Lessons Learned With Pre-Construction Condos
The Palm Beach Post reports on issues facing preconstruction condo buyers. “Here are some of the things we’re hearing from new condo owners who bought pre-construction condos. Lessons learned? Number One: Know what you’re buying.”
“Did you know ‘decorator ready’ means partly unfinished, as in, no flooring?”
“Number Two: Don’t be intimidated by those builder-friendly contracts, you know, the ones with all the terms construed toward the developer. One West Palm Beach condo owner says he was forced to close on his units before they were fully finished. But due to the contract ‘that we were stupid enough to sign,’ he had to close or face penalties.”
“Now this same condo owner is dealing with issues that might very well end up in lawsuit. It might have been avoided in the front end. ‘My attorney is ready to kill me,’ this owner says.”
“Number Three: Beware the dreaded Temporary Certificate of Occupancy. You might not be able to do anything about this one, but at least know it’s out there. West Palm Beach, for one, issues buildings a TCO on a floor-by-floor basis, rather than waiting until the whole building is finished.”
“So those folks who were the first to move into 610 Clematis last December have had to put up with workers flowing in and out of the building for months to finish upper floors and common areas.”
“Go ahead and kick yourself if you want to, but it won’t do any good now. Everyone was caught up in the real estate gold rush, and you didn’t want to be the only one left behind, did you? Besides, everyone knew that if you gave developers any reason not to do business with you, there were 20 people in line behind you, ready to sign with no questions asked.”
And finally Lesson Number 4: Don’t buy a condo in Florida right now.
That’s all they really needed to write.
Number 5 - read any of the available books on financial manias in history - my favorite is “Devil take the hindmost”. This way you get hosed next time!
*don’t
John Kenneth Galbraith’s “A Short History of Financial Euphoria” is a great read that is exactly what the title says it is. Very readable and covers all the big manias from Dutch tulip bulbs up to the 1987 stock market crash. Particularly instructive is the Florida real estate bubble of the 1920’s.
Pre-construction suited speculators fine. They didn’t have to put much money down and they never planned to live in the units, so quality wasn’t a big issue either. Now those pesky ‘end-users’ have to be dealt with.
OT…
Have been noticing a huge increase in the number of listings noting “$xxx below appraissal, $xxx instant equity..”
First off most of these appraisals were done at top of market so the homedebtor could take out more “equity” with a HELO or HEL… Secondly they were probably adjusted on the upside by the appraiser so the bank could write up a higher loan…
Anyway, do people actually fall for this instant equity bs and below appraisal line??? Anybody else seeing this sales gimmick in their area??? Northwest FL here…
The people who fall for this pitch are the same that fall for the “Our diamonds are guaranteed to appraise for double what you pay!” or “This $400 value can be yours for 3 easy installments of $19.99″ lines. Idiots, one and all.
destinsm,
Yes I’ve noticed their growth here in Portland, OR as well. It immediately looks suspicious to me b/c when the seller says “below market value” or; “below appraised (or even assesed) value I have to wonder. Obviously they are referring to some sort of “height of the market” value. This totally ignores today’s reality. If they’re saying 25K or 50K or 150K “below” it almost assuredly a figure derived from the peak. Just b/c that’s what the seller owes has no bearing on what I would even consider offering. I hate to beat this to death but just look at your local market “pre-bubble”. Then add in “normal” historic appreciation for your area and make your assesment from there. Anything else is just fluff and hot air!
Am seeing the “below appraised value” thing in Seattle too. Started about 2 weeks ago. Must be the newest marketing gimmick to keep the buyers coming in!
What a scam. It basically means:
“This home is only worth what you are willing to pay for it (and dropping), but heck, since you’re going to be one broke sucker at this price, we can find some crooked appraiser to tell you it’s worth more, so you can go even further into debt!”
“Did you know ‘decorator ready’ means partly unfinished, as in, no flooring?”
I’ve heard it’s also really common for condo developers finish condos with poor quality flooring and cabinetry. I’ve also heard they can stick you with initial landscaping cost in the HOA fees.
I always considered condos to be like cruise packages, both just give you a place to sit and stair at the ocean. If you want anything more than that you have to pay extra.
