Always nice when we have a satisfied customer.
Weeks ago I gave you a couple of strategies on how to ‘short’ the bubblicious housing market now frothing in some of our more vacuous cities. The point was simple: If the people be dweebs, why not have your way with them?
Predictably, I was called callous, heartless, anti-social, borderline illegal and certainly repugnantly capitalistic for even suggesting such things. And what were these heinous, soul-crushing, testosterone-drenched bubble-pricking sales techniques?
Well, you can look up the Bubble Busters yourself, but one suggested selling in a bidding war, and insisting on a l-o-n-g closing in order to accept an offer. The logic’s simple: Sell high (now), and buy low (later). The odds of Canada being in a real estate bubble in, say, April of 2010 are remote, so why not get a fat deposit and a long close, and thereby have it both ways? You sell at an inflated top-of-the-cycle price, live in the house for most of a year, then buy into a declining market with the proceeds.
Additionally, you get a stinking big deposit which is non-refundable (you’ll have to fight your agent a little on that one), so if the buyers walk when the bubble pops, you get to keep their money. Like Divine Retribution without the thunder and bolts.
I noted with interest some real estate blogs run by actual experts (as opposed to me) said this was impossible.
Apparently not.
A few months ago I received this note:
We have a home purchased for $400,000. It was up to about $900,000 but we are guessing it’s down to about $700,000. We have a $300,000 mortgage at 2.6% (open/variable) My husband and I, although we love this home, are not ‘married’ to it. We’d like to sell and either purchase something smaller (this home is 4200 sq ft and we only have 1 child left at home) or rent while we ride out this storm. Preferably we’d like to purchase debt free. (We live in the lower mainland so that may not be possible).
We have been advised to keep the home because it has such a low interest rate. Problem is, it costs a fortune to heat, in a winter like we’re having, and to replace carpets or lino will cost big bucks as well. From where you stand, how would you advise us if we were your children. (We’re way too old for that, <smile> but for the sake of conversation). We promise not to hold you to your ‘advice’. :-)
As you might imagine, my advice was to sell, reap the profits and downsize with less debt and more financial security. And here’s the update:
Well, we finally put our home on the market. (Our interest rate is now down to 1.93%) We had it evaluated 2 months earlier and one realtor said $699,000 was the highest we should ask and another realtor said $729,000. The higher of the two was the realtor we chose to list our home but on the day of listing he said we should got for between $749 -759,000. We chose the higher listing price, and just received an offer of $750,000! After some negotiations we ended up with a big deposit and a completion date that is a full 8 months away.
About an hour after the realtor left I began to giggle. My husband was confused so I explained, “Without realizing what we were doing, we just negotiated Garth Turner’s Bubble Buster #1.”
Well, Garth, I guess we’ll ride this out and see what the market does. We may rent. We may buy. But we’re going to find out how this bubble busts over the next 8 months.
God, I love the smell of napalm in the morning.
