Signed contracts for US property without legal advice or mort approval: Advice?

[Harvest]

When did you sign the contracts for this property? May I be so bold as to ask where the property is? If I said Florida, would I be far wrong? Have you tried looking at zillow.com to see similarly priced properties in the area?

The only reason I ask, is that there are areas in the U.S.A that have seen savage price drops thanks to the sub-prime fall out. It may be worth considering walking away from this property, if property values have fallen by more than E30,000.

Ha ha I dont mind, you cant argue with free advice. Its in Chicago City. Prices have remained the same really in the location that I am in. Its a very trendy area of Chicago. My ex collegue works there and says Chicago is a great place to live.

I dont think I'm going to walk away from it to be honest. I'm very happy with it and its exciting for someone my age with their first property. Anyone I've met has said best of luck and that Ireland really is too uncertain at the moment.

She did say they were getting cocky though. They see Obama getting elected, getting the olympics for his home town and bringing the states back to its former glory. She also says the Europeans will feel the pressure after the 3rd quarter of 2008 when their exports start to drop. They will have no choice but to devalue the Euro in order to avoid further unemployment.

 

[z106]

Ha ha I dont mind, you cant argue with free advice. Its in Chicago City. Prices have remained the same really in the location that I am in. Its a very trendy area of Chicago. My ex collegue works there and says Chicago is a great place to live.

I dont think I'm going to walk away from it to be honest. I'm very happy with it and its exciting for someone my age with their first property. Anyone I've met has said best of luck and that Ireland really is too uncertain at the moment.

She did say they were getting cocky though. They see Obama getting elected, getting the olympics for his home town and bringing the states back to its former glory. She also says the Europeans will feel the pressure after the 3rd quarter of 2008 when their exports start to drop. They will have no choice but to devalue the Euro in order to avoid further unemployment.

I'd be very surprised if prices have really stayed the same in the area you are looking.
Without being an expert on US property prices, to my knowledge prices have dropped all over the US (obviously more so in some places than others).

How do you know that prices are the same?

Are you basing that on asking prices?
There is a big difference between asking prices and selling prices.

 

[GDE]

I dont know your friend, but I would be very careful going by the advice of someone whos not a real estate investment expert. And when the main financial analysts in the world are disagreeing with eachother, I wouldnt be so confident on the outcome of anything at the moment. There are also a multitude of reasons why the euro may devalue with what you mention is only one strand of it certainly not the single reason.

Chicago is bidding for 2016 is it? After the disaster that was Atlanta they will be very lucky to get it unless pepsi fund the bid!

I would also think your property in chicago has definately gone down in value, the housing market hit its worst recession in almost 80 years. Banks are selling off houses for $1 in places of the US. First came the bank crisis, then real estate, and next the consumer borrowing and credit card bubble will burst causing further recession in the states (i believe). Most people in the US you hear talking about it coming out of this recession have a hidden agenda.
Perhaps you should read up on the crisis that hit Japans real estate 20 years ago and see what happended there and the parallells with the US and the kind of values real estate had.
When people can no longer get credit and cant afford to buyer houses anymore, demand goes down and supply goes up and it becomes a buyers market.

With the US people leveraged up more then any country in the world, they are not suddenly going to be able to afford to buy lots of houses again,because the money isnt coming from anywhere. From what I hear even the trump project in chicago cant sell and is struggling.

The states is certainly not the place for investment at the moment unless you are an experienced buyer that can spot a good deal from a distressed seller or something like that. otherwise its simply a lifestyle move

 

[The Viking]

Harvest

You should think again.

What you DONT know:
* the $1600 rent you've been guaranteed is likely to be 20% more than the market rate. The actual typical rent is more like $1,250.
* the monthly apartment fees are likely to be 20% more than you think.
* the local property taxes in Chicago will be 20% more than you bargained for.

The end result is that at the end of your 2 year guaranteed period, after you have to pay the letting fee, local property taxes, the monthly apartment fees, the cost of preparing an annual tax return etc etc, your net take home rent, to pay your irish mortgage, will be less than $700 per month.

Then, this won't even pay the 5.5% variable €200K mortgage you've taken out in Ireland - you won' be able to fund it from your income as you're in your 20s - and your parents will have to subsidise that every month. And your relationship with your parents starts souring etc etc.

And then you find that you don't qualify for a first time buyer's grant in ireland becuase you bought overseas, just to add to your misery.

So then, after 2 years, you think about selling it - and you'll find that the $300k property you bought in Chicago was actually only worth $240K at the time - and sure its gone up 5% per annum, so it is now worth $265K. At the end of your 5 year horizon, it won't actually be worth the $300k you bought i for. And during those 5 years, your / your parents will have been making a substantial income loss on the property every year.

