Real Estate Question

**disneysteve** · 07-29-2009, 07:06 AM

No numbers exist to "prove" that prices will go back up in 3-4 years. If they did, we'd all be buying up depressed real estate right now. Certainly, I think they will be up in 4 years, but who knows by how much. If the price rises 5%/year, big deal if you are paying the carrying costs along the way. You'd be better off in a CD.

Good luck convincing them. Maybe what you should illustrate is how that money would perform in a diversified portfolio vs. what carrying another home would cost them.

**Joan.of.the.Arch** · 07-29-2009, 07:22 AM

The way you are describing this makes it sound as if she might be obsessive about it. She's taking a huge hit on that house your grandmother moved from. She thinks some other relative should have moved in with grandma in order to smooth the financial way for herself. She doesn't have a lot of savings yet she's looking to get in deeper into what is currently not working out for her. This is probably way, way off base, but any chance --gosh I hate to even ask-- any chance she is showing any possible signs of dementia? I have seen some people become sort of obsessed with whatever task they thought "must be done!" in early dementia....What is your dad thinking about this?

(oops, sorry, I see the house is paid for, so money losses are just in taxes and maintenance)

**LivingAlmostLarge** · 07-29-2009, 07:47 AM

Nope they have a mortgage on the condo. I don't think it's dementia. She's fully functional. She's been poor with money management her whole life.

To her a paid for home is key. It doesn't matter what it costs in repairs/taxes, it's paid for so it's like a piggy bank.

Problem? My parents don't like to fix homes either. Our major home is in such poor shape it would cost $100k+ to fix it to sell. It will sell at a major discount because anyone buying it will NOT pay close to market value if it had been maintained.

Sadly my mom has not had much experience in dealing with RE. She's lived in 2 homes. Both of which she never took care of and has no idea what it's like to maintain a home.

20 years in 1 home and never replaced the roof, never mind it leaks. Tiles falling out of the shower. Probably needs a couple of new water heaters. Definitely needs the kitchen redone because the plumbing is leaking. Two of the bathrooms need to be replumbed as well because of leaks.

Yet they have spent $10k on a weekend getaway about 5-6x/year while I was in college. Sigh. So they had the money to pay for repair and keep up a home, but they never wanted to take the time.

It is what it is.

My mom is just hooked into RE as the end all be all. Since she's NEVER done a home repair, she thinks you pay off the house, then you get all this money back. She's NEVER sold a home in her life.

She wonders why I spend every summer doing home repairs? Why I complain about the cost of repairing/maintaining a home?

Well if you've never serviced your A/C, never had plumbing done, never spent a penny on any home repairs then how will you ever know?

**Joan.of.the.Arch** · 07-29-2009, 08:19 AM

I don't know why your mom would be in such denial. It sounds very bad. You must want to shake her! Has she gotten appraisals on her properties after she has let her place go? Would a dose of reality like that help? And what about your dad in this?

**LivingAlmostLarge** · 07-29-2009, 11:18 AM

Nope, no appraisals.

My dad said sell the homes as-is. Tough. It's in bad condition, it's their fault, why bother trying to fix stuff when obviously the people who buy it will basically redo everything and have to anyway?

He realizes they can't get close to top dollar.

**zetta** · 07-29-2009, 11:46 AM

Would selling the two paid-for homes be enough to pay off the mortgage on the condo (assuming that is where they live now)? That might appeal to her...also emphasize the value of not having the "hassle" of paying property taxes on the empty place...

**LivingAlmostLarge** · 07-29-2009, 12:34 PM

Yes, but they don't live in the condo. Complicated, but my mom lives in one house, my dad in the condo, then he weekends with my mom in the house. She prefers the house to the tiny 1 bd condo, the mortgage isn't huge, but they did have to cashout a lot of stocks to buy it.

So my mom's justification is they would have lost money in the stock market. My response, what are you doing in stocks (so much that is at 57 and 78? Her answer, I don't know, our merrill lynch advisor told us so.

