Future of the Real Estate Market

[dmk112]

I know all of us here indulge in trading/investing in stocks, options and the like. But has anyone done anything in the real estate market? Since it's peak prices have fell in many places and I believe there is more falling prices to come. I've been reading alot about real estate as I do not know much about it as I am still renting. I'm thinking about buying in about 2 years but may do something sooner if the opportunity arises. I'm currently reading Buying a Home for Dummies and taking Master Real Estate course. Any other recommendations?

http://www.mymoneyblog.com/images/0701/risk.jpg

The above image shows the cycle of Real Estate. Where do you guys think we're at in the current state of the economy?

[IIC]

I know all of us here indulge in trading/investing in stocks, options and the like. But has anyone done anything in the real estate market? Since it's peak prices have fell in many places and I believe there is more falling prices to come. I've been reading alot about real estate as I do not know much about it as I am still renting. I'm thinking about buying in about 2 years but may do something sooner if the opportunity arises. I'm currently reading Buying a Home for Dummies and taking Master Real Estate course. Any other recommendations?

http://www.mymoneyblog.com/images/0701/risk.jpg

The above image shows the cycle of Real Estate. Where do you guys think we're at in the current state of the economy?


I'd say we are fast approaching denial...the time to buy will be when we approach Panic down thru Despondency....You will still be able to get some great values up thru the approach to Relief....Doug

[Runner]

I’m going to start buying some houses through Carleton sheets program. I looked at a huge spike in bankruptcies and foreclosures occurring in my area. I wonder if this can be done with zero money down? Ya’ll think I joking….

[skiracer]

I know all of us here indulge in trading/investing in stocks, options and the like. But has anyone done anything in the real estate market? Since it's peak prices have fell in many places and I believe there is more falling prices to come. I've been reading alot about real estate as I do not know much about it as I am still renting. I'm thinking about buying in about 2 years but may do something sooner if the opportunity arises. I'm currently reading Buying a Home for Dummies and taking Master Real Estate course. Any other recommendations?

http://www.mymoneyblog.com/images/0701/risk.jpg

The above image shows the cycle of Real Estate. Where do you guys think we're at in the current state of the economy?

I think we're just hitting that area between anxiety and fear. This downward slope is the best time for those that have available cash an are not leveraged out from buying things that they couldn't really afford but got into because of plenty of available cash from the banks. Like stocks you have to wait for it to bottom out somewhere between capitulation and depression. Then the sharks come into the shallows and the bloodletting begins. One thing about real estate is that they are not making any more of it.

[IIC]

I’m going to start buying some houses through Carleton sheets program. I looked at a huge spike in bankruptcies and foreclosures occurring in my area. I wonder if this can be done with zero money down? Ya’ll think I joking….

First of all Carleton Sheets is a scam artist...He makes his money selling stuff that you could find out on your own.

http://www.infomercialscams.com/scams/carlton_sheets_no_down_payment

Second of all, I'd suggest waiting for the foreclosure deals...Why would you want to buy a foreclosure that will continue down in value...Wait till we are near a bottom unless you can find someone REALLY desparate to get out...It is too early to find many good deals...Wait till the Banks are willing to take less than they are owed or sellers are short selling to avoid foreclosure...Doug

[Runner]

Doug, thanks for the tip.. In all honesty I have a relative in Florida who does Real Estate for a living. He has offered to come to my house and show me how he does it.. He is very successful in this business and I figured if he is willing to teach I;m willing to learn... My business partner and I have wanted to use some of our profits from our business to help us along...

[dmk112]

Doug, thanks for the tip.. In all honesty I have a relative in Florida who does Real Estate for a living. He has offered to come to my house and show me how he does it.. He is very successful in this business and I figured if he is willing to teach I;m willing to learn... My business partner and I have wanted to use some of our profits from our business to help us along...

Let us know what you learn, Runner. You can make a lot of money in Real Estate over the long term and ever more if you leverage yourself right.

[dmk112]

First of all Carleton Sheets is a scam artist...He makes his money selling stuff that you could find out on your own.

http://www.infomercialscams.com/scams/carlton_sheets_no_down_payment

Second of all, I'd suggest waiting for the foreclosure deals...Why would you want to buy a foreclosure that will continue down in value...Wait till we are near a bottom unless you can find someone REALLY desparate to get out...It is too early to find many good deals...Wait till the Banks are willing to take less than they are owed or sellers are short selling to avoid foreclosure...Doug


I hear that foreclosures all together are usually scams. Think about it, foreclosures are houses that are on the market because no one wants them. Before they are 'foreclosed' they get every chance to get sold, they offer it to people they know as a great deal and if they hire an agent and offer a low price and they still can't sell it. The last resort is to foreclose the house.

[IIC]

I hear that foreclosures all together are usually scams. Think about it, foreclosures are houses that are on the market because no one wants them. Before they are 'foreclosed' they get every chance to get sold, they offer it to people they know as a great deal and if they hire an agent and offer a low price and they still can't sell it. The last resort is to foreclose the house.


Generally that is true...However, in 1994 there were some fantastic foreclosure deals in West LA...Real Estate usually goes in 9 year cycles...Values will drop a lot in the next few years...Right now they are going after those that think they can get a deal...It is too early in the cycle...Doug

[IIC]

Doug, thanks for the tip.. In all honesty I have a relative in Florida who does Real Estate for a living. He has offered to come to my house and show me how he does it.. He is very successful in this business and I figured if he is willing to teach I;m willing to learn... My business partner and I have wanted to use some of our profits from our business to help us along...


My advice...listen to what he has to say...then go your own way w/o him.

