
They can only say no

Dave #1

I will look around and post mine

Just Jack said...

Its not the neighborhood that would be on my list, so its a take it or leave offer with no counters.

I know that a similar home sold on Gladiola for $488K.

So, I'm going in with a bid of $470K using the same listing agent and will not counter the offer.

At the current list price, I don't expect to get a call back, as the list price and my offer are too far apart. But at the same time, I don't think the vendor is going to get any other offers either.

If they counter, I won't go up on the price, but I will leave my offer on the table for 48 hours for the vendor to reconsider.

My offer is not high nor low but fair to both vendor and purchaser

Deanna said...

Original list price: $559,500 (probably higher, but I don't see listings over $550,000 and this is listed as the previous price)
Current list price: $545,000
2010 BC-assessed value: $498,000

House square footage: 2632 finished unfinished workshop: 286
Lot size: 11444 square feet
Built in 1975, has wood fireplace, basement height over 7', large lot, and backs onto Buchart Gardens

I'd pay: $490,000, 11% off the asking price and under assessment.


- Great kitchen, lots of counters and storage
- Large lot
- Outside of town, but close to amenities
- Has a wood stove and a workshop
- Doesn't need immediate work; updating could be done on our own time and budget

Mortgage is manageable at 20% down, 25 yr amortization with the 10 yr rate offered by my credit union (4.75%) (I know, who locks in to 10 yrs these days? But I'm betting on interest rates going back up to 8%.) We would be making an extra $300 principal payment each month, so we'd have only 5 more years of mortgage when the 10 yr term was done (taking our total amortization from 25 yrs to 15)

Am I actually going to put an offer on? Oh hell no. It pains me to even say that I'd pay $490,000. I'd prefer to offer $375,000, but I thought I'd honor HHV's request not to stray too far into the low-balling zone.

Strategic Voter said...

Can Vancouverites play (with Vancouver listings)? Or do you want to keep this limited to Victoria?

Fabio said...

Mine is new on the market.

It's pretty much my perfect neighbourhood. Just right for our family.

Currently listed at $499
It's doesn't actually show what the square footage is, but that is not actually as important to me (we currently live in a small home, and don't mind it - what we need is a yard). Decent sized lot.

I would sign the papers today at $425 and I would seriously think about it $450.

HouseHuntVictoria said...

SI, giv'er.

HouseHuntVictoria said...

Fabio, I can't find the SFootge for you, but it's assessed at $462,000.

Alexandrahere said...

Mine is 1337 Tolmie Ave. Has an upgraded suite. I saw this house when it was new and I loved it.

Original Asking: $869K; Reduced to $649K. Will pay $550K cash but they will have to take my condo in trade.

Man, I would love to try it. Thing is I like being in Fairfield and all that goes with it. But do no want an old Fairfield house.

Alexandrahere said...

Just Jack: What do you think about the house on Tolmie?

DavidL said...

@HHV The property you linked to is just a block away from where I live. :-)

I've lived in the same neighbourhood for the past 18 years - so I know it well. The house at 4009 WISETON ST is old and will likely need some major work (are those single-pane windows?). The location is mixed: you are going to get a lot of traffic noise from McKenzie (trucks in the early morning, sirens at night), however the property backs onto a nice unused right-of-way and is near Swan Creek Park.

Check out the historical assessment value in your PCS and you'll see that the assessed value has barely changed in the past three years. This is not typical of other houses in the same neighbourhood. The asking price is way too much. Check out 3971 COLUMBINE WAY which just a couple of blocks away. It sold a month ago for $493K ($72K less than the original asking price) after languishing on the market for 4 months. It has the same size lot, less traffic, it 13 years newer, but is 500 sq. ft. smaller. It sold for $17K less than the assessed value.

The property at 4009 WISETON ST is assessed at $446K. Unless some major renos have been done which the BC Assessment Authority is unaware of, it probably is not worth much more than this - even with the rental suite potential.

I know that this sounds pessimistic, but I predict that within three years the house will be worth $385K. I wouldn't offer any more than this ... yes, my offer would be laughed at and my agent would try to disown me.

Truth be told ... I wouldn't be making any real estate purchases until the market stabilizes - which I predict will take a few more years.

DavidL said...

Incidentally, the price changes and new listings in my PCS have been going "nuts" over the past week. I'm seeing new listings of decent sized older homes in the mid $400K's, such as 3160 CARROLL ST and 3250 HARRIET RD.

DavidL said...

Only 400 metres away from 4009 WISETON ST, you could have bought 560 MOUNTFIELD ST in mid-September for $430K. Both houses were built in the early 1960's, have a split-level entrance, and rental potential. The lot size is slightly smaller, but the neighbourhood is much quieter.

