“If You Build Right Now, You’re Digging Your Own Grave”
The Tampa Tribune reports from Florida. “The Bayshore Palms Apartments complex was supposed to make way this summer for the Merasol on South Bayshore town houses. Instead, developer Remmie Rann of American Design Homes decided to remodel the building and rent out 25 apartments.”
“‘We are putting it on hold right now because of the market conditions,’ Rann said.” “Plans called for 19 town houses priced from $620,000 to $710,000. The property’s Web site showed eight of the 19 reserved. ‘We had reservations,’ Rann said. “We just did not convert them into hard contracts. Then we had a bunch of cancellations.’”
“He said he’s following the advice of a longtime South Tampa real estate agent: ‘If you build right now, you’re digging your own grave. So we decided not to build.’”
“Brad Monroe, president of the Greater Tampa Association of Realtors, said developers are reassessing their plans until the market rebounds. ‘I do see certain ones that were selling that are not selling and have gone back to rentals,’ he said.”
“Association statistics show condominium sales countywide fell from 337 in September 2005 to 192 last month. ‘There’s a softness and a lot of folks anxious to sell,’ Monroe said. ‘There is a lot of selection, and things aren’t happening.’”
The Palm Beach Post. “The Opera Place condominium in West Palm Beach looks like a no-go. Opera Place could not secure a construction loan needed to start building the much-delayed project. That lender wanted more equity in the deal, said Seacoast President Jean Strickland.”
“Other Stillwater plans for the 3-acre parcel include ground floor retail, commercial showroom space, medical offices, Class A office space and a few condos, in that order as one ascends the tower. Real estate expert Neil Merin is skeptical: ‘It’s like they threw everything up against a wall.’”
Also from Tampa. “A year ago, Dawn L. Molen quit her job as a commercial loan officer and set out to become a real estate agent. With three months’ experience, the agent who had never listed a home closed her first sale Jan. 27 in a working-class neighborhood.”
“Her buyer paid $45,000 more than the asking price. It stunned her peers. From then on, Molen brought in contracts by the stack.”
“Molen found buyers willing to consistently pay $50,000 to $70,000 more than the original price, according to documents obtained by The Tampa Tribune. Collectively, the homes sold for at least $2 million more than originally listed.”
“But there was something her boss said he didn’t know: Some of the money wasn’t going to the sellers. It was going to a third party with ties to Molen, sometimes without the knowledge of the lenders or the sellers.”
“Molen’s deals have several similarities to cases that have surfaced recently across the nation, some of which have resulted in investigations or prosecution for illegal activity. As the torrid real estate market has cooled nationwide, more industry professionals may take chances to make a deal, experts say. Lenders say they are bracing for a fallout in which buyers ultimately default on their mortgages.”
“Local real estate agents fear future buyers in the neighborhoods involved in the transactions may not be able to afford homes or higher taxes as a result of inflated prices.”
“More than a dozen sellers and listing agents interviewed by the Tribune said they felt uneasy about the transactions but went along after employees at the title company assured them they were legal and not unusual. ‘As long as I got my $180,000, I didn’t care what they were doing,’ said John Dieumegarde.”
“Now, other appraisers are stumbling across Molen’s deals as they search for comparable home sales to help determine the value of nearby properties. On paper, the sales appreciation is astonishing, said appraiser Doug Nail.”
“‘This is not a $250,000 neighborhood,’ Nail said, referring to one in St. Petersburg.”
“Nail evaluated one of Molen’s sales for the Tribune, without relying on recent sales represented by Molen. He estimated the house’s value at about $145,000. One of Molen’s buyers paid $250,000 for the house in September.”
“Frank Gregoire, a Pinellas County appraiser and chairman of the Florida Real Estate Appraisal Board, said he has been getting phone calls about Molen’s sales in recent weeks. Appraisers are unsure how to evaluate property because the inflated sales are skewing their appraisals, he said.”
“‘A competent appraiser would say, ‘What in tarnation is going on?’ he said, ‘particularly in the market we have right now.’”
