Speculators Reselling Condos Raise Fears

[Pamela Crowley (Florida)]

RHM,

Yup, that's what's going on. Now, I want to know WHY.

WHO are the buyers???

I'm finding the majority are Realtor/investors, some experienced investors, and many investor wannabes from all over the nation (world too).

WHO is actually planning on living there???

I'm finding the majority are planning on either flipping them to the next investor or planning on renting them for a profit.
BUT:
How much more price increase can the market take???
Rents are now no where near being able to make a positive cash flow unless they put AT LEAST 50% down - some are now hitting 60% down befor a positive cash flow can be found.

So..... the investors are making the market by speculating on being able to find another buyer for an even higher price.

I'm finding investors flipping on the same day to other investor buddies with the only reason being to raise the prices and eventually find a sucker to off load these hot potatoes to. Some of these investor buddy deals don't have any REAL money changing hands - it's just on paper to raise the prices. They pay the Deed Stamps but the inflated sale price is not real. (Had a newbie Realtor tell me this then said, "Don't tell anybody though.... it might be illegal."

The research to attempt to find a truly qualified sale is now amazing. My fee for doing any of these doubled and everybody involved gets really ****** at me for telling it all. I'm now turning them down too... way too much liability.

This is single family residential. If the vast majority (80%+/-) of the transfers are investors flipping to each other..... what/where is the REAL market for these properties????
IMO, The dump and/or foreclosures on these when the cash flow becomes so negative that it hurts too much to hang on to them is really going to hurt a lot of people.

 

[Austin]

I keep reading these tales and here is what exposes the ruse these speculators are involved in. If prices are increasing at say only 20% per year, what idiot would sell their property? The correct answer is no one would unless there is some compelling reason too like they were moving and needed their equity or it was an estate settlement. I mean, if an investment is earning 20% per year you don’t sell the investment unless you suspect the ruse is about to be exposed. The fact that these condos are selling, most before the unit is even completed and the players are not people that intend to live in them, is factual evidence on its face of a pyramid scheme or some type flipping operation. Any lender stupid enough to get involved will get what they deserve.
Same goes for manufactured homes. A friend called me last week to appraise a manufactured home for one of his buddies. The people are refinancing and the mortgage company told them to get it appraised. Is this asking to be screwed or what? When a lender on manufactured homes accepts an appraisal from a homeowner for refinancing, that says it all. It is a self-fulfilling prophecy. The people said they have called every appraiser in the area and nobody will take the assignment. Lender can't fina an appraiser either. What does that suggest? Maybe we need more new Fannie Mae forms like 1004c-d-e-f-g-h......
Then here is what happens: Over on another forum there is a tale of gross mortgage fraud in Charlotte, NC. The NCAB is moving their meeting to Charlotte to handle the volume and there is a huge mortgage fraud trial under way at the same time. Then they wonder how something like this can happen. Less than two years ago on this forum I was told my an appraiser in Charlotte that the market was so hot that if he came up short on an appraisal, he would just wait one week and new sales would be available to make the deal work. Either that or time adjustments. 25% time adjustments for a six-month period and nobody ask what the hell is going on? Then they have 16,000 foreclusures in the Charlotte area and still, nobody ask what the hell is going on?

 

[Pamela Crowley (Florida)]

The fact that these condos are selling, most before the unit is even completed and the players are not people that intend to live in them, is factual evidence on its face of a pyramid scheme or some type flipping operation.

Exactly what I believe too Austin!

 

[Dale Smalley]

Austin
The return on investment is much higher because you are only putting down 20% of the overall value. You put down 60k on a $300,000 unit now worth $430 two years later. You pay no RE tax, No Montlhy HOA, No mortgage. So on your 60k you double your return. We see it all the time here but it is very risky. I just got an order for a unit to be completed 2006. Of the 486 units only 3 are left.

Now all I need is an extra 60K .... anbody.... hey we have lots of units to choose from....