Woohoo! “Decorator-ready” condos for everyone!
Part of the difficulty with this type of situation is the lack of transparency with the process.
For flippers/investors/speculators; let them rot. They are choosing to make this their work, thus they have a high level of culpability and are required to do due diligence… that’s what WORK is.
However, many people who bought as homeowners were duped by contracts that were clear as mud. The person who they THOUGHT was helping them navigate the difficult waters of homebuying sold them out. (the real estate agent.)
How many people can understand legalese enough to know what they’re signing? I bet FEW people can truly understand. Many of you cold-hearted people will say “well they should have gotten a real estate lawyer to review the documents pre signing”. HOWEVER, many normal people like me didn’t know that real estate agents don’t/can’t function in that capacity. People look (erroneously) at real estate agents as their trusted friend, a professional with a high code of ethics. They TRUSTED those RE professionals as most normal people would.
In life, the smart people aren’t the ones who know everything, they’re the ones who know when they need help. Unfortunately, the RE regime has convinced everybody (laypeople, reporters, the gov’t) that they are professionals who can serve in the role of ethical RE transaction facilitator. Although I (unlike many on this board) see utility in having RE agents, and think they do serve some great functions, they are not trained enough in their fields to facilitate as ethical financial transaction specialists.
It reminds me of when we closed on our house. We read every page that was in that stack, and it took 2 days to do it. We understood like 80% of it… but that 80% can make a difference. We thus had to trust someone, so we trusted our RE agent to help us. Luckily, I had a supremely ethical RE agent (like MrIncomeStream) working with us. But I too would have misunderstood what “decorator ready” meant. I too would have misunderstood the full ramification of an arbiter instead of suing, and so on.
This is very sad for the homeowners IMO.
I think what is needed is a retooling of the RE transaction process. It is the LARGEST most important financial transaction most of us will ever make. Perhaps relegate regular realtors to showing houses, writing ads, etc. Then mandate that all home sales be conducted not by RE agents, but instead by RE attourneys or equivalent, one who represents the buyer (and is legally obligated to the buyer) and one who represents the seller (and is legally obligated to the seller). The buyer’s RE attourney (or equivalent) would be paid by the buyer (not the seller) and would be paid a flat fee, not a commission based on home price (which is a conflict of interest IMO)
end longwinded rant
clouseau
No salesperson should ever be trusted completely, it always amazes me when people don’t figure this out after they buy their first auto. You can hire an agent (as a third party not to be paid part of the house sale commission). At the end of the process, you write them a check for their time, advice, and council. I dislike having the govenment mandate anything, as it then creates new and usually more difficult to solve problems.
It bothers me that anyone would sign a contract for something that costs about 1/3 of their lifetime income, but doesn’t think it prudent to pay a few hundred dollars to disinterested expert to council them.
I’m not an attorney, but I see very similar behavior in my field. People trust their financial broker (who run the gambit from bucket shop salesperson to extreemly capable advisors) with little concern about the background, training, and experience that backs their expertise.
“No salesperson should ever be trusted completely,”
End of subject.
You’d be amazed at how many people trust me completely. How many people I have irritated by making them read or me read aloud the contract. What should be recognized is that if someone puts that amount of trust into you it’s not to be taken lightly. That’s the problem people trying to fill there pockets and not respecting the position they are in. Happens with Lawyer’s CPA’s and Doctors also. Not just restricted to salesman.
On point as always mrincomestream.
A wiser man than I once said, “everyone’s selling something.” Good advice to remember mrincomestream.
“You’d be amazed at how many people trust me completely.”
I am amazed .
clouseau,
You have never spoken truer words. I had this same discussion with a couple of friends last Fall. Of course, one *is* a lawyer (reads EVERYTHING!) and the other *has* a lawyer, but the fact is that MOST people do NOT have a lawyer to look things over in a RE contract, wouldn’t think it was necessary, and trust their RE agent (or broker) to translate the contents. I’m really not siding with the the FBs in the above topic, but I can see how people can be duped. The FBs of the pre-contruction condos (and other RE) just had many, many $$$$$$ signs in their eyes and wouldn’t have seen the huge ass elephant in the room if it came over and sprayed water in their faces. They were going to sign regardless of what it said.
