Speculators Reselling Condos Raise Fears

[Dee Dee]

Sun Sentinel

With South Florida's white-hot housing market showing no signs of cooling, the role of speculators in the market is receiving more scrutiny. Real estate speculators have always been a part of the market in South Florida. But double-digit increases in housing prices have attracted the attention of not only experts like Koslowski but also amateurs looking to make a quick profit -- people who could get burned if the market turns abruptly.

 

[liznindy]

Not just in South Fla....my sister sold a condo (in northern FLA) after only a couple of years of ownership for more than 100% increase in original purchase price....Wish I had bought one when she did!

 

[Otis Key]

Wendy Morton called me today to tell me she and the family are back home with no electricity, water, telephone (only cells are working), tv or plumbing. She said it looks like a war zone there and a lot of others are talking about selling and moving on. At least they're safe and she now has a bunch of job security.

 

[Non Sequitur]

Otis, the king of non sequiturs.

 

[jay trotta]

it just oveerjoys me to see that the word "Flip" is still being misused; what the snoozpaper article refers to as "Flips" - are Not and never have been.

what the article describes is either an "Investment" or a Dealer via IRS rules, the profit can be taxed as Income or a windfall profit and they better be payin taxes on this stuff; now ifn I were an IRS agent, I might be inclined to see how some of these folks are payin their taxes.................... :mrgreen: and what their clamin as deductions B)



h34r:

 

[Tim The Enchanter]

What goes up must come down, I'm hopin.

 

[DTB]

Lee,

Why would you hope for that? Unless you missed the party.

 

[Eric Boggs]

I remember the 1980's when I lived in SoFla when you couldn't give away a condo unit, even one on the ocean. I suspect that there will be a certain percentage that will leave, especially if Ivan hits - like they did after Andrew. My Folks, who are currently relocating within Fla (building a new house) are having second thoughts. My Brother, who also lives in SoFla is thinking of moving out of state. My Sister, who lives in central Fla is staying. My in-laws are also thinking of leaving. I was even thinking of moving back - and probably will, but not in the next year. I wouldn't be able to get homeowners insurance.

 

[Pamela Crowley (Florida)]

What that article is talking about is speculators / investors, many being Realtors, that are flipping these condos, sometimes on the same day, for $20,000 to $50,000+ more. This is being done on hype while other similar listings are lower priced. Many of the resale prices, if not most in some complexes, CANNOT be justified by ANY qualified comparable listings or closed sales. So these mortgages are being closed on appraisals that makes the higher price with nothing legitimate - or fraud? Buyers at the higher ends are typically from out of state, many are being told about the great investment opportunity they are getting.

BUT, there is NO WAY these properties can rent for as much as the mortgage payments and many are sitting vacant. How long can the new owners afford to make payments with negative or no cash flow?

Add in this seasons hurricanes. How many are going to be foreclosed???

I don't have the answers yet. Most I wouldn't even consider purchasing for even 75% of what I could legitimately appraise them for at this point.

What are some of you doing in these situations? Where almost all comps are multiple sales, same day or within a few weeks, with other legitimate listings and sales available for $50,000 less?????

 

[RHM]

Hi Pamela:

To answer your question, I am simply turning the assignments down. This one hit my desk in May. It was a 100 feet gulf front lot. This is the sales history +/- a few thousand as I am going from memory.

Novermber 2000-----------------$435,000.00
September 2003-----------------$700,000.00
March 2004-----------------------$1,100,000.00
Contract on my desk for June 2004 to close at $1,475,000.00.

I turned the assignment down. My insurance agent bought a condo pre-construction in March for $450,000.00, he now has it under contract to close in Januar for $650,000.00. His investment is a letter of credit from the local bank which cost him $1,300.00.

Another guy owned a tire dealership, apparently it was not doing to well. He sold out and his wife told me that they were closing on a condo (nother pre-construction deal) and were making $250,000.00 on the deal. Now I don't begrudge anyone making making money on RE, in fact I've done pretty well myself but I have done it over time. I see no way for the momentum in the condo market to continue and I simply don't want my name involved in any of these deals.

Regards to all,

RHM