[skiracer]

Runner,
It takes a long time to learn the real estate business and to understand how to read the market and to market a home. It's not something that you can learn overnight or in a week or two. Plus it's always advisable to know the legal ramifications and to have a good real estate lawyer handle any transaction for you. Foreclosures are homes that the mortgage lender or bank has taken back from the owner for failure to pay the mortgage. It doesn't necessarily mean the home is a lemon or that it isn't marketable and that it can't be sold. The main factor is that the owner could not meet their mortgage commitment or obligation and the lender took it back. Usually because the owner or buyer initially didn't have enough down payment and got in on a shoestring and the mortgage payment is so high that they get strangled by the monthly payment an end up falling into arrears on their commitment. There are numerous legal actions that have to be cleared up in these cases to get a free and clear title to the home. Be wary of trying to do it on your own without the proper legal representation by a lawyer who knows how it works and the ins an outs of foreclosures. My advice would be to take an available real estate course at a local junior college or university or at a real estate school. These courses usually require about 72 hrs. of course work and passing the final examination which then allows you to take the state examination which will differ from state to state. Some states are now requiring 2 years of college as a prerequisite plus the required 72 hours of study in that subject matter. It is not as simple as it seems and as some will try to convince you that it is. Buying and selling homes can become a negative action just as easily as a positive one if you don't know your market and what your are doing.

[IIC]

Good post w/ good info Ski.

However, sometimes a foreclosure results from someone who did get suckered in to a lemon...Now they got out of it and it is available for the next sucker.

Although foreclosures are rising...We are no where near a "cherry pickin'" market...Patience is a Virtue...Sometimes

[Runner]

Runner,
It takes a long time to learn the real estate business and to understand how to read the market and to market a home. It's not something that you can learn overnight or in a week or two. Plus it's always advisable to know the legal ramifications and to have a good real estate lawyer handle any transaction for you. Foreclosures are homes that the mortgage lender or bank has taken back from the owner for failure to pay the mortgage. It doesn't necessarily mean the home is a lemon or that it isn't marketable and that it can't be sold. The main factor is that the owner could not meet their mortgage commitment or obligation and the lender took it back. Usually because the owner or buyer initially didn't have enough down payment and got in on a shoestring and the mortgage payment is so high that they get strangled by the monthly payment an end up falling into arrears on their commitment. There are numerous legal actions that have to be cleared up in these cases to get a free and clear title to the home. Be wary of trying to do it on your own without the proper legal representation by a lawyer who knows how it works and the ins an outs of foreclosures. My advice would be to take an available real estate course at a local junior college or university or at a real estate school. These courses usually require about 72 hrs. of course work and passing the final examination which then allows you to take the state examination which will differ from state to state. Some states are now requiring 2 years of college as a prerequisite plus the required 72 hours of study in that subject matter. It is not as simple as it seems and as some will try to convince you that it is. Buying and selling homes can become a negative action just as easily as a positive one if you don't know your market and what your are doing.

Ski, that is some great advise you gave. I don’t expect to jump into anything unless I got the angles covered. I’m also not looking for homeruns. From what I understand many real estate investors are very greedy and that greed often will kick them in the butt. I will listen to any anyone who has done something I have not and is successful in what they do.

[skiracer]

Ski, that is some great advise you gave. I don’t expect to jump into anything unless I got the angles covered. I’m also not looking for homeruns. From what I understand many real estate investors are very greedy and that greed often will kick them in the butt. I will listen to any anyone who has done something I have not and is successful in what they do.

Knowing you as I do I'm sure that you will do your homework and research everything before you take on anything. It can be very profitable or very troublesome and the experience and knowledge it takes to cover all your bases takes alot of time to learn. Like trading stocks, those that spend the time to do the DD and develope a plan and strategy will win and those that don't will fall by the wayside and wonder what went wrong.

[Runner]

I’ll keep an open mind to what my cousin has to say and dig in. I always have felt that being a good student of anything you’re interested in helps. Anything that is worth having requires a plan and due diligence. I’ve never had anything put into my lap and in fact have had to fight tooth and nail for everything I’ve got.. One thing is for sure I can learn with proper mentoring. I realize he is not going to give me a 10-step list that I must follow to become successful.

I have always wanted to get involved in real estate and now might be the time.. Part of my thinking is to use some of my profits from my current business to help in the financial aspects. Oh I forgot to mention I cut grass for a living...LOL

[dmk112]

Runner,
It takes a long time to learn the real estate business and to understand how to read the market and to market a home. It's not something that you can learn overnight or in a week or two. Plus it's always advisable to know the legal ramifications and to have a good real estate lawyer handle any transaction for you. Foreclosures are homes that the mortgage lender or bank has taken back from the owner for failure to pay the mortgage. It doesn't necessarily mean the home is a lemon or that it isn't marketable and that it can't be sold. The main factor is that the owner could not meet their mortgage commitment or obligation and the lender took it back. Usually because the owner or buyer initially didn't have enough down payment and got in on a shoestring and the mortgage payment is so high that they get strangled by the monthly payment an end up falling into arrears on their commitment. There are numerous legal actions that have to be cleared up in these cases to get a free and clear title to the home. Be wary of trying to do it on your own without the proper legal representation by a lawyer who knows how it works and the ins an outs of foreclosures. My advice would be to take an available real estate course at a local junior college or university or at a real estate school. These courses usually require about 72 hrs. of course work and passing the final examination which then allows you to take the state examination which will differ from state to state. Some states are now requiring 2 years of college as a prerequisite plus the required 72 hours of study in that subject matter. It is not as simple as it seems and as some will try to convince you that it is. Buying and selling homes can become a negative action just as easily as a positive one if you don't know your market and what your are doing.


Ski, will taking these classes give you any type of certification or maybe a real estate license?