Not that it is a reasonable comparison ... but 560 MOUNTFIELD ST sold for $22K less than assessed value and $25K less than appraised value, so $22K less than the assessed value of $446K for 4009 WISETON ST would be $424K.

Oh ... and a final note: the "in law" suite at 4009 WISETON ST is not a legal secondary rental suite as it is north of McKenzie Avenue:

DavidL said...

@Alexandrahere wrote: Ok ... Mine is 1337 Tolmie Ave.

I agree, that is a lovely home. I'm sure the views are fantastic. Have you checked it out "in person"?

Patrick said...

1337 Tolmie Ave has a huge ugly antenna tower in the middle of view, and a steep slope backyard.

Just Jack said...

Wowsers to the house on Tolmie. Shows you how much I know, I would have thought that home with that view would be around the mid 700K mark.

I wonder if it's all those floor levels that are limiting the market? Certainly not a kid friendly lot, but still, what a view. Maybe, its just takes this type of home a longer time to find that match to a buyer.

The list price is just screaming
"buy me, buy me" I wonder if it will sell over list price? If you don't mind the steep lot, definitely something to put on the short list of properties.

Love the view, but not for me for the same reason I won't look at homes with pools - young child.

Strategic Voter said...

This is such an interesting thought experiment you have set for us, HHV!

After you gave the go-ahead for Van submissions, I thought -- OK, the challenge will be to narrow down the dozen or so candidates that I would love to buy in North Van. Then I took a careful look at each of them and realized that, no, there is not a single one I would feel good about owning in the current market. Most of them would have to be 50% off current asking to be attractive, and that's not the game we're playing here.

But here's one that I would buy tomorrow if it was priced at $560,000, which is $12,000 over tax assessed value. I don't think it is worth that price, but I don't think I would lose (much) money in a resale if I had to move out of the area. It's in a good location for my family, has a strong, self-managed strata council, and can be rented for $2,500+ per month. It has been on the market for a year now, originally asking $699,000 and reduced last May to $675,000. The owners have done a lovely job of remodelling both the interior and the back garden. There have been questions raised about the slope stability of the land directly above it, but a detailed study concluded that it is safe and will not be buried under a landslide one rainy night.

Homes in this complex generally sell well, with two units in much rougher shape that sold this year for somewhere in the 500 - 550 range. So at the price I mention there would be buyers lining up for this one:

Patrick said...

My choice is 1182 Sunnygrove Terr. Listed at $629,900; assessment at $534,000. Move in condition + nice lot for kids. Will sign the contract at $550,000 if considered not offending the seller, but won't counter either.

DavidL said...

@Patrick wrote: 1337 Tolmie Ave has a huge ugly antenna tower in the middle of view, and a steep slope backyard.

That microwave tower is about 350 metres away ... still it might keep things warm on a cold winters' day.

@Just Jack wrote: I wonder if it's all those floor levels that are limiting the market?

Yup, those kind of floor designs tend to rule out the very young and "getting old". Between my parents and in-laws, at least two of them would have challenges in this kind of home.

Alexandrahere said...

About the house on Tolmie: Yes, I saw that house when it was new by the builder. The one thing I remember about it that I didn't like (but could get used to it), is that the master bedroom is accessed from a door off the kitchen. I've always been drawn to multi-level homes with views but realize they certainly aren't practical for many.

The listing agent really doesn't mind I am sure if people come in with low offers. He will tell the venders that "these people are out of their mind" but "we" should at least never know. So at least then the agent has a fairly clear picture of what the sellers are really ready to let the house go for. So the next time will be much easier on him.

Leo S said...


1072 square ft.

a simple man said...

2536 Thompson Ave.

List $749,000
Assessed $692,000

Need a 20% drop in market for me to plunge into this fixer-upper.

Offer $600,000 and not worry if I am offending anyone. They can say no and call me bad names to blow off steam if they don't like it...or sell for $600K and likely only realize $250,000 tax free profit. Previous rental house until two months ago.

Has a goofy basement stairwell into the garage which you must go through before getting into the suite area and a relatively goofy upstairs floorplan...but I like goofy because it usually means discount. Also the wood panel bedroom/office upstairs is, ummm, rustic at best.

20% off the market? May never happen, but for me to pull the trigger now with confidence I won't be taking a multi-year loss, I need to draw that line in the sand. And that is my line. Mortgage would be tiny (by Victorian standards).

happy renter said...

1422 Camosun St.

List: $550,000
Assessment: $438,700
Sq Ft(finished): 2131

I'd pay $450,000 today. It's got some of the worst wallpaper I've ever seen, but that's an easy fix and it's the perfect area for me. Also, it's on 2 city lots.

patriotz said...