BayQT~
Clouseau;…I agree with most of what you say except this;
“conducted not by RE agents, but instead by RE attourneys or equivalent,”
Here we go with the attorney CRAP again…Nothing gets my hair up more than this statement….Most attorneys is my area can’t carry my jock strap so, I f..king resent your suggestion that you are going to regulate me to; “”Perhaps relegate regular realtors to showing houses, writing ads, etc.”"
You can kiss my …
I don’t think lawyers should be mandatory because I hate regulations. Regulations prevent people from learning from their mistakes which leads to even bigger problems down the line. Regulations allow people to be gullible without consequence, that’s very bad in the long run but then who thinks long term these days anyway?
“Here we go with the attorney CRAP again”
Note my words, you quoted (but misunderstood) them yourself. I stated specifically and purposefully “RE attourneys or equivalent”. The “equivalent” could be many things. It could be a new breed of real estate professional… whatever. Just so long as they were a professional that were competent to read RE contracts and inform buyers and sellers as to the risks/rewards with each contract AND also required to have primary responsibilty to the seller OR buyer (not both). Current Real Estate licensure is inadequate for this purpose.
The problem is that as it stands we have Real Estate people who pass themselves off as RE experts and more importantly RE CONTRACT experts, and erroneous or not, everyone is led to believe that they are capable of navigating these tricky waters. Well they’re often NOT capable of it.
My suggestion was only to have some form of RE contract specialist who IS qualified help people through the process… or at least have some form of way of letting people know about the true abilities of many RE agents.
“I f..king resent your suggestion that you are going to regulate me to; “”Perhaps relegate regular realtors to showing houses, writing ads, etc.””
So what? I’m not relegating you to anything. If my proposition (which is a damn good one) passed, and if you didn’t like it, you could (gasp) increase your training and become more than a regular realtor.
Like I said, I DON”T CARE if it’s actually LAWYERS that perform this needed service (hence the “equivalent” part of my post again… I guess reading and comprehension are very hard, aren’t they? This is why I don’t want you deciphering a contract for me).
As an example, we could create a new higher trained level of realtor-we could call the people Real Estate Contract Specialists (RECS) as an example. A regular RE agent would write ads, show homes, put up signs, field calls, find buyers and sellers, etc. Those people (like yourself) who want to do more than that would go through certification and training about RE contracts and the legalese, etc. Then they’d get their new title (RECS) and would be beholden to a new set of standards (different than that for regular realtors), and would be more effective at helping their clients (buyers and sellers).
“You can kiss my …”
Ok, I’m french kissing it right now. Tongue DEEP in. Squirm baby.
SCDave: your above post was crap. Like it or not, part (by no means all) of the reason for the mess we’re in is that we have poorly certified people who pass themselves off as total RE professionals helping the sheeple (like me) make the most important financial decision of their lives.
Note: I am NOT (nor have I ever) said that ALL RE agents are incapable of this. In fact, I have congratulated my own RE agent and MrIncomeStream several times over the last few weeks. Some RE agents are likely capable, and many aren’t. Note how many newbies are in the RE field now, are you going to claim that they are all RE contract specialists???? How are we as sheeple to know who is who????
If there were different criteria for different aspects of the RE game, the consumer would have better information and better trust. They would have (as an example) their RE agent find them their house, and then they would go over the closing contracts with their RECS. The RECS and RE agent could even be the same person, so long as they were certified in both.
I’m a doctor. By having the MD behind my name people know that I have a certain level of training. However, that’s not enough to actually practice. I also have to get other certifications showing that I am
- proficient in my specific field (Board Certified in my specialty)
- proficient at specific skills in my field (such as intermittent recertification for procedures such as Cardiac Live Support or at intubations or at chest tubes or colonoscopies as an example)
- up to date on the current standing of my field as measured by recurrent testing (must re-take my boards every 4-7 years, a greuling process)
- keeping up with ethical/legal requirements for my field
- certified and licensed by my state (licensed by state board of medical practice)
- licensed to dispense medications (DEA license)
- up to date per my practicing facility (have privileges to hospitals/clinics/etc)
Just being a doc isn’t enough. It’s not like a hospital will allow a dermatologist to do a heart transplant.