If anyone's interested http://www.success.org/ (http://www.success.org/) provides courses on Real Estate. I downloaded into my iPod and this guy seems pretty honest and good. He's not trying to make any money, he just wants to spread knowledge on the real estate game, hence the .org website. He's a Shaolin master too! LOL

[dmk112]

Oh, and the gist of the whole course is how to get your to become a multi millionaire in 20 years or less. Basically buy 6 properties and pay them off (mostly rental properties generating positive cash flow). I'm about 2/3 through the Master Real estate course and it's pretty good so far and I recommend it.

[lemonjello]

But this cycle has been stretched out and exacerbated by the Fed actions after 9/11 by a couple of years. The hot markets are still heading down but the ones that didn't run up are probably already stabilizing - Texas for instance. Lots of buyers are cashing out of Cali and moving money to Texas.

All real estate is local. :cramersmiley:

Generally that is true...However, in 1994 there were some fantastic foreclosure deals in West LA...Real Estate usually goes in 9 year cycles...Values will drop a lot in the next few years...Right now they are going after those that think they can get a deal...It is too early in the cycle...Doug

[lemonjello]

Runner,

I know quite a few real estate investor (multi)millionaires that got started from situations similar to yours. If you're seriously cutting grass you might be in a great position to talk to lots of people about their property and look at lots of real estate on your job as you drive around - something people that work in offices can't do as easily. There may be deals you drive by every day and don't know about.

Here's a website from a legit investor that retired from the military and decided to get into RE investing you might find interesting. Check out the articles.

www.rehab-real-estate.com

Here's a site from another ex-military Harvard MBA legit investor where he rates gurus and has some of his own pubs. Sometimes he can be almost too pessimistic. :cramersmiley:

http://www.johntreed.com/Reedgururating.html


I’ll keep an open mind to what my cousin has to say and dig in. I always have felt that being a good student of anything you’re interested in helps. Anything that is worth having requires a plan and due diligence. I’ve never had anything put into my lap and in fact have had to fight tooth and nail for everything I’ve got.. One thing is for sure I can learn with proper mentoring. I realize he is not going to give me a 10-step list that I must follow to become successful.

I have always wanted to get involved in real estate and now might be the time.. Part of my thinking is to use some of my profits from my current business to help in the financial aspects. Oh I forgot to mention I cut grass for a living...LOL

[Websman]

I'd say we are fast approaching denial...the time to buy will be when we approach Panic down thru Despondency....You will still be able to get some great values up thru the approach to Relief....Doug


Judging by my local market, I would have to agree. If you talk to any local realtor, they will tell you that sales are way down, but then they'll say that the market is only in a temorary downswing and will be back up next year. That sounds like denial to me.

The average family can't afford a home. Something has to give and it will...

[skiracer]

Ski, will taking these classes give you any type of certification or maybe a real estate license?

If anyone's interested http://www.success.org/ (http://www.success.org/)provides courses on Real Estate. I downloaded into my iPod and this guy seems pretty honest and good. He's not trying to make any money, he just wants to spread knowledge on the real estate game, hence the .org website. He's a Shaolin master too! LOL

DMK112,
My wife an I have had our NJ sales agent real estate licenses for 20 years an they are active and hanging at our brokers offices so I can list and sell any listing that is listed in any Multiple Listing Service or by any licensed real estate agent in NJ. I was talking about taking any course that is validated and certified such that if you pass that course you can then register and take the state examination in your state an if you pass that exam you will be eligible to obtain your state agents license. All states differ in their process towards obtaining that state license. Taking any course or tutorial can and will increase your knowledge base but will not allow you to buy or sell any listed, LISTED being the operative key word, property. If an owner of a property lists that property with a brokerage or an agent for a brokerage then they cannot just sell that property to anyone that walks in the door. Because of the contractual obligations of the listing agreement they have to market and sell the property through that agent or some licensed brokerage in that state as long as the term of the listing agreement is in effect. So that closes down alot of opportunities. Not to say that you can't buy that property but it has to be bought through someone licensed.
On the other hand if the property is not listed an is up for sale by the owner himself he can do what he wants with it in regard to how he sells or markets it. Having the license just opens the door to alot more activity but does not necessarily shut you out from investing in real estate if you don't have a license.
I have bought and sold numerous properties, residential and commercial, over the past 20 years or so and the pitfalls are many. I don't want to disuade anyone from thinking they can make money in real estate, basically buying and flipping residential homes or vacant lots, or fixer uppers and flipping them, because there are always plenty or good deals out there if you know what you are looking for and know your market and timing. But the guys that are sellling these "make a million if you follow my example" are making more money selling those tapes and courses than they are selling real estate if you get my drift. It is much easier and quicker to sell that commodity than it is to buy and sell houses in general.
As far as buying to own and then rent out to a renter is concerned you had better look into the laws governing that type of situation in your state because you will find out things about how it works that will amaze you. Most renters have more rights towards the property than the owners and eventually they will have you talking to yourself or thinking about killing the bastards renting from you. Once they are in they are hard to get out if they renige on the rent and the process is time consuming and very lengthy on top of the mental anguish the entire process will put you through.
I have at times owned a dozen homes and rentals and my logic was that owning a construction company with access to all the trades it would seem to be a great fit. The continous stream of things that will breakdown becomes another job in itself and the costs to keep everything running when factored into the profit and loss statement doesn't make it all that enticing in the end. You are also at the mercy of the equity curve rising and falling as the real estate cycles rise and fall. The value of the property can easily fall much lower than the initial price you pay for it.
Leveraging or the system of buying one and then building a base off of what you think is equity and buying another and another is a viable way of approaching building a real estate portfolio but do not think that it isn't filled with pitfalls. Leveraged systems are made to collaspe an without the proper capitalization and money in the bank it doesn't take much to make the entire pyramid fall. Of course there are a few out of thousands that will succeed with this type of model but for everyone that does build that so called empire there are thousands that have failed an are now trying to find a way to pay off the debt from the collaspe.
I still continue to look for depressed situations an any opportunities that will hold water but it is not an easy task and very time consuming especially if you are running other businesses. I have plenty of capitalization an access to as much as I want or need to do as I please but am still always wary and do the DD until I am sure. As I said earlier, I am not trying to disuade anyone from thinking they cannot make money in real estate but just trying to put it into the proper perspective. You will never know unless you try but it is always good to listen to the voice of reason an experience.
I've been subjected to gamblers an basically a gambler all of my life in the sense that I am not afraid to take the risk or the plunge when I feel I'm right about any situation but I never gamble unless I feel or make the edge in my favor. I am against leveraging in any sense of the word when you do not own the cash to back yourself up just in case. Of course I will always try to work with someone else's capital if the terms are reasonable and work within the model but to try to build on leveraging without some capital base is asking for trouble an I strongly suggest anyone not to do that until they can acquire some capital of their own behind them. Other that any of this I would say take the plunge as long as you have done your homework and aren't deceiving yourself by not understanding fully what you are doing or trying to accompolish.

