Re Market: The Sky Is Falling?

[Julio E. Sune Jr. (FL)]

http://realtytimes.com/rtcpages/20040914_skyfalling.htm

 

[Pamela Crowley (Florida)]

That's nice.

What I'm most interested in is the effect of when investor/speculator purchasing with no real people ready or willing to live there at the prices they have inflated them to have taken over a particular market.

Properties flipping between investors with the only reason being to inflate the market - sometimes these sales are 'paper' only in order to 'create' 'comps' for the ignorants.

Many are sitting vacant, for rent or for sale again.

At what percentage of the overall market in a given area does this have a profound effect?
What results can be expected as the current investor/owners with negative cash flow and few/no renters or buyers to be found anymore walk away to cut their losses?

Have we ever had a real estate market so inundated with investor/speculator buyers and sellers instead of the actual people/families that really do live in the house they purchase??? If so, what eventually happened to that market???

I truly don't know how to handle this phenomenon.

I disclose all this in my reports and do everything I can NOT to use the investor flips as comps, but it's getting harder and harder to find sales where the buyers actually do move in and live there.

**************************

The apartment converted to condo project started closing on the first sales of them the last couple days of August. Over 20 are now listed for sale in MLS for $20-50K more than what they just paid for them 2 weeks ago with NO justification for the asking prices at all. All of these listings are investor sellers, many are Realtors.

If the prospective out of state purchasers looking for a place to actually live were told the real story of this project, would they be so willing to buy there?

If the lenders were told the real story of how many of these units (75%+) were just purchased by investors and at what prices, would they be as willing to do the mortgages of an 80% (the price it just sold for a couple weeks ago) plus a 15%+/- second mortgage (seeing A LOT of these!)?????

 

[John Sales]

I'm seing the same on the residential side and ya know just by the names of sellers you know these are none comps. I use em when I can't avoide it and then use older verifiable sales and adjust the least likely comps down to the real market values based on the historical data. I know this is not the best method but in some neigborhoods it the only thing you can do. I'm affraid its guna happen more and more till the market finally corrects itself. Just my cent and a half :blink:


I try to explain what the current deal is that investors have a strong influence on the market and most are not owner occupied this typically make the investor on the loan say uhhhh no way. :yellowblack: I tell it like it is maybe thats why I have to call myself to make sure my phone still works. :asleep:

 

[Pamela Crowley (Florida)]

I tell it like it is maybe thats why I have to call myself to make sure my phone still works.

That sounds familiar.

 

[John Sales]

Ya I know Pam it's not right but it's how it is.

 

[Bill Rose]

Quiet phones and thriving mortgage brokers everywhere. Reality bites.

 

[Dee Dee]

Pam,

I don't believe there is an historical precedent for this many short-term real estate speculators in the market, so we're breaking new ground.

The only place that I even see the subject addressed within the profession is occasionally on this board, and every now and then a news article will pop up about it. The majority simply don't see it or prefer to believe that it isn't an important market factor.

Perhaps it's because many appraisers make money on the side by investing that it's a taboo subject that most would prefer to avoid because it would be like the pot calling the kettle black.

 

[John Sales]

This is true youd think its was illegal but they get away with it like bandits

 

[Karl]

More INFOMERCIAL more Investors, Stay tuned for the INFOMERCIAL with lawyers saying did U loose ALL your money from a INFOMRERCIAL Call US cause WE CARE. Got Investor out here Buying just about EVERY REO that comes up she has 8 EIGHT for RENT or LEASE PURCHASE within walkin distance of each other & is STILL Buying.

 

[Bobby Bucks]

For the last year I've been using a "Carlton Sheets" adjustment for most REO assignments. It's not in the grid, but it's sure as hell part of the final reconciliation. Those Sheetzers fresh out of boot camp are convinced that if a property is a foreclosure, it must be 50% off.....a sale like that flashing blue light for K Mart shoppers....I've seen many cookie cutters sell for more than competing listings in average to above average conditon. It's best to not get between them and their "bargain".