Flipping houses, Flopping houses....

We've all heard of guys flipping a house. It makes sense, right?  You buy a home at a low price, fix it and sell it at a profit.   Well, when you flop a home, you're banking on the price going down.  This mostly occurs with short sales and in my opinion, are usually shady deals.   There are many ways to go about doing this.  One common way is when an investor persuades a bank to sell a home "short".  That is, selling the home for less than what is owed to the bank.  The investor has a seller already lined up to purchase the property at a higher price.  Now, is this illegal?  Maybe.  Unethical?  Very often the answer is yes.  Some of these guys who are doing this will actively seek out homeowners who are in trouble and give them a sales pitch on why a short sale is the only way to go.   I have personally dealt with some of these people.   These guys will argue that they are making a profit in a market where profits are hard to get.  Maybe so, but my objection is that the homeowner never gets the information that should be shared.   When I meet with a homeowner who is in financial difficulty, I refer him to a Tax Accountant or an Attorney for advice on short sales.  What do I know about the tax implications or legalities involved?  I'm a real estate agent..   The fact is, nobody knows how this is going to shake out.  When a homeowner short sales his or her property, they are entering uncharted waters.  They are not covered under AZ non-deficiency laws.  The courts have yet to weigh in on whether banks can come back and sue the homeowner for the amount they (the banks) have lost on a short sale.

Hey, I'm no advocate for banks.  I hate dealing with them, they frustrate the hell out of me.  Please don't take this blog to mean that I feel banks are getting an unfair deal here.

I'm just saying, if you get into trouble and are considering selling your house through the short sale process...educate yourself on all of the factors involved before proceeding.  And if you get an email or phone call from a guy named Lefty from Las Vegas who has a sure fire way to short sale your house quickly.....RUN!

Hang on to your hats....

Investors are keeping a certain amount of velocity in the Phoenix housing market.  In fact, depending on who you listen to, investors make up as much as half of all resale transactions on any given month of the last year or so.

So, if Bank of America is halting foreclosures, what happens now?  Will the resale numbers drop by half?

I have come to a better understanding of the value of reading trends in the market place, any market place. If you can read the future, you are valuable to any organization, right?  I profess that I have NO IDEA what is going on in this market.  As this blog takes shape, I ask myself:  What am I going to share with my readers?  How about honesty?  For starters, I don't know where this market is headed.  I read all of the reports by industry leaders, I look at the numbers, I follow the news concerning lenders.  Most importantly, I am in contact with real people who are looking to buy or sell homes in this market on a daily basis.   I can tell you, nobody has a good idea of what happens next.  Not even the really, really smart guys.

John Paulson says BUY, BUY, BUY!!!!

 John Paulson is a bigshot from New York who manages a HUGE hedge fund.  He made his fortune betting on the housing crash.  Now he's saying:

... this is the best time to buy a home in fifty years,... "If you don't own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home."

You can  see the full article on www.seekingalpha.com.

Bank of America halts all U.S. foreclosures

As I said yesterday, this is a very interesting market.   So, BofA comes out with a
nationwide moratorium on foreclosures as anger grows at how lenders have prepared documents to support evictions.    I suspect many lenders will follow suit.
How crazy is this market?   If you're one of those who have quit paying your loan to BofA, put away the packing boxes, it looks like you can stay awhile.   

BofA says that it is focused on keeping current homeowners right where they are by modifying loans.   Let's hope this is true.   I have dealt with many families that have attempted the modification process only to have their home foreclose in the middle of the process. Often, one department in the bank will reassure the customer that the foreclosure will be postponed while another department is moving full steam ahead on the foreclosure. How maddening and how upsetting to a family.  Most people would much rather know what is going to happen, it's much easier to prepare that way.  Uncertainty causes ulcers, especially when it comes to the roof over the heads of your children.

I say this market is interesting.  However, more true to the point, this market is tragic.

Long, slow slide to the bottom.

Hey all,

Welcome to my little corner of the net.  I will endeavor to make this blog a useful reference tool for anyone that is interested in Phoenix, AZ area residential real estate.  I am constantly perusing several sources on a daily basis in order to keep my fingers on the pulse of the market.  I will use this blog as a platform to share a condensed version of what I encounter.  Enjoy and feel free to offer feedback!

October 08, 2010

Since last May, Phoenix area homes are down an average of $9000. I believe this is an even greater number in the areas in which I specialize (San Tan Valley, Apache Junction, Mesa). We seem to get hit the hardest.
Foreclosures accounted for 45 percent of the existing-home market activity in August.  Can you believe it?  45%!!!   Buyers have seem to have disappeared as well.  A sluggish economy and job uncertainty couple together to keep buyers out of a market where great interest rates and low prices should be attracting them.

If nothing else, this is an interesting market.  I can't wait to see what will happen next.