Yeah she's in C shares of loaded mutual funds, mostly stocks, never mind at her age and position in life they shouldn't be more than 50% in stocks instead of nearly 100%. But they don't bother listening to their kids advice, they listen to a saleswoman.

**wincrasher** · 07-29-2009, 06:03 PM

Sounds like 2 things going on.

First - parent/child relationship - its not unusual that your mom won't listen to your advice. She's not going to relinquish her status as parent. The best you can probably do is steer her towards a better adviser. You may have to play a trick like saying you overheard people talking about how smart this person was, or successful or whatever.

Second - my folks are pretty elderly - they don't understand stocks or the markets at all. They watch the TV news and believe every talking head. They've often called me in a panic that I must have lost it all. They do understand buying an selling real estate and goods like cars and equipment. It's a simple transaction really. And real estate has gone up their entire lives - why would they think that it won't again. The key is buying right, and like you elluded to above, maintaining the value.

**ActYourWage** · 07-30-2009, 08:48 AM

It sounds like the 'powered butt syndrome', where the parent is not going to listen to someone they used to change diapers for.

**Joan.of.the.Arch** · 07-30-2009, 09:11 AM

I think we can agree there is a problem when parents cannot recognize that their grown offspring are no longer children, but adults who may surpass the parents in both smarts and wisdom.

**happygirl** · 07-30-2009, 01:25 PM

You said your parents do not have dementia and are able to make their own decisions, so my suggestion is that you respect their right to do so. It sounds like you are putting too much energy into trying to convince them to do what you think (know) is best, but they have the right to make decisions for themselves, even bad ones.

You've given them your opinion. Let them know if they want to hear more about what you've learned you would be happy to share, then just be glad that you are an independent adult with your own home, your own income and your own life and that you aren't responsible for them and they aren't responsible for you.

Sometimes the best thing you can do is maintain and respect boundaries.

**Seeker** · 08-02-2009, 12:52 PM

LAL, there's no guarantees anywhere....

But, people whom do real-estate research (people who do historical trending and make assumptions about the future based on those trends), do indeed feel that in most areas (locations), the economy is still of sufficient concern and that real estate has not yet reached bottom.

There are some published reports (that are not "free") available here:

The resource cannot be found.

https://www.rerc.com/store/shopdisplayproducts.asp?id=1&cat=Real+Estate+Reports

Will real estate ever recover? Again, it depends on location entirely. The economy of each location is extremely important to real estate... unless of course, the people in question have absolutely no affordability issues and could live anywhere they wanted.

**LivingAlmostLarge** · 08-02-2009, 03:03 PM

Col, excellent tool. thanks.

**snafu** · 08-02-2009, 04:28 PM

As I read OP I thought you must know our family lol. They are big time Blame Gamers. The blame lies with the poor advice from the financial advisor, the @#!% banker who wouldn't give them the sums they desired with the terms and conditions they deserved, the relative who didn't move-in with grandma, the RE Agent makes millions with statements that earn commissions, the car salesman who sold them a mechanical dud, and they even believe the screaming announcer on late night TV who inists they can't live another day without special face cream.

Doing some research, learning about investments, taking a class on money management, reading Consumers about autos, reading newspaper articles about the economy...that's for other people...

The fact that there is a 10 month inventory of unsold housing, real estate sales volume has dropped 19% and is still falling are facts that would interfere with their established decision making pattern. The qualified buyers are sitting on the sidelines because they are convinced the market has not yet reached bottom.

The housing market will certainly improve when unemployment is not @ 9% and the number of people on unemployment benefits decreases substantively because they found employment...not run out of benefits. If you follow the Baltic Freight Index, you might be a tiny bit ahead of the curve. I too would like to know what to say to loved brothers and SILs who have l-o-n-g sad stories other than endless um huh, so sorry, oh dear etc. I just don't want to be manipulated into their Blame Game.

You can take a horse to water but you can't make it drink! How do you get the people you love to make reasonable financial decisions?

Real Estate Question