“One by one, the unsuspecting sellers are figuring out their transactions are stuck. Korri Prendergast, a broker in St. Petersburg, said the closing on her client’s St. Petersburg home was postponed twice.”
“Appraiser Caryn Blauser was astonished by what she found. Molen’s sales are not isolated. She has found many local homes selling for substantially more than the original price. ‘There’s some weird stuff going on,’ Blauser said. ‘The buyers may chalk it up to creative financing, but we may soon see a lot of mortgage foreclosures because everyone wanted to make a quick buck.’”
The Tribune fraud article is worth taking the time to read and appears to be the first in a series. This is all I could find on yesterdays auctions in Naples:
‘Southwest Florida’s supposed weak housing market made a bid for the better on Saturday. Not able to sell their homes on the open market, homeowners instead decided to put them on the block. It was standing room only at the Naples Beach Hotel, as 44 local properties headed from the housing market to auction.’
‘Here in Southwest Florida, the white sandy beaches and spectacular sunsets lured people to Paradise. But once they get here, waiting becomes a way of life. ‘It’s like everywhere you go, the lines are twice as long,’ Warner said. Michael Mir, owner of Bah Bah Persian Restaurant in North Naples, likewise finds it hard to find and keep good help. ‘People make appointments for interviews and they don’t even show up,’ he said.’ ‘Naples resident Miranda Warner said the worker shortage definitely is affecting the quality of life in Southwest Florida. ‘You go to the restaurant and the waitress is like, ‘You want ketchup? Get it yourself.’ It’s the same at the bank, with the electric company. It’s terrible,’ she said.’
‘In Hollywood, angry taxpayers piled into buses to revolt against the tax increase. In Fort Lauderdale, they pleaded with elected officials for a break. At the Broward County Commission, hundreds crammed the tax hearing in an uncommon show of concern. County Commissioner John Rodstrom said, ‘There was a real sense of a crisis brewing out there because people were getting hit hard and some appear to be moving out of here.’
The letters in TLW Mortgage Lending Inc.’s name stands for The Lord’s Work, and principal owner Michelle Darby believed in Molen. She said the agent arrived in early 2006 highly recommended by other professionals.
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TLW - I have in my stack of local lies an article that appeared in our local newspaper some time back. The mortgage broker repeated his belief in religion several times (the are I live in is 80% Far Right), then went on to claim that buying a house now in 2005 was a “no-brainer” and all the other REIC crap. This one is one that bugs me more than anything - using religion to prey on people in this cycle sickens me!
Here are some additional fraud stories, brokers beware: http://tinyurl.com/g3xrh
Actually, Crispy, you did not correctly read the article. The religious based company did business with the “confidence woman” because she had won their confidence. That’s what they do.
When they found out she was a scam artist, the relationship was discontinued.
Ben–thanks for the try on the Naples Auctions. I guess that we need to wait to find out if the sales really went through. The newspaper article implies that the success of the auction implies a healthy market. However, it’s not surprising that properties can sell when the prices are reduced by about 50%. I think that would scare the hell out of local realators and owners if prices suddenly drop that much.
From the Tribune article:
“Lee Farkas, chairman of Ocala-based Taylor, Bean & Whitaker Mortgage Corp., said his institution funded four of Molen’s deals. He was surprised to discover the assignment fees and did not realize the property had sold for more than it was originally listed.
“There’s no way we would do a loan structured like that,” said Farkas, who plans to look more closely at Molen’s deals.”
Dude, actually looks like you did four deals structured like that!
I’m getting tired of this auction BS. At some point this will blow up. People buying at many of these auctions are flippers? I suspect they are still overpaying and will get burned at the stake.
I suspect the main problem is that there is still lots of “free” money being served up by lenders, facilitated by ever-loosening lending standards. Don’t worry, as the late-great Herb Stein pointed out, “Anything that cannot go on forever will stop.”