But here's one that I would buy tomorrow if it was priced at $560,000, ...It's in a good location for my family, has a strong, self-managed strata council, and can be rented for $2,500+ per month.

You must be joking. Price/rent of over 200 for a strata townhouse? P/R 125, tops.

I also think your rental estimate is a bit optimistic.

$2400 / 4br - Fully detached home in Grand Boulevard

omc said...

ore bear news I am surprised I don't already see linked here.

a simple man said...

thanks for the link omc...

loving what Benjamin Tal, deputy chief economist at CIBC World Markets, said in that article:

"The next decade will be weak,” Mr. Tal concedes. “In the next year we should see negative growth, with places like Vancouver maybe even seeing a 20 per cent decline."

20% decline? That is my trigger! And for real estate, there is no place more like Vancouver than Victoria...

Dave said...

A good read for this morning


Dave said...

Sorry for duplication..didn't check omc's link


Marko said...

"1422 Camosun St.

I'd pay $450,000 today. It's got some of the worst wallpaper I've ever seen, but that's an easy fix and it's the perfect area for me. Also, it's on 2 city lots."

Easy fix as in 100k or more? - This home has disturbed asbestos, knob and tube wiring throughout, etc.

Two city lots - yea, but each one would be like 2,500 sq/ft. The home has at least 100 tons in it - your dumping fee alone would be $20,000 without trucking, excavating, asbestos clean-up. There IS development potential here, but NO development potential that is economically viable. Unless you want to pay 315k for a 2500 sq/ft lot, which is 65k too much per lot.


happy renter said...

"1422 Camosun..."

Wow, Marko. This is where it would really pay to have a realtor who knows what he's talking about when it comes to construction (or in this case demolition)! I'll admit to being hopelessly naive about most of this stuff.

happy renter said...

Also, I just want to say thanks again to those of you here who offered me advice about negotiating rent. As I mentioned in a previous post, I ended up renting a condo in the same building as the condo that I just sold. I was able to get the landlord to take $100/month off of the advertised $1400/month rent and she's renting me an extra parking space at no extra cost to me. On top of all that, my savings from renting vs. buying this year will be about equal to what I would have built up in equity by paying down my mortgage for another year. I'm really happy to have this blogging community to discuss this stuff with! I'll buy again eventually when it seems affordable and when the time is right, but I'm in no rush. Until then, I'm looking forward to hearing what you all have to say.

omc said...

A very scary bear!

PainInThe said...

RE: multi level houses with views. Let me tell you, the thousandth time you have to haul up a grocery load to the kitchen up stairs is the last time you will ever buy a house with a kitchen NOT on the ground floor. And we have an abundance of houses built that idiotic way to "take advantage of the view" that you ignore two week after being in the house.

Marko said...

"RE: multi level houses with views. Let me tell you, the thousandth time you have to haul up a grocery load to the kitchen up stairs is the last time you will ever buy a house with a kitchen NOT on the ground floor."

Problem is people want suites, especially in new homes. Unfortunately you cannot fit a garage, suite, and main living space on one floor. If you have a two story home with a suite you are essentially forced to put the living space upstairs. There are ways around this, but all of them that I have seen suck - such as putting the suite above the garage - than you have the suite on the same level as your bedrooms.

Solution is to do a three story home with main level entry, bedrooms up, suite in basement. Problem with this is that it is very expensive; foundation is usually huge, not many lots setup for three level main level entry home.

Alexandrahere said...

Dave...thanks for the read

Alexandrahere said...

Marko....couldn't agree with you more.

The house on Tolmie has the kitchen on the main level right off the entry.

Pretty well all of the Gordon Head shoe boxes built in the 70's have the kitchen on upper floor, i.e. up stairs, turn at the landing and then up again.....and thru the dining room in many cases as well.

Then there are the 30's, 40's,50's and 60's bungalows where you either drove into the basement and go up the steep basement steps to the main level .. or you drive into the basement/carport/driveway and go up the stairs in the front or in the back of the house.

Many ranchers of course built mostly between the 50's through the 80's had access from the carport right into the kitchen. But most people don't want a rancher anymore. Even retirees' seem to prefer getting a condo now after selling their home. Mostly, I guess because you can just shut the door and walk away.

HouseHuntVictoria said...

Actually heard this from a REALTOR® at an open house today:

"Prices won't come down, there's not enough inventory."

Keep in mind, as a rule, I generally don't get into "the market" when I look at opens. I'm there to observe traffic for a few short minutes and check out places 'cuz I enjoy that. But wow, I really do have to bite my tongue when I hear stuff like that. One day I'd love to see the expression/response when I say something like: "would you put that in writing for me if I bought this place?"

Just Jack said...

