Certainly upside down is not the end of the world. I’ve been in that position several times. Once I had to bring cash to closing as a seller, but I didn’t own the house very long either. The other times I had that happen, I was able to stay in the home long enough to come out ahead.

I had a couple of things going for me though when I was underwater. One was that a had an affordable house payment, so moving didn’t seem worth the bother. The other thing I had going was the conviction that if I just waited a couple of years, the house would increase in value.

Unlike my situation, a lot of borrowers currently can get a much better monthly housing payment by moving. It remains to be seen how long they will be confident about home prices rising eventually and hanging on.

As much as I make fun of Yun for his bullish predictions, I’ll admit I’m pretty chicken about coming up with my own. There are way too many variables in the equation and not enough constants, and market psychology remains a huge question.

So, first has anyone else had a similar experience? This is my take, since the mortgage brokers are starving, because underwriters are pissing and moaning about “ANYTHING and EVERYTHING” on borrowers and disqualifying them in herds, they are trying to ticky tack any expense they can so as to stay afloat and stay off the Ramen.

This behavior only makes their industry look that much worse. I mean greed was the cause of this pain, and now we are seeing bottom feeding behaviors so as to survive. Here’s a clue, go out and get a real friggin’ career, Engineer, tradesman, anything that benefits society instead of trying to feed and damage it.

Sorry about the rant, but UUUUUggghh!

I also think that if prices fall too fast it hurts the banks more. More houses become worth less than thrleir debt– although that problem is diminishing since the inventory is getting so big that houses are virtually unsellable at any price. “Catching a falling knife.” Once one house is on the market at a low price, that becomes the new market value. Now everything else has to drop to meet it.

Dan

The housing bubble has barely started to burst. Housing prices have a LONG way to fall. Inventories of homes are still near all-time highs (and will break records this summer). Banks have written off at best 33% of their total losses, and likely much less. We’ve barely started into the recession; by all indicators it will be the worst one in a while, and likely fairly long lasting.

This is the beginning, not the end. Wait it out. As longwaver said, the day will come when banks welcome pennies on the dollar for these things. They think they’re overwhelmed right now, but I want to see what happens when things really get going. Didn’t they say that 10% of people are underwater now, and CNN said that 35% will be by the end of the year?

Want to understand what’s going on? Get in the drive thru at your local Wendy’s and when the guy comes on the speaker, ask him for 3 gallons of white Dutch Boy paint.

So the only way the banks can handle this is to turn it into a “money moving” problem.

I expect that “Joe Wall Street guy” (you know the ONE guy that actually knew what was coming and stashed some cash.. Well that guy will meet with the CEO of MegaGlobalMonsterBank. Mr CEO will transfer 50,000 homes to Joe Wall Street for 30 cents on the dollar so that Mr. CEO doesn’t have to admit that his bank is insolvent.

Then the auctions start at 35 cents on the dollar and bid up from there.

And I forgot to mention the home I made the offer on has been on the market 910 days, 2yrs and 6 months to the day! Maybe Deutsche Bank needs to hatch it before they sell it, so they can sit on it another two years.

Thank you housing doomers for all your input! Y’all are great! And thank you Mrs. Twist!

(b) Don’t forget that your “agent” has a HUGE conflict of interest here – s/he WANTS YOU TO OVERPAY. If you pay more, s/he gets more money – that’s why agents are always trying to get you into a bigger, more expensive place, always telling you to bid more, etc. – for every dime you pay extra, s/he gets a penny of that money. (Well, closer to half a penny, but you get the point.) All of the agent’s decisions will be directed to (i) making a deal happen, whether it’s a good deal for you or not – s/he doesn’t care, because s/he only gets paid when you close a deal, and (ii) making that deal be for as big a price as s/he can get out of you. Don’t forget it, or you’ll pay the price.

Dude! Take your money and go elsewhere! What are they gonna do?

I am a big fan of the lowball offer. We got into this mess because everyone was paying way too much.

They don’t like your offer? Say thanks and WALK

Sellers need to look at their odds. In a market where you have a dozen sellers for every buyer, you had better have the best price of the 12— having a price in the middle of the pack isn’t going to be useful.

My favorite sellers theory is the one for “days on market”. That’s where they figure that if the DOM is at 120 days, you list at whatever and 120 days later, your home sells.

That would be the average of WHAT ACTUALLY SELLS. The delusional who sit there forever aren’t averaged in.

I think the buyers are trying to be back, pendings in Phoenix have risen sharply in the last few weeks. Of course, listings are up too– and it remains to be seen how many of those pendings turn into closings.

The second one. Apparently the Free Market wants to hand those banker’s heads to them.

I hear this all the time, too. The really stupid thing is…. some people are actually still buying under these conditions.

Not privy to any info other than what is in the post, shouldn’t that read:

“My FORMER agent had the gall…..”

I have another friend who’s been trying to sell her house since last year. She and her husband have already bought another house in another state. Last spring she had it listed for $580,000, which was in line, she said, for the neighborhood. But those other houses weren’t selling either. I told her to drop the price to $500,00, but she wouldn’t until October.

Now she’s listing it for $480,000 and it’s not selling. I told her to drop it to $400,000 but she won’t. The price is in line with other houses in the neighborhood and she’s waiting for the magical springtime of buyer season.

As I recall, we figured that in pristine condition, it should appraise for about $650K. However, the foundation was cracked, the roof needed to be replaced, as did the air handlers, the sprinkler system, and all floor coverings. It also needed paint, the pool replastered and the pump replaced, and the fact that it had no garage at all also hurt the value.

The agent for the bank said that they wouldn’t consider taking anything less than $630K- and that they had two offers at that number.

The guy that lost the house had owed $850K on it, so $630K was a big haircut, but that didn’t mean it was a good deal.

Apparently those “two offers” came to the same conclusion we did, or they didn’t qualify, or something. The place remained on the market for months. [It may still be, I haven't checked on it lately.]

All the agents I’ve talked to that have dealt with the lenders have had, shall we say, less than positive experiences.

I do know someone who was happy with their short sale purchase, but so far he’s the only one who’s told me he was happy with the outcome.

Needless to say we are still waiting… apparently they are receiving 200-300 new short sale offers a day and are not staffed to deal with it. We’ve dug up all the numbers (mortgage & 2nd etc) and Countrywide, in this case, stands to nearly break even on the property, yet it still takes them 12+ weeks to just sign the thing? No wonder they are hemorrhaging cash.

Sorry for the novel.