Time to face the music, many (not all) RE agents are very good at selling homes, finding clients, writing ads, but are piss poor about reading financial contracts. Let’s differentiate the ones who can- and yes SCDAVE, that does require more training and certification. I’m sorry, that’s what being a “professional” is all about.
clouseau
Otherwise, I’ve enjoyed your previous posts SCDave. Hating 1 out of many isn’t too bad.
I hope we can be friends again after our tiff.
require more training and certification.
HIC…Now I understand…Its my lack of the 2 year law degree that disqualifies me as a “Professional”..
HIC;…I hope we can be friends again after our tiff.
No offense taken….I understand clearly where you (and many others) are comming from and I agree with you…
Just don’t lump me in with them….
Just don’t lump me in with them….
Wasn’t trying to. I think you’re a little oversensitive here, partly based on what OTHERS (read: not me) have said.
================
Now I understand…Its my lack of the 2 year law degree that disqualifies me as a “Professional”..
No. You are confusing issues here, and you are projecting what OTHERS (again, NOT me) have said about professionals onto my post. I don’t recall ever saying that RE agents aren’t professionals. To tell you the truth, I think it’s a bullshit word, and really has almost no relevance whatsoever. And most of the people using it on this board use it INCORRECTLY to denote a white collar vs blue collar sort of situation. But I digress.
What I DID say, was that the requirements/training/certification/etc for being a RE agent as it stands does not in and of itself qualify an individual to act as a contract specialist. this is true.
This does not mean that a RE agent can’t learn contract law, or know it well enough to practice it well, or that they’re not a professional. Only that their licensure as RE agent does not ensure that they know enough about contracts to protect the consumer. Much/most of the knowledge they have about contract law would have come in ADDITION to the RE licensing requirements, not BECAUSE of the RE licensing requirements.
=========================
Some examples:
As an MD I consider myself a professional (I’m not even sure what “professional” means, but whatever). That does not mean that I am qualified to review and give information regarding real estate contracts to consumers. (and I’m NOT qualified to do that by the way)
In the same way, the fact that I am not qualified to do contract law does not invalidate that I am a professional. (unless you’re asking if I”m a professional about contract law, in which case the answer is no I’m not)
As an MD, I am also not certified to teach people how to set up a Roth IRA. However, I happen to have extensive knowledge about setting up an IRA, so I could do it and easily teach others how to do it as well. (but my MD certification has nothing to do with that)
=======================
Since you’re so sensitive about this, let’s use you specifically as an example.
I’ve never met you, but it seems you are a RE agent or have RE agent experience/training.
Based on that, I can assume:
1) you know the process for buying and selling a house
2) your primary interest and responsibility is to the seller, not me (most buyers don’t know that)
3) UNLESS you are a buyer’s agent, in which case your theoretical primary responsiblity is to me… but it is complicated by a conflict of interest- you make more money the higher the sales prices is, whereas it’s in my best interest to get the lowest sales price.
Apart from that, BASED ON YOUR CREDENTIALLING/CERTIFICATION, I know nothing about your abilities.
You may be the best RE contract reader on the planet, RE lawyers might actually not be worth the stench in your jock, but how do I know this? I only have your word on the matter. There is no 3rd party objective source that can help reassure me that you know anything about contracts. With a contract lawyer, I can get tons of 3rd party confirmation.
REGARDLESS of whether or not you have extensive background in contract law, you can be a professional. The two ideas are not related.
Hence, my desire for some form of Real Estate Contract Specialist (RECS- you heard it here, folks), and the RECS can come from the law arena, from RE arena, from the moon for all I care, so long as it meets the general guidelines I stated above.