Took a drive around today and saw LOTS of for sale signs and this is October and not the spring. Wow!

omc said...

A Simple Man,

That house on Thompson had some pretty big drawbacks when I looked at it. I would be very careful about relying on a basement suite in oak bay; they aren't allowed. Some people have them out here, but you are betting on tolerance from your neighbors. IN oak bay if you get reported it's a question of if the inspector is coming today, or tomorrow. That guy had installed most of the suite stuff, but never used it. The city knows about it too.

Thompson is a busy road too. Go there in the morning, or after work to find out. Standard stuff about houses from that era apply, such as no insulation in the walls. I only took a quick look, but it looked a bit handy man in the work done all round. Why wouldn't you not pay a few grand extra when you put the suite in to at least have those posts moved into the walls? One of the rooms is actually unusable because it has a post right in the middle.

omc said...

Ha Ha... not enough inventory!

a simple man said...

Hi omc;

thanks for the comments. I agree that there is some do-it-yourself vibe in the house on Thompson and that the traffic is heavier on that street than others in Estevan as it serves as an artery to the streets below Musgrave and to Willows. The suite is not important to me as we would fill the house with our own flesh and blood, so no fear of Chris Causton knocking on our door.

Those posts are pretty brutal in the basement - I'll give you that - their removal would be high on the list of must dos, as would the removal of the wall between the kitchen and the dining room, with a peninsula put in its place....etc

We actually rent a few blocks away - sounds like you and I may be neighbours.

Animal Spirit said...

Realtors ratify deal to give consumers wider choice of services

By being one of the early adopters, Marko is going to get rich. The old school realtors who don't adapt are going to be in trouble.

Mindset said...

I was provided with some tips for getting a good price and the house you want (from a retired real estate agent of mine that has been extremely successful). I thought I would share.... like all free advice, take from this whatever you feel is of benefit based on your own style and beliefs.

1. With most buyers agents not doing any real work anymore (other than filling out the offer papers), there can be significant benefit with dealing directy with the listing agent. It increases the room for comission reductions in your negotiations and makes you a more important buyer (than other clients who have a buyers agent that is getting part of the selling agents pie).

2. Always view the home with the selling agent present. This will give you an opportunity to understand who you are dealing with (is the agent a shark, a genuine nice person, a deal-maker?), and will allow you to get good answers to specific questions about the home, buyers motivation, previous sales, etc.

3. Whether with a buying agent or not, always present your offer in person with both the real estate agent and sellers present. If after you make your in-person offer they say they need time, tell them you can go into the other room while they talk, but that if you physically leave, your offer goes with you. This reduces the the ability of a realtors to generate a bid war by contacting other potential buyers, adds seriousness to your offer, and allows you to see and understand the people that are selling the house and negotiate accordingly.

4. Before making your offer, discuss openly what your thoughts are about the house without offending the seller or the agent (can be tricky if you are not very smooth, this can be a good spot for a skiller buyers agent if you are a bit of a bull in a china shop). Talk about what you would like to do, fix up, how much you are able to spend, etc. This will personalize your offer, and reduce the shock of the seller only seeing a price that seems low.

That's his general advice. I thought that I would pass these thoughts on with everyone talking about which homes they would buy in this thread.

Me, I plan to use this approach but am still sitting on the sidelines until some real price reductions happen, or it is obvious that housing prices have stabalized.

omc said...

I am a bit further away in south Oak Bay Simple Man. If you are not going to rent out the suite in that house, I think it might be prudent to walk away. You are talking about renovating a house that has already been some what renovated. The owner is going to want some sort of profit for what he has done, and then you are going to rip it out and pay for it again.

I looked at that house with the same goal as you; to live in the entire thing ourselves. The max that thing is worth, fixed up, in this market would be low $800k range. If you are lucky, not many people want to live on a busy road with kids. Even if you are lucky at a $700k low ball, it would take about $100k (at least) to do the alterations.

The kitchen, bathrooms, and general finish quality is set for someone to buy it and rent out up and down. You would have to remove the posts, add a decent set of stairs some where in the middle of the house. I noticed a lot of deficiencies in that house, too many to list here.

If the owner had just put the house on the market and you could have gotten it in the low $600k range it might have worked. Right now it is an odd ball; set up as an investment property that can't fly.

If you looked at houses that sold in Oak Bay this summer in the $750- $800k range, this house is not a deal. You could have gotten a much better house, in a better location for the same, or less than what you would have had to spend to get that one into shape.

Things slow down here in the winter, and my observations is that the turkeys sell. They are the only ones on the market. The spring (earliest that you could do the work and move in) will again bring opportunities, and probably lower prices.

a simple man said...

thanks omc - I really appreciate your input. I redact my imaginary offer!