[Runner]

Lemonjello, I looked into Reeds site and was quick to pick out on how quickly he discredits the rest of the gurus. I then notice he is selling books. It makes me weary of those who bash others in order to elevate themselves does not sit well with me. I think the road to any successful venture is filled with potholes and challenges. The potholes and challenges lets us truly look at who we are and what were made of…

I did recently attend a Whittney’s seminar and was quick to capture the salesmanship. I did some research of the company RUSS.OB and new this was not for me. It was interesting the guru was talking about how anyone could make a fortune in real estate and he was quick to show us the sale price and the benefits of buying it today. You would not believe the number of people lined up to fork out 1,000.00… I left the meeting and was wondering how much money this guru made in just a few hours…..If fact I often wonder why market gurus sell all these services? Is it to offset the down drawls they face? Could it be they make more cash from people joining then investing? Not sure…

[peanuts]

I’m going to start buying some houses through Carleton sheets program. I looked at a huge spike in bankruptcies and foreclosures occurring in my area. I wonder if this can be done with zero money down? Ya’ll think I joking….

I know for a fact that you are not joking about the foreclosures in your area!!!

The problem I see, is whether the city across the river will continue to redevelop downtown and attract big names in business like the company your wife works for. If so, you might be OK by the northern lake area, east of the border.

I can buy houses in my hometown for zero money down. That place is a dump, however

[lemonjello]

I know some local guys who are very good at doing real estate deals that have gone into the seminar business. They are all legit and teach real workable info. My take is the money in seminars is a lot easier and faster than real estate investing. If you can sign up 500 people in a seminar at $1000 each in a couple of weekend seminars it's some fast money. I've heard from the horse's mouths that only about 10% of those people will actually do anything with the info from the seminars. Turns out real estate investing is usually a lot more work than most people think it is. OTOH the guys giving the seminars were themselves among the 10% that had paid for other people's seminars when they were starting up.

In any case, I'd stay away from the national gurus and look for a local person that knows what works in your market.


Lemonjello, I looked into Reeds site and was quick to pick out on how quickly he discredits the rest of the gurus. I then notice he is selling books. It makes me weary of those who bash others in order to elevate themselves does not sit well with me. I think the road to any successful venture is filled with potholes and challenges. The potholes and challenges lets us truly look at who we are and what were made of…

I did recently attend a Whittney’s seminar and was quick to capture the salesmanship. I did some research of the company RUSS.OB and new this was not for me. It was interesting the guru was talking about how anyone could make a fortune in real estate and he was quick to show us the sale price and the benefits of buying it today. You would not believe the number of people lined up to fork out 1,000.00… I left the meeting and was wondering how much money this guru made in just a few hours…..If fact I often wonder why market gurus sell all these services? Is it to offset the down drawls they face? Could it be they make more cash from people joining then investing? Not sure…

[lemonjello]

BTW, I met a guy last year who had followed some gurus advice and bought up a bunch of rentals and is now facing bankruptcy since the alleged gurus didn't know what they were talking about and have since vanished. Caveat emptor.

Here's an interesting blog showing how people get themselves into trouble. Was this guy ethical? I imagine there are a lot of people in similar situations right now in Cali, Arizona and Florida.

http://iamfacingforeclosure.com/

[Runner]

BTW, I met a guy last year who had followed some gurus advice and bought up a bunch of rentals and is now facing bankruptcy since the alleged gurus didn't know what they were talking about and have since vanished. Caveat emptor.

Here's an interesting blog showing how people get themselves into trouble. Was this guy ethical? I imagine there are a lot of people in similar situations right now in Cali, Arizona and Florida.

http://iamfacingforeclosure.com/

Lemonjello, I did check out that kids blog and I must admit I’m impressed with his honesty as he shares his mistakes with the world. I bet this kid will be a millionaire one day if he sticks with it. We all make mistakes everyday and yet few wish to admit when they are wrong. What I find interesting is the moment you wish to try something that is different you get attacked by all the nay Sayers telling you how you can’t do something…

[lemonjello]

Yeah, that video was very interesting. Especially the part about the kid following some guru's advice. Of course there are successful real estate investors that never even got close to a predicament like that. Seems like that kid's situation is the almost exactly the same thing that happens to some stock traders. They get too greedy and blow out their accounts. No position sizing and money management. :cramersmiley:

Once again, I'm just throwing this stuff out there for general information to people reading the thread. Personally, I'd rather not go thru what that kid is going thru. I'm crazy like that.

