Montana Jones

It's the economy...

He:

you know the big media outlets. ABC, NBC, FOX, CBS, and so on. You know those guys.

Me:

Yeah.

He:

Well, they have successfully predicted 40 of the last two recessions.

He:

The mortgage crisis is not dying off, it is only going to get worse. You know all those international investors that bought the subprime mortgages, well, they are going to start suing. They were sold unsecured loans as though they were secure loans. They are going to sue the middle men banks to get their money back. These banks are going to get screwed from defaulted home loans on one side and get screwed by lawsuits from international investors on the other. There are some banks that will not exist anymore in a year.

He:

Keep an eye on the real estate markets this year. Around June things will start shaking out and it might be a good time to buy that house you want.

Me:

I have been watching. I was doing a search last night in fact. I am starting to see the cracks in the ice. Six months ago I was seeing the $600,000 houses drop price to $500,000.

He:

Big woopty.

Me:

Yeah, not very useful. But just now in the past couple weeks I have started seeing the $250,000 house drop to $200,000. There are even a handful for less than $200,000 come onto the market. We might just see the starter houses become affordable again this year.

He:

That is what we need. Get those $250,000 houses back down to $175,000 and people might be able to afford to live here again.

He:

I can't believe how short peoples memories are. I still remember what happened right after Vietnam. The economy was in the shitter. LBJ spent all our money in Vietnam and there was nothing left for ourselves. The same thing is happening in Iraq.

Me:

Only more so.

He:

Yeah, more so. George is throwing money away in spades. Do you remember what happened back in the 70s? Back in 1978 and 1979?

Me:

Not much economically. The word stagflation comes to mind.

He:

In 1979 the interest rate was 16%. No one could borrow any money without these incredible fees on it. The government had to do it, they had to charge these huge interest rates to try to make back some of the money that was thrown away in Vietnam.

He:

I'm starting to change my mind about switching banks?

Me:

Oh?

He:

The big question right now is which banks are going to still be here in a year. Ever wonder how Glacier Bank got so big so fast? I bet they were dealing in those shady loans. If so, they are going to take it hard too. So I want to wait and figure out who is going to buy out whom and which banks will be left standing in a year.

Labels: affordable, bank, conversation, economy, mortgage, real estate, recession

Posted by: Montana Jones / 9:07 AM 0 comments

Butte America

He:

I think I will be asking about 155 for it.

Me:

No way. This is a three hundred thousand dollar house.

He:

Not in Butte.

Me:

Four bedrooms, finished basement, patio, and four car garage all close to downtown for 155? Either I'm living in the wrong city or there is no reason to live in Butte.

Labels: Butte, conversation, real estate, sell, value

Posted by: Montana Jones / 9:20 AM 0 comments

From my outbox

Interestingly enough, the mortgage guy I used to double check the bank called me back after hearing my news. He started singing the praises of interest only loans and other novel ways to make the rates affordable for me. Made me clutch my wallet in fear. I might 'accidentally' loose his business card.

Yes, this has been a learning experience. One of the things learned is how professionals (bankers, brokers, et al.) that you hire to watch your interests really just watch their own.

MJ

Labels: bank, email, interest, learning, loan, money, mortgage, outbox, real estate

Posted by: Montana Jones / 8:40 AM 0 comments

Decision

Me:

Hey dad, I've made my decision.

Dad:

Good. What did you decide?

Me:

I'm not going to do it, I am backing out of the deal. I haven't found financing I am comfortable with.

Dad:

Well, good. I'm sure you will feel better now that you have a decision.

Me:

Yeah, I think so too.

Dad:

No matter which decision you made you would have felt better for it.

Me:

Yeah, probably true. I pushed some numbers around for a while and really didn't like what I saw. Then I flipped a coin. I had to flip it six times.

Labels: coin toss, conversation, dad, decision, financing, real estate

Posted by: Montana Jones / 7:18 AM 0 comments

Contingencies

Me:

Part of me thinks that it is just the realtors blowing smoke to keep pressure on me, but it is enough of a sellers market that I can't take the chance. Perhaps I did get lucky being first in line with a bid for this place.

Dad:

And if it is the renters with the other offer, well, that's their problem.

Me:

Yeah, I don't feel sorry for them. They took the chance on renting a place that is up for sale and they had the opportunity to make an offer long before I did.

Dad:

Just make sure they don't leave it in a crappy condition.

Me:

Oh yeah, that's in the contingencies.

Labels: contingencies, conversation, dad, offer, real estate, renters

Posted by: Montana Jones / 7:38 AM 0 comments

Buying and selling

Me:

Well, the radon test results are now a moot point. My financing has been shot down.

Dad:

Uh-oh.

Me:

Yeah, I'm pretty bitter about that. I have some options, but I am angry right now so I'm not gonna make any decisions until I've cooled off.

Dad:

So what did R have to say about it?

Me:

Not much. She did give me the name for a different mortgage guy but she was thought the problems I have with the bank I will have everywhere.

Dad:

What about a down payment? You can probably change the numbers in your favor with a larger down payment.

Me:

The few thousand dollars I have to throw at it won't make enough of a difference. To get the bankers to pay attention I will need about 10 to 20 percent of the asking price.

Dad:

You should try to find out what the minimum down payment you need is. The bank of mom might be able to help.

Me:

Hmmm Okay, I will look into that.

Dad:

Does the bank have any other options?

Me:

Yeah, but not good ones. They have a higher interest rate that I can't afford. Funny how my income is too high for the affordable housing people, to low for the board of housing people, and the first thing the bank can suggest is a bigger cut for themselves and a higher payment I can't afford.

Dad:

Welcome to being in the middle.

Me:

I would never have gotten into this process if it wasn't for the bank giving me a good faith estimate that I could afford this thing. Two of them even. Now it feels like a bait and switch. The banks good faith estimates are loosing credibility with me. Did I mention I am pretty angry about this?

Labels: angry, bait and switch, bank, buy, conversation, dad, financing, money, real estate

Posted by: Montana Jones / 8:12 AM 1 comments

An Offer

R:

So here are all the sell prices for the neighboring units, we can use these to help figure out an offer.

Me:

Hmmm, yeah. This helps.

R:

It looks like most of the sales were at or close to the asking price. I'm not sure how low you can really go.

Me:

Well here, this is the low price. It looks like about half of them have sold for this.

R:

Yes, but keep in mind that was a year ago. If you offer too little the seller may not even bother to counter offer. Or worse, he could decide you are not worth dealing with and wont budge from his asking price.

Me:

Interesting game, this. All the more interesting because it's my money. I knew there was a reason I didn't like gambling.

R:

You can ask whatever you want really. The worst he can say is no.

Me:

Well let me do some math here, gimmie a minute. Lets see, that sold for… and that was… so you subtract that from… and so the difference is three percent. Hmmm. The calculator is not helping with my mind reading.

R:

Mind reading is never easy.

Me:

Well in my business I can usually mind read pretty well with a calculator. But I don't know anything about real estate. I don't know if these are the numbers he wants to hear.

R:

So what do you think?

Me:

Well, I have a couple numbers here that appeal to me. Matching this low price sounds good but you think that may be too low.

R:

Right, I don't think you will get very far with that.

Me:

This neighboring unit sold for three percent less than it's asking price, three percent off this price is X. I like that number, lets offer that.

R:

Sounds good. I'm curious if your mind reading will work.

Labels: buy, conversation, mind reading, money, offer, price, real estate, sell

Posted by: Montana Jones / 10:13 AM 1 comments