Please bring this into your consciousness!! Nothing is SOLD in real estate until the deed get recorded. Repear “the deed gets recorded”. The real estate community uses sold to open an escrow. According to the New Homebuilders, 50% of sales are droping out before escrow closes. An auction is just another marketing tool to get some escrows opened. Check back in 60 days, and lets see how many deeds get recorded to new owners
My friends just moved out of a place they wer renting for $1200 a month here in Tampa to $875. The houses were comparable, there is just a lot to choose from. However, they screwed over the landlord. Not only does the landlord in the old place think they are just late on this month’s rent, (October’s has not been paid) but the house is a mess. The walls have dirty kid handprints on them. Carpets have stains. There is a hole in the wall. One bathroom, they tried to paint red, but it is half finished and looks very nasty. The yard is also a mess and the front yard is overgrown and weeds. I said to my friends, “you need to fix up this house.” to which they said, we don’t have any time and he has our security desposit so he can fix it himself.
The lease gives him the security desposit if you break it. You also have to give him 30 days notice and fix anything wrong with the house. Not only are they not fixing anything, but he did not get 30 days notice. So he is missing October’s payment, November’s, no 30 days notice and the security desposit. That is $3600 and he has to also dump money and time into the place to fix it up. To this I say, good luck to all those landlord flippers who want to rent instead of getting out why you still can.
The house across the street was bought by a flipper here in Tampa and the guy was trying to sell it and no takers. Rather than drop the price it is now up for rent. He is asking $1900 a month. Also, the yard he had to dump a lot of money into it after the HOA fined him $25 a day. It took him about 30 days to get the lawn fixed.
These people are bleeding and it’s only going to get worse.
It sounds like you need some new friends. They give “renters” a bad name. I hope he finds a way to get out of them what they rightfully owe.
Take pictures of the house and put them and the people’s name up on a web site…submit their names to google as search keys. Let the people know you are doing this….with background checks using google, this will get their attention.
I’m not a lawyer, so this would need to be legally verified…but I’d think since it is factual, a little scarlet letter on the internet on these people is in order.
It sounds like you need some new friends. They give “renters” a bad name. I hope he finds a way to get out of them what they rightfully owe.
Amen to that. You’re friends are not too bright. A landlord can go to court and document the damages. Your friend thinks he is limited to his security deposit. I have news for you. If the landlord takes him to court, he can sue him for damages above and beyond his security deposit. I hope he gets bent over and treated the same way he treated others.
Tom — your friends represent a low-life type of person that is not represented on Ben’s blog to any degree at all, I believe. We all have differing views about the bubble and its after-effects, but no here is of such low character that they condone what your “friends” have done to the house they rented. I am not a frequent critic of other posters’ posts, but this one is too much. Any worthiness of your observations is totally obviated by your apparent admission that such trash are your friends and your condoning their actions by lack of condemnation.
Chip,
I don’t think Tom is condoning what his “friends” are doing. It’s obvious, in the tone of his post, that he doesn’t approve. It also sounds like he tried to confront them when he said they needed to fix up the house. That’s much more than most people would do, I’m afraid.
We all have friend’s that don’t do the right things. We, as friends, should try to confront them and have them do the right thing. I’m still trying to convince them to clean the house up and let the guy know so he can put up a for rent sign in the front yard.
I know they are flat broke, so they can’t pay someone to do it, but I think they have enough to buy some paint and supplies and get in their and clean the place up. I told them to go over, mow the yard, and I would let them borrow my carpet cleaner (I hope they clean it out when they are done). I will let everyone know what is happening, but I wanted to point out the kind of crap that landlords have to deal with and I don’t think many flippers are going to enjoy being landlord’s.
BTW, I think the landlord is VA_INVESTOR.
“He said he’s following the advice of a longtime South Tampa real estate agent: ‘If you build right now, you’re digging your own grave. So we decided not to build.’”
There is plenty of gravedigging going on in San Diego County these days…
I suppose there will be a percentage of potential buyers who see a lot of inventory and some 5% discounts and figure now is as good a time to buy as any.