Lemonjello, I did check out that kids blog and I must admit I’m impressed with his honesty as he shares his mistakes with the world. I bet this kid will be a millionaire one day if he sticks with it. We all make mistakes everyday and yet few wish to admit when they are wrong. What I find interesting is the moment you wish to try something that is different you get attacked by all the nay Sayers telling you how you can’t do something…

[dmk112]

In any type of investment vehicle, following a guru is usually a bad idea. Hence those morons who buy Cramer's stocks in AH at a 10% premium and then the stocks goes down the next day.

I was recommended a real estate website which allows you to search for homes in your area that are up for sale. A good practice is to write down the asking prices of homes and then the final sale prices. This will allow you to gauge how the housing market is doing. If someone asks $500k for a home and then sells it for $400 is a sign of a housing slump, etc.

The website is...
http://www.realtor.com

Has anyone bought any investment real estate on this forum? I want to hear from you!

[Runner]

I called my cousin last night and was talking to him about real estate. I asked him about the market and how he was dealing with the slow down. He told me it is not a problem for him because he is not greedy. He said it is always a buyers market. I told him that this does not make sense and his response was again I do not get greedy. Then he went on to explain the greed factor in real estate. I was blown away with what he was saying. In fact the same principle applies to the stock market.

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

[dmk112]

I called my cousin last night and was talking to him about real estate. I asked him about the market and how he was dealing with the slow down. He told me it is not a problem for him because he is not greedy. He said it is always a buyers market. I told him that this does not make sense and his response was again I do not get greedy. Then he went on to explain the greed factor in real estate. I was blown away with what he was saying. In fact the same principle applies to the stock market.

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

You need to get some details for us Runner! How does he find these deals? What's his strategy? ETc..

Interesting chart I found today:

http://www.mymoneyblog.com/images/0701/shiller2.gif

[IIC]

I called my cousin last night and was talking to him about real estate. I asked him about the market and how he was dealing with the slow down. He told me it is not a problem for him because he is not greedy. He said it is always a buyers market. I told him that this does not make sense and his response was again I do not get greedy. Then he went on to explain the greed factor in real estate. I was blown away with what he was saying. In fact the same principle applies to the stock market.

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.



Runner...I hope I never meet your cousin...I eat guys like him for breakfast.

[skiracer]

Runner...I hope I never meet your cousin...I eat guys like him for breakfast.

First of all it is never always anybody's market. It cycles between the two forces of buyers and sellers as the real estate market itself cycles thru strong and weak periods. Lowering a home $10,000 might increase and generate some interest but in a weak or weakening marketplace it sometimes takes more incentive than 10,000. But lowering the price is a start in the right direction.

Doug,
Isn't that kind of an inflammatory statement. You don't even know the guy or how he conducts his business.

[Runner]

Runner...I hope I never meet your cousin...I eat guys like him for breakfast.

Smart ass.... let me guess you work for a real estate COMPANY!!!

[skiracer]

Smart ass.... let me guess you work for a real estate COMPANY!!!

Runner,
Whenever a parcel, whether residental or commercial, isn't selling at the price you are trying to market it at the first and foremost item that a realtor can and will do is to lower the price whatever they think it enough to stimulate interest. Alot depends on the owner/seller as to what they have to get out of the property as to what you as the realtor can do in lowering the price. Whenever I do a CMA, comparable market analysis, on a prospective listing I always have a plan that takes in what the seller's needs are in netting out on the deal, what the comparable homes or properties in that area are being priced at in that days market, what comparable homes have sold for in the past 3/6 months in that area, and what the seller's bottom line is as far as consideration in regard to dropping the price if the parcel doesn't sell at the initial pricing. It's like everything else in business or trading. You have to have a well thought out plan that tries to cover everything that may come up in marketing the home or the trade.
The first line of defense is to lower the price. Secondly we try to include some of the appliances to generate lagging interest. Sometimes we will ask the seller to help with the points if the mortgage application involves points. Sometimes I even give back some of my end of the commission but I try to avoid that and it only happens under extreme circumstances.
Commercial properties are similiar to residential properties but the commission structure is quite different and the pricing and bargaining is much more complex. Your cousin is right on the money in his logic about lowering the price. Money talks especially when you can specifically show that by lowering the price accordingly you are presenting the prospective buyer with a good deal comparatively speaking. And I have found in life that you always catch more flies with honey even if you don't necessarily mean to be nice to them.

[dmk112]

Check out patrick.net (http://patrick.net)

Pretty interesting, this guy spends his time writing about how the real estate market will crash, is a bubble, etc..

[skiracer]

Check out patrick.net (http://patrick.net)

Pretty interesting, this guy spends his time writing about how the real estate market will crash, is a bubble, etc..

Do you agree with anything he has to say about it being a bubble?

[IIC]

Doug,
Isn't that kind of an inflammatory statement. You don't even know the guy or how he conducts his business.

Read it again Ski...

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

This is a classic...although legal... con for agents to pull. The house is worth $250,000...right???...But his cousin, being Mr. Nice Guy, drops his commission a little...By how much???...My guess is about $300 off the $7,500 he would've made...And of course the buyer is happy...He just got a house for less than it's worth...BUT WHAT ABOUT THE SELLER???...he just got over $9,000 less than his house was worth because Mr. Nice Guy was not greedy.

Everybody is happy...WHAT ABOUT THE SELLER that Runner's cousin screwed over???...Runner's cousin can twist words around any way he wants...But saying he is not greedy is something I don't buy...He wanted to take what he could get and get on to the next deal IMO. Heck, if he could convince enough suckers to lower their price $50,000 below what it's worth he'd be a friggin' billionaire next year.

PS...Runner, no offense personally...there are plenty of guys like your cousin running around.

[Runner]

Read it again Ski...

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

This is a classic...although legal... con for agents to pull. The house is worth $250,000...right???...But his cousin, being Mr. Nice Guy, drops his commission a little...By how much???...My guess is about $300 off the $7,500 he would've made...And of course the buyer is happy...He just got a house for less than it's worth...BUT WHAT ABOUT THE SELLER???...he just got over $9,000 less than his house was worth because Mr. Nice Guy was not greedy.