Again, it is very clear to me from PERSONAL EXPERIENCE that the house consumer is at a tremendous disadvantage when making the largest purchase of their life. Most of the involved parties have a keen interest in getting the consumer to pay the MOST amount of money for the purchase. Even the buyer’s agent has this conflict of interest. Worse, the consumers have been fooled into thinking that the homeselling machine is looking out for their best interest (hence “they wouldn’t lend me this much if they didn’t think it was safe” and “the RE experts tell me I’ll get 20% per year forever” kind of reasoning). I thus would like to add one person to this mix who would be legally and ethically responsible to the consumer, and who would have the necessary information about not only the home buying/selling process, but also the actual legal contractual issues since they play a large role in the process. The current licensure requirements for RE agents is not sufficient. Thus, let us add a RECS who could come from either the legal or the RE field, or both. I couldn’t care less.
clouseau.
That’s actually not a bad idea Clouseau. I have seen my fair share of contract stupidity. It wouldn’t hurt the industry to put a little more into an agents knowledge of contracts before they hit the streets.
One of my first few clients years ago was an attorney. That encounter taught me a lot plus I recieved a few parting gifts from him which included 2 contact law books 1 one real estate one general and a commission split which was considerably less because someone had to pay for the f*** up.
HIC, Right On! I couldn’t agree more strongly with everything you stated.
Most attorneys is my area can’t carry my jock strap so,
You don’t go to a dermatologist for cancer treatment. You don’t go to real estate broker who specializes in factories to buy a home and you don’t go to general practice lawyer for a real estate deal.
But you do go to a cancer specialist for cancer treatment; if you are going to sell a large commercial building, you get a real estaet agent who specializes in large commecial buildings; and if you are going to hire a lawyer to look over a real estate deal, you hire a specialist.
SJ
P.S. I am one of those ultraspecialized specialized lawyers. You either need me or you don’t. And if you need me and you happen to find me, you don’t give a d*mn about what I charge. Because I can typically solve your problem so fast you head will spin.
Amen to that stjoe;….My real estate lawyer charges $400. per and my Planned Unit Developement Lawyer charges $625. per…I use both often…….Just finished a deal and it cost me 17K+ between the two…Probibly spend 25K+ a year with the Real Estate Lawyer…I consider both a bargin
Point;…Do we need either to interpet a contract for the purchase of a condo as the DOC would suggest ?? I don’t think so…
St Joe,
If you happen to work in the mid Atlantic states I’d love to get a hold of you offline, as I will probably have need of your services in the future.
scdave ….I dont know if your a realtor or not , but I would hire you in a minute because I know you have right character and knowledge .
These transaction were more than likely not handled by real estate agents. But the developers sales staff. Most of these developments during boom times won’t let agents within a country mile of their projects. All developer contracts are geared towards the developer the bigger the company the worse the contract.
yup….
Double yup.
Don’t most RE transactions require a lawyer fee which is paid by the buyer. I think that means you will be hiring a lawyer when you borrow. Why not make them earn their pay and explain the contract? If possible pick the lawyer AND the appraiser.
That lawyer represents the lender not the buyer. Buyers should always hire their own attorney who represents them.
That being said, a lawyer can’t always negotiate away the more onerous provisions in a builder’s contract. So much depends on the strength of the market. In my experience, the builders would present the terms of the contract as take it or leave it, and the best I could do is explain fully to my client the consequences of entering into the transaction. As the market changes, the builders will be more willing to negotiate.
Not any more. I have a feeling that regular joes (with or without lawyers) can demand pretty much whatever they want in the contract without the fear of the bulider walking away.
In buying my last house, it came with a white Kohler sink. I asked the construction manager which white. He looked a me like I was crazy and then I said, “Kohler has three different white sinks.” Even he didn’t know that. He had to make two phone calls to find out which white there.
There there was the built in file drawer. I told him the drawer in the sample was too small to hold any file. Again he looked at me like I was crazy. I pulled out a sample file and told him to fit it in the drawer. He couldn’t. The drawer looked nice, but it was unusable. He then had to retrofit all the other house that were built but not delivered.
SJ
How many people even use realtors when buying new construction? I’d bet the majority of them bought from the condo sales people and didn’t use a realtor.
You’d win that bet 9.9 out of 10 times
“However, many people who bought as homeowners were duped by contracts that were clear as mud. The person who they THOUGHT was helping them navigate the difficult waters of homebuying sold them out. (the real estate agent.)”
