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As EJ has famously stated, real estate is different from stocks in that a house can languish on the market for years, which means there is no relevant information on which to value it. It's impossible to tell what it's actually worth.
Unless there's an absolute auction.
My wife and I attended our first (of hopefully many) absolute auction today, and it was very interesting. You had to sign up 30 minutes before the auction, bring a $25,000 cashier's check, be prepared to make a full 10% deposit by the end of the next business day and close within 45 days. There were 7 registered bidders by the time it started.
The house was a really nice, though slightly dated, 3 bedroom, 2 bath concrete block structure on an acre of oceanfront. Upstairs apartment (a 1/1) was rented. Places like this were regularly going for one to one and a half million a few years back. This one had been on the market for a few months. The listing price was $1.7 million. Zillow's Zestimate call it $1.7 million.
It went at auction for $600k.
Wow. I thought it would be years before these kinds of prices came around again. But there's so much farther to go. The buyer originally paid $410k for it in 2001. He'd be up if he hadn't drained the equity with a second mortgage.
My wife and I sold our place nearby at the peak and are renting for less than what my property taxes were. We're enjoying sitting on cash, and waiting for the mad crazy bargains that will come along. When I am actively scoffed by friends and acquaintences for even looking at real estate, I'll know it's time to buy, paying cash, and extracting rent to cover the opportunity cost of sinking the cash in a house.
This should be fun. Thanks, iTulip.
Unless there's an absolute auction.
My wife and I attended our first (of hopefully many) absolute auction today, and it was very interesting. You had to sign up 30 minutes before the auction, bring a $25,000 cashier's check, be prepared to make a full 10% deposit by the end of the next business day and close within 45 days. There were 7 registered bidders by the time it started.
The house was a really nice, though slightly dated, 3 bedroom, 2 bath concrete block structure on an acre of oceanfront. Upstairs apartment (a 1/1) was rented. Places like this were regularly going for one to one and a half million a few years back. This one had been on the market for a few months. The listing price was $1.7 million. Zillow's Zestimate call it $1.7 million.
It went at auction for $600k.
Wow. I thought it would be years before these kinds of prices came around again. But there's so much farther to go. The buyer originally paid $410k for it in 2001. He'd be up if he hadn't drained the equity with a second mortgage.
My wife and I sold our place nearby at the peak and are renting for less than what my property taxes were. We're enjoying sitting on cash, and waiting for the mad crazy bargains that will come along. When I am actively scoffed by friends and acquaintences for even looking at real estate, I'll know it's time to buy, paying cash, and extracting rent to cover the opportunity cost of sinking the cash in a house.
This should be fun. Thanks, iTulip.
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