Everybody is happy...WHAT ABOUT THE SELLER that Runner's cousin screwed over???...Runner's cousin can twist words around any way he wants...But saying he is not greedy is something I don't buy...He wanted to take what he could get and get on to the next deal IMO. Heck, if he could convince enough suckers to lower their price $50,000 below what it's worth he'd be a friggin' billionaire next year.

PS...Runner, no offense personally...there are plenty of guys like your cousin running around.

Doug, he owns the houses he sells..

[Runner]

If you own your house and bot it under market value I would think you can be a lot more flexible with the sale.. many people are in distress situations and are not looking to sell for a profit.. Does this makes any sense?

[skiracer]

Runner...I hope I never meet your cousin...I eat guys like him for breakfast.

Doug,
Believe me I did read your post. Did I miss something here or are you trying to wiggle out of what you said. You should read your quote. You're the one that said what you said! I just thought it was somewhat inflammatory on your part to make a statement like that. I read the post several times and still it rings the same way to me. I don't see how you can see it or try to explain it away any differently. I thought it was a foolish statement and still do. This is how people do real estate sales. It is the most used strategy in the business. If after a period of time it doesn't sell it's overpriced for whatever reasons and the price has to be readjusted. But that doesn't have a thing to do with your statement being off the wall. You don't even know the guy. What would your reaction be if someone said the same thing about your cousin? Or was it supposed to be a joke? And you should spend a moment reading my other post. It will provide some insight as to how it works. Your last post just doesn't hold any water at all. It is just the way real estate transactions get done.

[Runner]

Here is something I’ve been thinking and would love to hear some thoughts from MM members…

Say I find a house in foreclosure and I do my title search and find no liens are on the property. I talk with the owners and find they are 6 months behind in payments. Can I help this person get out of a jam?

I have them sign the appropriate paper work, I catch the payments up and take over the loan. Now say the house is worth 250 and they owe 150. I spent say 6 on back payments and make the payment each month on time.

I get the house prepped and sell it for 220. Would one possibly walk from the table with a little under 94? Then deduct the 15% tax or 14 or clear around 80..

I don’t know if this is how things work, as I do not have a clue about real estate. Was wondering if something like this is possible..

[Lyehopper]

Read it again Ski...

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

This is a classic...although legal... con for agents to pull. The house is worth $250,000...right???...But his cousin, being Mr. Nice Guy, drops his commission a little...By how much???...My guess is about $300 off the $7,500 he would've made...And of course the buyer is happy...He just got a house for less than it's worth...BUT WHAT ABOUT THE SELLER???...he just got over $9,000 less than his house was worth because Mr. Nice Guy was not greedy.

Everybody is happy...WHAT ABOUT THE SELLER that Runner's cousin screwed over???...Runner's cousin can twist words around any way he wants...But saying he is not greedy is something I don't buy...He wanted to take what he could get and get on to the next deal IMO. Heck, if he could convince enough suckers to lower their price $50,000 below what it's worth he'd be a friggin' billionaire next year.

PS...Runner, no offense personally...there are plenty of guys like your cousin running around.
Doug-E-FRESH! DUDE! Runner's cousin owns the freakin' house.LOL!.... His point is this; Why be greedy? Sell that house for a lesser profit, beat out the competition and move on to the next deal, much like a stock trade.... Read his post again.

Hey Doug.... I don't understand your argument here if Runner's cousin was just a listing agent.... An agent can't lower the price without the owners OK anyway. AND what's wrong with an agent taking a hit on his commission if he needs to. I've made "deals" with my RE broker a few times for him to cut his commission for the "sake of the deal". And he does it.... Because he wants to continue to be my agent.

[Runner]

Runner,
Whenever a parcel, whether residental or commercial, isn't selling at the price you are trying to market it at the first and foremost item that a realtor can and will do is to lower the price whatever they think it enough to stimulate interest. Alot depends on the owner/seller as to what they have to get out of the property as to what you as the realtor can do in lowering the price. Whenever I do a CMA, comparable market analysis, on a prospective listing I always have a plan that takes in what the seller's needs are in netting out on the deal, what the comparable homes or properties in that area are being priced at in that days market, what comparable homes have sold for in the past 3/6 months in that area, and what the seller's bottom line is as far as consideration in regard to dropping the price if the parcel doesn't sell at the initial pricing. It's like everything else in business or trading. You have to have a well thought out plan that tries to cover everything that may come up in marketing the home or the trade.
The first line of defense is to lower the price. Secondly we try to include some of the appliances to generate lagging interest. Sometimes we will ask the seller to help with the points if the mortgage application involves points. Sometimes I even give back some of my end of the commission but I try to avoid that and it only happens under extreme circumstances.
Commercial properties are similiar to residential properties but the commission structure is quite different and the pricing and bargaining is much more complex. Your cousin is right on the money in his logic about lowering the price. Money talks especially when you can specifically show that by lowering the price accordingly you are presenting the prospective buyer with a good deal comparatively speaking. And I have found in life that you always catch more flies with honey even if you don't necessarily mean to be nice to them.

Ski, once again you raise some awesome points. I was always under the assumption that the realtor does not have the sellers best interest at heart..

[skiracer]

Here is something I’ve been thinking and would love to hear some thoughts from MM members…

Say I find a house in foreclosure and I do my title search and find no liens are on the property. I talk with the owners and find they are 6 months behind in payments. Can I help this person get out of a jam?

I have them sign the appropriate paper work, I catch the payments up and take over the loan. Now say the house is worth 250 and they owe 150. I spent say 6 on back payments and make the payment each month on time.

