There’s more to Real Estate than meets the eye

Yesterday morning, after breakfast, T and I took a little drive around our seaside community.  Cruising past well kept lawns and blooming flower beds, we were on the lookout for the For Sale signs of a growing market of properties where, according to the news, the median home price has dropped to $385,000.  But we weren’t surprised to find that the flyers we found were still holding to pre-bubble prices.  $799,000 and $675,000 for 20 year old homes albeit in nice neighborhoods.  As we curved up the hill towards the top level and newer homes that can claim ocean views $1 million and more still was the price.  It appears that location, location, location still means something even in this market.

 As we continued our drive, she and I talked about two recent developments.  Two friends of ours had enrolled in the Trump University Real Estate program.  They were spending a part of each day and several nights a week trolling for properties both rental and commercial.  They told us of their experience at last weekend’s REDC auction where after putting down a $5,000 entry fee they were able to tour a listing of foreclosed properties and to make bids to buy them. 

“There were all sorts of people there,” S said. “The guy in front of us was a college student, next to us was a family of four, behind and standing along the wall were guys in suits with laptops open as they checked each bid against their own info.  There was an air of excitement and it felt like anything could happen.  We ended up bidding on six properties but all but one of them went to someone else.   The last one we’re still waiting for word on whether the bidder’s financing went through.”

The second development concerned our son who’s part time job as computer consultant for a real estate company has blossomed into a full time management postion as the company began last year to focus totally on handling foreclosed and bank owned properties.  Their listings went up a thousand percent in the second quarter of 2007 and haven’t decreased since.  Now the company wants him to head a new division that specializes in short sales.  At About.com, realtor Elizabeth Weintraub gives this definition, 

“A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.”

In other words this is a negotiated sale of the property before it goes into foreclosure.

Our friends experience got complicated last week when their Trump counselor who had been touring with them to find properties turned them onto a can’t miss deal that had them making an offer of $525,000 for a property the realtor assured them they could turn around and sell for $640,000.  The seller would even throw in $35,000 as an incentive.  Three things put a crimp in the deal. 

  1. The prospective buyer at $640 couldn’t qualify so our friends would be expected to carry back a part of the loan.  
  2. Our friends were shopping with money they thought they had available in a HELOC on their own home.  Unfortunately, their lender had reset and canceled it without notifying them. 
  3. When we heard the details of the situation we immediately sat down with them to talk about the real real estate market they were getting ready to take a chance on.

 Our son seems eager to jump into his new job.  Our job apparently will be to keep our eyes open as the people around us venture forth.

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