I’ve said it before, but prices will not really move down until need and not greed controls sellers fates. This is heading down the pike and already we are seeing huge increases in foreclosure numbers to prove it, but wait till fall 07 and all of 2008. You will not hear pomp sellers declaring how offended they are at low-ball offers.
Is it my imagination, or does it seem like every thread on this blog gets hijacked and turned into a California discussion? Can we keep this one focused on Florida? Please?
‘It’s like everywhere you go, the lines are twice as long,’ Warner said. Michael Mir, owner of Bah Bah Persian Restaurant in North Naples, likewise finds it hard to find and keep good help. ‘People make appointments for interviews and they don’t even show up,’ he said.’
‘Naples resident Miranda Warner said the worker shortage definitely is affecting the quality of life in Southwest Florida. ‘You go to the restaurant and the waitress is like, ‘You want ketchup? Get it yourself.’ It’s the same at the bank, with the electric company. It’s terrible,’ she said.’‘Naples resident Miranda Warner said the worker shortage definitely is affecting the quality of life in Southwest Florida. ‘You go to the restaurant and the waitress is like, ‘You want ketchup? Get it yourself.’ It’s the same at the bank, with the electric company. It’s terrible,’ she said.’
Yeah, it really sucks, doesn’t it to be rich snobby SOB used to having your butt wiped for you by the hoi polloi and then suddenly the hoi polloi can’t live on the pittance you paid them?
Sickening.
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What’s the point of being rich if you can’t be an a$$hole?
Nice “Conservative” comment!
What’s wrong with a society that requires more workers than its population can provide? It’s called consuming more than your share.
Just imagine the shrieks, howls and lawsuits if the electric company she’s bitching about cut their divident by a penny a share to pay their workers more money so they could afford to live in Naples and “serve” her lazy ass.
This kind of stuff is why I like the escapism of the international thread
Right on, Txchick!
Corporations which do not have to compete - such as utilities have discovered that if you make customer service bad enough, folks will stop complaining and suck it up. Welcome to the new world neo!
Wait till she calls 911 for a anbulance and is told to just walk it off you sissy, its so bad she would move but she cant sell her house !
yep, this is whats going on in south florida. if you go anywhere, you find teens who dont care or old folks, because they have to pay for their high condo insurance. i cant wait for people start flipping their own burgers, working the fries line and (self serve drinks). then again, with the crime rates going up, dont expect the police to show up when you get shot by some puck wantabee gangsta in your 750,000, zero lot housing development. THE SUBURBAN PROJECTS
Exactly what incentive do these workers have to be nice to the rich locals, especially if they don’t tip well (as many retirees are painfully loathe to do)? When you price out the working-class, the qualified, but underpaid, workers will go somewhere else. You are left with high school kids and those who live with their mothers until they are 40 years old. They don’t *need* your money, so they don’t have to put on a show.
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“If You *BUY* Right Now, You’re Digging Your Own Grave”
I am not sure when it will be the right time to buy, but it will be a day when rent covers expenses. I doubt this will happen until 2008 or beyond, perhaps as late as 2010, and then I suspect money will be so hard to come by that hardly anyone will be able to afford anything even at those prices.
““Appraiser Caryn Blauser was astonished by what she found. Molen’s sales are not isolated. She has found many local homes selling for substantially more than the original price.”
I’ll bet the MBS buyers didn’t factor this fraud into their risk models.
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I bet this is the tip of the big RE fraud iceberg.
It would be interesting if it turns out that Molen hasn’t broken any existing laws, and therefore isn’t prosecuted. To any RE lawyers here: Is that a possibility?
I dont understand this, where is the extra money going?how does this scam work?
I will venture a guess:
They are infalting the price of the home without telling the buyers that the asking price was much higher. I think she is telling the buyer - “There are four other offers at X, lets raise our price by Y. If you don’t buy now you will be priced out forever…”
Then she is making sure everyone in the daisy chain (agents, sellers, title co, appraiser) all agree not to discuss the non-existent other buyers. Then she kicks back some $$$ to the co-conspirators?