I get the house prepped and sell it for 220. Would one possibly walk from the table with a little under 94? Then deduct the 15% tax or 14 or clear around 80..

I don’t know if this is how things work, as I do not have a clue about real estate. Was wondering if something like this is possible..

It the balance on their mortgage is 150,000 then they have about 90,000/100,000 in equity less the 6 months in arrears give or take a few thousand. Would you expect them to walk away without taking anything with them for that just because they are behind 6 months on their mortgage payments and in the foreclosure process. If they knew the house was worth 250,000 do you think they could find a buyer somewhere that would give them 40,000/50,000 for the house as is and sell the house to them before the bank actually foreclosed and took the house away from them. Then the new owner owns the balance of the mortgage (the house) for 150,000 plus the 40/50,000 they gave the old owners which puts them in the home for around 200,000 and the new owner now owns the equity of 50,000 themselves which is the worth of the home less the 50,000 they gave to the original owners and the mortgage balance. The mortgage lenders don't want to be in the "owning homes business" as much as they want to lend the money out for 20/30 years and make the interest off the loan or sell the loan to Fannie Mae and take their profit and go. It would be a great deal for you if you could find someone that would do that but I don't see many people walking away from 90,000/100,000 equity in a home for just someone catching them up and taking everything just for doing that. Unless I'm not understanding what you are saying Runner. Please correct me if I'm misunderstanding something about what you are talking about.

[Runner]

It the balance on their mortgage is 150,000 then they have about 90,000/100,000 in equity less the 6 months in arrears give or take a few thousand. Would you expect them to walk away without taking anything with them for that just because they are behind 6 months on their mortgage payments and in the foreclosure process. If they knew the house was worth 250,000 do you think they could find a buyer somewhere that would give them 40,000/50,000 for the house as is and sell the house to them before the bank actually foreclosed and took the house away from them. Then the new owner owns the balance of the mortgage (the house) for 150,000 plus the 40/50,000 they gave the old owners which puts them in the home for around 200,000 and the new owner now owns the equity of 50,000 themselves which is the worth of the home less the 50,000 they gave to the original owners and the mortgage balance. The mortgage lenders don't want to be in the "owning homes business" as much as they want to lend the money out for 20/30 years and make the interest off the loan or sell the loan to Fannie Mae and take their profit and go. It would be a great deal for you if you could find someone that would do that but I don't see many people walking away from 90,000/100,000 equity in a home for just someone catching them up and taking everything just for doing that. Unless I'm not understanding what you are saying Runner. Please correct me if I'm misunderstanding something about what you are talking about.

Ski, you understood my post correctly. I see your point as to why would they walk with out getting something for the deal… I made this up and was curious as to if this might work. I can see your point crystal clear…. Thanks for posting

[dmk112]

Do you agree with anything he has to say about it being a bubble?

Well he's from the Bay area so I can't comment...It is much different than the Market here in the Jersey area..

Although, I do think that we are in some type of bubble GEOGRAPHICALLY. If prices increase until the point that the people can no longer afford the houses then something must give.

[dmk112]

Yea I agree with Ski on his response.

[skiracer]

Ski, once again you raise some awesome points. I was always under the assumption that the realtor does not have the sellers best interest at heart..

Over the last several years most states have adopted what is called the "Realtor's Code of Ethics". This is a very multi-faceted set of rules and regulations that outlines the ethical principles that every sales agent or broker must follow. Also over the last several years the concept of "buyers agents" and "sellers agents" has come into being. Before this the sales agents always represented the seller. Now a sales agent has to declare which type of agency he is involved in. They can be a "sellers agent", a buyers agent" or "dual agency". Usually the brokerage where the sales agent has their license hanging declares the type of agency they are going to be and the agents that work there are bound to be that type of agent and usually only represent one of the two. A "dual agency" sales person can represent both parties to the sale but must represent each side in a fair and equal manner.
Since the "Code of Ethics" has been adopted each sales agent or broker is bound by the rules and regulations set forth in that Code. It covers every possible scenario involving how you act, what you say, and who you represent and how you must declare from the start what type of agent you are and who you represent to everyone that you come into contact with regarding the sale of any piece of real estate. Violating any part of the rules and regulations in this Code can and will result in fines, censoring, suspension or the state in which you are licensed can take your license away from you if the violation is serious enough. They keep a very close eye on everyone's actions these days and any buyer, seller or anyone party to a real estate sale can bring ethical charges against an agent for violation of these principles. It has come a long way from how things used to be. Ask your cousin about this and he will assure you about what I have just said.
Realtors, both sales agents and brokers, are in business to make money and that is why they are in the business. But they cannot do as they please and take advantage of the people they represent if they want to stay in business and to keep developing and propogating their clients and customer base. Everything has to be above board and on the up and up in todays marketplace. I'll get you a copy of the "Code of Ethics" that we all have to operate by and mail it to you if you would like a copy to read. I'm sure your cousin would be able to get you a copy also. We also have to re-certify every couple of years by reviewing the Code online and taking a certification test which you must pass or you cannot continue to operate and your license will be taken back by the state.

[Runner]

Ski, thanks for the info. I guess things have changed for the better. I’ll ask my cousin about this next time I talk with him..

[IIC]

Doug, he owns the houses he sells..

Well...that was not the impression I got from your original post...my mistake.

[IIC]

Doug,
Believe me I did read your post. Did I miss something here or are you trying to wiggle out of what you said. You should read your quote. You're the one that said what you said! I just thought it was somewhat inflammatory on your part to make a statement like that. I read the post several times and still it rings the same way to me. I don't see how you can see it or try to explain it away any differently. I thought it was a foolish statement and still do. This is how people do real estate sales. It is the most used strategy in the business. If after a period of time it doesn't sell it's overpriced for whatever reasons and the price has to be readjusted. But that doesn't have a thing to do with your statement being off the wall. You don't even know the guy. What would your reaction be if someone said the same thing about your cousin? Or was it supposed to be a joke? And you should spend a moment reading my other post. It will provide some insight as to how it works. Your last post just doesn't hold any water at all. It is just the way real estate transactions get done.


