Unclogging the Real Estate Market

June 28, 2009

By Janet Walgren

I’m sorry that I’ve neglected this blog for quite some time now. My daughter and I have been trying to find the perfect house to buy. With all the houses on the market, you’d think that would be a simple task. We are pre-approved for more than an adequate amount of money. We have our down payment. Our credit scores are terrific. We are motivated to buy… so what is the problem? Answer… the listing agent, the seller or the seller’s bank!

It is time for folks to get a reality check.

Imagine you own a 1996 Geo Metro with 250,000 miles on it. You are ready to get a new car. The used car lot says, “We’ll list it for $125,000″ and you say”_______???” If you said, “Great!!!,” you need a reality check. It doesn’t matter what “equity” some fool told you that you had accumulated over time. Truth is, the car is old. It is worn out. It needs rehabbed, renovated, restored and the cost of the rehab is more than the car is worth.

If you start shopping for a $125,000 replacement car, you need a mental evaluation.

If no one buys your car… what do you expect? Even if you were fool enough to pay more, or expect more, than the car was worth, do you expect the world is full of greater fools?

On the flip side:

The world is full of bargain hunters. Listing agents know this. Now, imagine the above Geo Metro was advertised for $50 dollars. You were looking at a similar car. It was clean, had less mileage and was still a bargain for $1000. You are one of two bidders and you are in the top position. You decide to relinquish your position and take the $50 dollar car so you can save for a new car. But, when you go to pay for the car, the dealer says, “I’m sorry, the bank wants $2,500 for the car.”

About that time you want to scream. You decide that the dealer is involved in fraudulent advertising and you call the Better Business Bureau. Apply this scenario to the short sale housing market.

Don’t you think a seller and the seller’s bank should be required to list the actual price they are willing to take for the property. Some potential buyers wait for up to 9 months only to find out that the bank holding the note said no. In the meantime, other honest sellers are waiting to sell their homes and end up in foreclosure because a potential buyer was sidelined.

I think it should be illegal to post a bogus asking price and that anyone doing so should be charged with fraud. I also think banks refusing to sell properties that have legitimate offers should be barred from bidding for the property when it goes to auction and barred from getting deficiency judgments on the foreclosed owner.

House Hunting

April 11, 2009

No, I haven’t disappeared of the face of the earth. I’ve been house hunting and it takes hours every day. We put in an offer $10,000 above list in a bidding war and the listing agent cussed my agent out. Go figure. The house is still on the market and sitting vacant.

Tomorrow we will make an offer on another house that has huge potential, but it has been totally trashed by the last occupant. It needs a total rehab but the price and location are great. Wish me luck!

False Advertising? Fraud? or Bidding UP!

March 17, 2009

Have you ever noticed that the only ones who get away with committing fraud are the banks and real estate agents?

If a house is in foreclosure and is owned by the bank, don’t you think you ought to be able to buy it if you offer $10,000 ABOVE the listing price?

NO! They sit on your offer, let it expire, then wait for the next party to offer more than your offer that they didn’t respond to.

Putting a price on a house that’s on the MLS isn’t like a starting bid on eBay folks.

Home Schooled

March 8, 2009

By Janet Walgren

Yesterday I went home shopping with a real estate agent and real estate investor/trainer. We viewed four homes out of the original list of the ten that we started with.  Three of the four were not functional and looked way too lived in (by pigs). As we were driving back to my car, the agent said, “Janet, you know what’s wrong?”

I asked, “What?”

He said, “You’re looking for a home instead of making offers on houses.”

I think he’s on to something. Architects design houses, contractors build houses, banks fund houses, investors rent or flip houses and real estate agents sell houses.

I wonder if the market might look a whole lot more appealing if someone was actually designing, building, funding, renting, flipping and selling (or living in) HOMES? I ask you:

  • Does anyone ever think about the people who are going to live in the space they’re creating?
  • Does anyone think about what a person, or family, does in a room when they design it?

The kitchens had room for a coffee pot on the counter and enough cupboard space for coffee and mugs. What more can I say when there isn’t anything more to talk about? “I don’t even drink coffee!”

Doesn’t anyone cook anymore? If they do cook, where do they cook – the outdoor barbecue? Wait, there wasn’t one! I guess that ‘s OK because there wasn’t really room for one. Where are people supposed to put their dishes, pots and pans and food? Where do they eat?

The bedrooms, what can I say? Crib space… that would have been a real “WOW!” for me forty years ago, but wait!!! I had six babies and they got BIG!

Two of the houses smelled like barns. Perhaps houses ought to come with enough “room for a pony” and out buildings with pet bathrooms.

One house was an art gallery of sorts. It had graffiti on the walls (0r what was left of them). The water pipes burst when they had frozen and then flooded when they thawed. The tile, walls and ceilings all over the house had been smashed to get to the offending copper pipes.  This was a bank owned property that needed gutted back to the frame. Do you think the bank would loan money to a buyer or pay someone – anyone to fix it?

I asked my agent about it and he said someone would need hard money (cash loaned by a private investor at about 10-12% interest) for the purchase. The bank won’t even loan money to sell their own house. No wonder the market is slow.

It kind of makes me want to drive a stake in some raw land and start from scratch.

House Hunting – The tale of Peter, Sam and Paul

February 15, 2009

By Janet Walgren

Heather and I went house hunting yesterday. Jeesh! What a joke. We found a house of interest but, when we toured it, we found an incredible mess. The house was a bank owned foreclosure, better known as an REO. The furnace, the entire kitchen, and parts of the bathroom were missing as well as some floor covering and most light fixtures. The walls were a mess and the water had been shut off. TOXIC antifreeze had been poured in the pipes and toilet to keep the water in them from freezing. Animals had pooped in the basement – yucky! The bank was asking $150,000. That’s $20,000 below market for a rehab that would cost a minimum of $40,000 in repairs to bring it up to market value. Like I said, jeesh, what a joke!

Perhaps this was an isolated incident. We can only hope… or can we?

We had asked our realtor to show us another REO house but he had already checked it out and said it was as bad as the first one we toured.

A contractor friend of ours just finished building a home located across the street from another REO (the original contractor who was building the sub-division went bankrupt). Anyway, our friend noticed wet bricks on the front of the REO across the street and went over to investigate. The power had been shut off, but not the water. The frozen pipes had burst then thawed flooding the entire house (second floor included). The sheet-rock on the ceilings and some of the walls had collapsed, the walls were full of water and the basement had several inches of water flooding it. In other words, this brand new $200,000 house was a total loss because the bank was too cheap to pay the electric bill.

It is obvious that, in these three cases, the banks manage REO property about as well as they manage money. It probably doesn’t matter to them because they have insurance. And, if the insurance doesn’t pony up the dough… there’s always dear ole Uncle Sam who seems more than willing to rob Peter (another name for taxpayers) to pay Paul (the banker).