You should think again, cos this is reality, not make believe. I know its hard to take the fact that you have wasted €30k; but its cheaper than you what you are about to do and a valuable lesson in life. 10 years on, you'll look bakc and be glad that you did not compund the mistake you have made.

Some practical stuff:
- have you paid €250 on your credit card to get a valuer (independent appraiser in the Chicago market) to do a valuation for you, which would include an assessment of current market rent for your property, the local taxes to be paid and estimates of service charges in comparable buildings in the city?

 

[james7]

I am American and have invested in property here for almost 30 years. The property market here is not as bad as the media makes it out to be. There are areas that have fallen little in value and are now slowly but surely going up in value, but no one talks about them because they do not make good news. A big problem with many of the areas that have high foreclosure rates is that they are located in crime-ridden parts of cities which makes being a landlord a tough go, and few home buyers want to live in such neighborhoods, so there are very few if any takers for the foreclosed properties.

As for this particular deal, it would be very hard to judge from a distance whether this is a good price and what other like properties are selling for because most big cities in the US go block by block, meaning that property values and the character of the neighborhood differ widely from one block to another. As an example, it would not be unusual for one block of 100 year old 3 story townhouses in a big city to be populated by upper middle class professional people, while a block of the same type of houses a block or two down the street would be populated by welfare recipients and drug addicts.

There should be a clause in the contract that allows you to get your deposit back and get out of the contract if you have made a valid attempt, but are not able to get a mortgage within a certain period of time. Almost all contracts here in the US have this clause. You should have had an attorney well-versed in US real estate law, practicing in Ireland or the US, look over the papers before you signed them. If you still want to get out of the contract, it may be well worth it to have an attorney look them over.

An excellent suggestion from a poster on this thread was to hire an independent appraiser to find out what the property should sell for. You should be able to do that from your home in Ireland. It would have been wise for you to visit the property and area before making the decision, but may not have been necessary if you have a good estate agent, that is one who looks out for you, not for their commission. If you have a good estate agent, they should try to get you a mortgage, or try to find a solution to your problem.

I have no faith in www.zillow.com because their comps are all over the place. The website [broken link removed] may be of help.

Honest agents that have your interests first are few and far between in the US. Of all the countries in the world to buy a place without seeing it first, the US would be last on my list.

Good luck.

 

[johnspica]

If you really want to be sure that you're not jumping from the frying pan to the fire, you need to book a flight to the good old USA and spend a week in the location of your intended purchase.

You need to call to every realtor in the area and ask him about property values, rental values and resale demand.

It's possible that you are buying a property that is worth a lot less than you're paying for it. On the day you close the sale with your lovely new mortgage you may be the proud owner of a property that is worth €50k or €60k less than you bought it for.

Letting the deposit go if you can may not be the worst thing that could happen.

 

[Harvest]

Hi there

just an update-
developer went bust a few months ago and the appartment is not yet finished but due to close by january.
I have been waiting to here from the developer but he didnt return my calls..
The bank is now the new owner and i am scared. Will they sell off the remaining units at a reduced price?
can i bargain with the bank?
have i a right to demand my deposit back?
is now a good time with interest rates so low and dollar weak to go ahead?


many thanks!

 

[askalot]

Hi there
The bank is now the new owner and i am scared. Will they sell off the remaining units at a reduced price?

Almost certainly. Property is the US has been falling for even longer than here.

.
can i bargain with the bank?
have i a right to demand my deposit back?
is now a good time with interest rates so low and dollar weak to go ahead?
many thanks!

You really need to engage a US lawyer but IMHO you should think long and hard before getting your parents to join you in this 'investment'. Depending on how long ago you signed contracts and where the property is, you could be looking at 10+ years for prices to return to where they were when you bought.

 

[Harvest]

Thanks-
Property is downtown chicago. excellent location. Prices have fallen about 10% since i signed a year ago.

Is there anyway I can talk with the bank and negotiate?
Btw the dollar is good value at the moment!

Almost certainly. Property is the US has been falling for even longer than here.



You really need to engage a US lawyer but IMHO you should think long and hard before getting your parents to join you in this 'investment'. Depending on how long ago you signed contracts and where the property is, you could be looking at 10+ years for prices to return to where they were when you bought.

 

[wexford dude]

Harvest,

I think you are looking at this thru rose tinted glasses.There is massive over supply in property the world over and prices are likely to continue falling.The various fees have been outlined for you.I think your main priority now should be to get out and if possible get your money back or as much of it as possible.
This will serve as a lesson well learnt.