That was not the part I quoted in my last response Ski...I was under the assumption that he talked the seller into taking less than market value just to get a quick sale.

My comment was tongue in cheek since I don't know the guy.

Say anything you want about my cousin...It won't bother me.

[IIC]

Hey Doug.... I don't understand your argument here if Runner's cousin was just a listing agent.... An agent can't lower the price without the owners OK anyway. .

But a slick agent can try to talk the owner into lowering the price even when it not necessary just to get a quick commish and since I didn't realize he owned it himself that is how it appeared to me.

[IIC]

Over the last several years most states have adopted what is called the "Realtor's Code of Ethics". This is a very multi-faceted set of rules and regulations that outlines the ethical principles that every sales agent or broker must follow. Also over the last several years the concept of "buyers agents" and "sellers agents" has come into being. Before this the sales agents always represented the seller. Now a sales agent has to declare which type of agency he is involved in. They can be a "sellers agent", a buyers agent" or "dual agency". Usually the brokerage where the sales agent has their license hanging declares the type of agency they are going to be and the agents that work there are bound to be that type of agent and usually only represent one of the two. A "dual agency" sales person can represent both parties to the sale but must represent each side in a fair and equal manner.
Since the "Code of Ethics" has been adopted each sales agent or broker is bound by the rules and regulations set forth in that Code. It covers every possible scenario involving how you act, what you say, and who you represent and how you must declare from the start what type of agent you are and who you represent to everyone that you come into contact with regarding the sale of any piece of real estate. Violating any part of the rules and regulations in this Code can and will result in fines, censoring, suspension or the state in which you are licensed can take your license away from you if the violation is serious enough. They keep a very close eye on everyone's actions these days and any buyer, seller or anyone party to a real estate sale can bring ethical charges against an agent for violation of these principles. It has come a long way from how things used to be. Ask your cousin about this and he will assure you about what I have just said.
Realtors, both sales agents and brokers, are in business to make money and that is why they are in the business. But they cannot do as they please and take advantage of the people they represent if they want to stay in business and to keep developing and propogating their clients and customer base. Everything has to be above board and on the up and up in todays marketplace. I'll get you a copy of the "Code of Ethics" that we all have to operate by and mail it to you if you would like a copy to read. I'm sure your cousin would be able to get you a copy also. We also have to re-certify every couple of years by reviewing the Code online and taking a certification test which you must pass or you cannot continue to operate and your license will be taken back by the state.


Lawyers have a Code of Ethics too...LOL

[IIC]

Here is something I’ve been thinking and would love to hear some thoughts from MM members…

Say I find a house in foreclosure and I do my title search and find no liens are on the property. I talk with the owners and find they are 6 months behind in payments. Can I help this person get out of a jam?

I have them sign the appropriate paper work, I catch the payments up and take over the loan. Now say the house is worth 250 and they owe 150. I spent say 6 on back payments and make the payment each month on time.

I get the house prepped and sell it for 220. Would one possibly walk from the table with a little under 94? Then deduct the 15% tax or 14 or clear around 80..

I don’t know if this is how things work, as I do not have a clue about real estate. Was wondering if something like this is possible..

Runner...Here is what I think you should look...You are a bit early in the cycle though for this.

But here is a real life example regarding some people I used to know back in the 90's.

In 1987 they bot a condo for $189,000...They put $38,000dn and financed $151,000 in West LA...3 bed 2 1/2 stories 1350 sq. ft. with a very large rooftop patio.

In early 1994 the husband was transferred to Seattle. The value had gone down so they rented it out for $1,000 mo. The lady who moved in gave them $2,000, moved in and declared BK...They never saw a dime again from her and it took over 6 mos to get her out.

Now, in 7 yrs they had not put much of a dent in their TD...If I knew the interest rate on their loan I could tell 'ya but for argument's sake lets estimate that they owed $135,000.


They put it up for $159,000...then $139,000...then the Bank agrees to a short sale...$129,000...$125,000...meanwhile they have paid a year's worth of $1400mo payments...Finally they just give it back to the Bank...Bank sells it for $119,000 within a month...Last year the place sold for $499,000.

It is not desperation time yet...But you are wise to start planning now IMO...However, the bottom is a ways off...Doug

[dmk112]

Well, I won't be buying a house in NJ now (atleast for now). I just found out I will be going to Los Angeles, my job is relocating me there for the rest of the year and there is no way I can afford a house in the bay area.

Any ideas on what/where to rent out in LA? I'm looing at apartments.com and its quite pricey...any suggestions on saving $?

[IIC]

Well, I won't be buying a house in NJ now (atleast for now). I just found out I will be going to Los Angeles, my job is relocating me there for the rest of the year and there is no way I can afford a house in the bay area.

Any ideas on what/where to rent out in LA? I'm looing at apartments.com and its quite pricey...any suggestions on saving $?

Welcome to LA...Home of the Body Bag...First of all, the "Bay Area" is about 480 miles North of here in S.F.(But maybe you meant another BAY AREA???

LA...Depends on where you want to live...I live on the Westside...If you are looking for an Apt. you are looking at 1 br about 1200...2 br 1600-1900... 3 br 2100+...There are areas that are cheaper and areas that are more...For example some new apts went up in my area about 6 months ago...2995 for a 3 br.

Send me a pm about the area you are looking at...I don't really have any "IN's" on rentals but I might be able to give you some ideas...If you are looking for a nicer place to live but don't mind driving a ways to work...I might be able to help idea-wise...Best, Doug(IIC)