The extra money is going to the buyer ,maybe some to the seller and maybe the appraiser and maybe the mortgage broker and maybe the creep realtor ex mortgage loan officer Molen .
I hope that criminal scum like Molen and her crew get busted royal . Usually people like this go to far or some seller or buyer rats on them .Here is another creep inflating values and everybody suffers .
Yeah, there HAS to be a daisy chain of people with their hands out for this scam to work. As a former agent myself, it was SOP for the appraiser to get faxed a copy of the sales contract. So, what did Molen do? “White out” the sales price? The appraiser would have to be paid off. The lender/underwriter, too.
What happens when an “honest” appraiser comes onto the scene to do a future appraisal using that house as a “comp”? Comps are now whacked off-the-chart. House of cards comes tumbling down–eventually.
Also, the buyers who were working with agent Molen: there’s a very strong possibility that they signed an agency disclosure form during their time with her. 99% of the time, it would claim that she is a “buyer’s agent” and owing her fiduciary duties to THEM–not the seller. I smell a BIG lawsuit coming. She deserves it, too. Pure, unadulterated, slimeball $@%#-for-brains greed.
The buyer is getting some coin - You are correct. Maybe a straw buyer or two also in the chain of deceit!
I dont understand this, where is the extra money going?how does this scam work?
The scam is to Inflate the house price to get additional money from the sale. The SELLER is told that the house will be re-sold, but doesn’t care so long as he gets his money. The Buyer is a credit worthy bag-man who the companies involved are using as a credit source to float the loan from the lender. The APPRAISER, BROKER, AND Transfer agents are taking the “extra cash” as a fee for putting together the deal with the new buyer.
The catch is the LENDER isn’t fully informed of the payouts in the deal and that the price was inflated. In some cases they are using 2 sets of closing statements, one for the LENDER, and one for the Brokerage house. The title company is the one selected by the company transacting this investment deal, so they handle all the paperwork accordingly. Everything is okay, so long as everyone in the transaction is fully informed of where the money is going.
When the LENDER is not told of the additional payouts, and the new appraisals, this constitutes FRAUD. The lender has been lied to about the real value of the property, the proceeds to the seller, and the actual “equity” of the Buyer, which is nothing. It was a cash-out deal and the LENDER is going to get stuck.
“Opera Place could not secure a construction loan needed to start building the much-delayed project. That lender wanted more equity in the deal… ”
Another sign of a credit crunch…Trump labeled tower went down for same reason.
In addition, “Lenders say they are bracing for a fallout in which buyers ultimately default on their mortgages….”
Reads like financing will also dry up in the retail market.
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“If You Build Right Now, You’re Digging Your Own Grave”
If you find yourself in a deep hole, keep digging! At least, you have the hope of getting out on the other side of the globe.
For Hopebuilders, it is Dig or Die! Downsizing most businesses becomes a question of choosing between two bads. And most people are not good at it.
Most Hopebuilders will die (go bankrupt) before they stop digging.
Jas Jain
Dawn L. Molen could be going to jail, as are a lot of her collaberators. This sounds like fraud on a massive scale and would exepct the AG to get involved.
Yeah, I would strongly advise her to stop looking for a job in the Tampa area and to check out our International R.E. thread.
There was a picture of Dawn in the newspaper article but not the internet. It was a Sunday front page story. I don’t think she’ll be getting hired by any mortgage, real estate, or title company any time soon in the Tampa Bay area, but there is some good news for her. She is quite attractive and in her mid 20’s. I’m sure the Doll House, Mons Venus, and other Tampa Bay area gentlemens clubs could use her services. She can use the money to pay for the lawyers she’ll need when the FBI knocks on the door.
I’m from the Tampa area (grew up in suitcase city actually) and will be moving back sometime next year (hopefully to a much better location). I plan on renting no matter what for the first year, but does anyone have any opinions on which areas are the most likely to remain good places to live when this mess has run its course?
Several regular posters are from that area (I’m in Orlando). I suggest you be more specific about where you are going to work, unless commuting is no issue at all. “Palmetto” knows a lot about that area; I’m sure others can help.
As for renting, I recommend you rent a place that you are sure you can extend for a second year, should you choose. My wife and I rented for a year, extended for a second and may well be interested in a third or even fourth — until the downturn has played out.
Reading the Tampa Trib article answered most of my questions. There clearly is a cabal of miscreants at work here.
I wonder if her brokers will be on the hook for any of her misdeeds. At least one was smart enough to do the CYA-thing and call the FBI. If there is any justice in this world she and several other people will be making little rocks out of big ones in some nice razorwire resort.
This is not the first story like this from the Tampa Bay region either… St. Pete Times covered a similar situation last summer.
That was Jill Jackson. http://www.sptimes.com/2006/06/11/Tampabay/With_no_money__she_s_.shtml She was able to purchase $1.8 million worth of property on a annual salary of $24,000. She bought 10 properties at 100% financing in bad neighborhoods at prices in excess of their values.
A few weeks after that article an Account Executive from a mortgage company made the rounds at our office. One of the loans that Jill Jackson got were from her company. I showed the article to the AE and let her know that her company financed one of the properties. I gave the AE all the pertinent info to give to her supervisor. When I saw the AE a few weeks after that, I was told management knew about the situation and was dealing with it. Luckily for the AE, it wasn’t one of her deals.
The mortgage broker that sold the loan to the lenders could be in big trouble over this. The lender will force the broker to buy back the loans if there is fraud involved.
She’s definitely radioactive right now. Anyone whose signature appears on any loan documents along with her’s is probably best served by hiring a very good lawyer to review their possible exposure to criminal charges (and for the love of god, don’t pay the retainer with a check from your HELOC!). And if so advised by their attorney, approach the DOJ and/or state AG’s office expressing their desire to cooperate with their investigation in any way, shape, or form.
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“There clearly is a cabal of miscreants at work here.”
One has to go beyond the surface and dig deep: What made all these “miscreants” possible?
A FRAUDULENT FINANCE SYSTEM, operated by Bankrupters and Fraudsters of NYC and overseen by Fraudulent Reserve System headed by Greenspan (now by Bernanke).
Unless people understand that housing bubble, like the Scam Market bubble before it, was merely a manifestation of the fraud that underlies the US economy. When the Fraud can’t be sustained any longer the US economy will naturally slide into a depression. It is that simple, folks.
Jas Jain
The independent banks that make up the federal reserve are not part or owned by U.S. government. Their goal is to print new money every day and loan it out! If they get back 10 cent for 1 dollar, it’s party time. It is that simple, folks.
Hey maybe Dawn was related to our post-Huntington Beach mayor who just recently got convicted of RE fraud (Apt-Condo conversions)!
WHO makes enough money in TAMPA to pay 600k+ for a property???? There isn’t anything there to warrant that kind of prices - is there????
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Are there any doctors in Tampa, Nurse Liz?
Jas Jain
not THAT many!!!!! furthermore, you need surgeons to afford those prices, the average family practioner doesn’t make that much anymore!!
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“furthermore, you need surgeons to afford those prices, the average family practioner doesn’t make that much anymore!!”
Oh no. I know of many “family practitioners” who live in Palos Verdes Estates (second hand from a friend who lives there) who can afford homes in $2-20M (yes, $20M) range.
You should tell those doctors in Tampa to move to L.A. Area. I am told by the same source that these doctors over prescribe all kinds of procedures and are minting money. Their biggest problem is what to do with more than $500K a year doctoring income. Many of them have been buying homes for investments like crazy, in SF Bay Area, for the past 3-4 years.
What a system!
Jas Jain
I had a hard time believing that homes in Tampa were going for 600K until I saw it for myself on realtor.com. I started at 400K and saw a lime-green beauty at 450 and gave up. I guess the doctors are going to have to commute from Zephyrhills too. Any bets on where things will be a year from now?
Correction, any educated and reasonable preditions for Tampa a year from now?
That’s a tough one. I lived in Pinellas County from 1992-2002. When I sold my house in Clearwater in 2002, I thought the market was getting frothy. My guess is that prices will retreat to 2001-2002 levels, adjusted for inflation and the lower interest rates.
Tampa Bay was a bit of a backwater when I lived there. It has a large retired population.
For me, one of the “a-ha!” epiphany moments was when I heard that the median home price in the Tampa-St. Pete-Clearwater metro area surpassed the median home price in Atlanta.
“I guess the doctors are going to have to commute from Zephyrhills too.”
Funny, but only a Floridian will get that one.
The writing is on the wall folks-
Headline from todays Sunday’s Boston Globe “Magazine” pull-out.
“YOUR (TINY) HOUSE”…
“Real Estate-Why LITTLE Is the NEW BIG in a Cooling Market”
Looks like the music has really stopped for the McMansion crowd.
So maybe my 1200 sqff house in Ohio won’t be too hard to sell?
Your home IS the house of the future.
The Globe article has one guy living in 285 sq. ft. on Cape Cod.
It will only be hard to sell, if you think it’s price is gonna fund your retirement for the next 40 years.
To be fair, it’s just his weekend place. He lives elsewhere.
That reminds me of these Japanese hotel “rooms” that I saw on TV many years ago that we not much bigger than a coffin. I think I remember them even being stacked on top of each other. Since everyone wants to move to Florida, that’s the obvious next step for the state’s affordable housing crisis
I stayed in one of those, for two weeks, thanks to a colleague who didn’t ask me if I preferred the Okura. I’m well over 6 feet tall and banged my head on the steel top of the door jamb several times each evening/morning. Felt like being Lurch in a submarine.
Someone said that builders will never willingly be out of work. As long as they can make enough profit to keep from considering other careers, they will building. Does anyone know how low prices have to go before building homes is no longer a worthwhile activity?
Yes. I was in Central Florida during a big downturn many years ago. Knew a couple of local “custom” builders (they built great custom homes, but also spec homes, as most do). They told me — and this timeless logic must prevail today among the smaller, local builders — that they would build for virtually zero profit, if they had to, in order to keep their subcontractors employed. The reason was simple and sensible — these builders had subs who worked for them for many years and were excellent and reliable — to replace them, quality and reliability-wise, would be daunting beyond words. If they could keep food on their subs’ tables during the hard times, those loyal subs would be there to work in the good times. Otherwise, they would move to where the work was, as a matter of necessity.
A very simple formula on which I bank the outcome of my sold-and-buy or sold-and-build cecision.
I believe the famous quote that I cited came from you. But what have the profit margins been lately? Can they take a 30% drop in house prices and still put food on their own tables?
Woo-hoo!
Self-dug graves for everyone!
RE: Naples auction results
Don’t take Zillow estimates for homes to be gospel.
Here are the results vs. estimates of an absolute auction in Naples this weekend.
Note that the gross aggregate price was 57.3% of Zillow estimates.
There was a 10% commission (vs. a 6% regular brokerage fee).
So let’s guess the following.
Total price paid: $14,840,000 + 10% = $16,324,000
Total Zillow estimate: $25,901,000
Clearing price = 63% of Zillow estimates.
I suspect Zillow estimates were a bit high, relative to a year ago.
But it tells you to a certain degree how much prices and demand in Naples, Florida has really fallen.
And 14 of 51 properties did not sell.
Full details here:
http://www.housingbubblebust.com/NaplesAuction.html
Would these auction prices be considered bargains or do they represent the new normal for selling prices in that area? Unless the buyers “stole them” why would anyone be willing to pay more for comparable properties.
“Evans said he works with investors to help them find homes to buy and then lends them the money. The purchase prices are inflated, he said, because he requires his buyers to borrow additional money to set aside in case the home needs repairs. The “speculators,” as Evans called them, make their mortgage payments to him.”
HA!!! Speculators!!! I love it.