I have a sister who’s a legal secretary. The first private attorney she worked for did a *lot* of business with the real estate agents from the office down the street. Time and again they’d charge into the lawyer’s office, begging him to quick fix something they’d f’d up - “Please oh please oh please we gotta get this fixed before closing. I can’t let
my client find this out.”
Sis didn’t need to have her boss tell her to always use an attorney when buying or selling real estate. She saw on a regular basis the potentially-disastrous results of leaving sometimes intricate legal details to unqualified real estate ‘professionals’.
When I purchased my house, I insisted on handling the paperwork myself. I figured I couldn’t do worse than a real estate agent, and I paid an attorney to review and okay my work. That worked out to be one h*ll of a lot cheaper than hiring a real estate agent.
I just LOVE that name…. effing brilliant!
I thought the same about yours. Laughed my hiney off when I first saw it.
‘Homoaner’ is the derogatory nickname folks in the building trades use for certain types: those who constantly gripe about the bill, and those who think they should be able to get free advice from a professional regarding their DIY project. They have nothing but contempt for those who are willing to do a hack job, ignore building codes and risk their family’s safety just to save a few bucks by doing it themselves. And it’s disquieting how many of those types are out there - another reason I’d never buy a home from a flipper.
What I want to know is how do you fix something in a real estate transaction without either of the principals knowing.
Ex: Here in California while in escrow if there is something that needs to be changed about the transaction or property it typically requires the signature of the buyer or seller or both.
Since 9 out of 10 realtors seem to be functional illiterates, judging from their mailers, how can anyone possibly trust them to understand the fine print on a contract?
Clouseau,
While I agree on some of the things you say, and I am not a realtor, laying blame on others for not doing your own homework is a trend that sickens me. What ever happened to taking resonsibilty for your own actions? The cry for regulation and lawsuits and ignorance of the laws , lack of comme sense, ect seems like a recurring end of bubble phenomenon.
People really do not realize that often times the Escrow Officer ,or sometimes the loan officer, cleans up the mess in the purchase contracts of do do realtors . Escrow officers are real pros at cleaning up the mess of the lousy contract writing realtors . Sometimes even the Escrow Officer can’t repair a mess and the fight begins . Never try to solve later ,what should of been solved in the original contract .
I got so pissed off one time when I was younger that I sent a agent walking because they were not sure who the buyer was in the offer . Oh I could tell you stories , but I will spare you .
” I sent a agent walking because they were not sure who the buyer was in the offer ”
Wiz-
Tell me your kidding. Now I believed the one about the guy wanting to kill the deal for 50 bucks. Because I had a guy who wanted to kill one for 200 bucks and wouldn’t let me pay it too close the deal just on principle but he relented.
But a agent not knowing who the buyer was in a deal. Tell me he didn’t last long in the business, you fired him right, hopefully with a swift kick in the head.
Mrincomestream ……I was selling a rental property I had . A buying agent came in with a offer ,but the blank for the buyers name was blank on the contract ..All other details were filled in on the purchase agreement . Of course I asked ,”Who is the buyer ?”
To make a long story short , the agent said that she would be finding out . I told the agent to not come back until she knew and to also bring me the buyers proof of income and proof of down payment . I don’t know if the agent lasted long in the business or not .One time on a deal a buyers agent submitted a offer and the buyer was in prison . I have seen it all .
laying blame on others for not doing your own homework is a trend that sickens me
Yep. me too .
That said, the NAR has convinced everybody that “suzanne researched this” and that suzanne has “rigorous ethical training” and that she is “a RE professional who can guide you through the purchase of a lifetime” (am I the only one who has seen these commercials?). The govt depends on the NAR for much of its data. Journalists defer to the NAR as the only RE experts.
Is it a surprise that the sheeple then trust the NAR? I would argue that people are TRYING to do their homework, and have been misled by everybody- turning them over to the pack of wolves. They make a purchase partly out of greed, but much is out of ignorance- which is why they used a RE agent to help navigate through their ignorance.
It’s the same (in most people’s minds) as trusting a doctor to prescribe the best medicine for what ails you. You can do as much “research” as you want, but at some point you have to rely on a professional from the field (or you have to learn everything about everything. None of us are omnicient). RE agents (like it or not) are considered the professionals. Well, if they want to be that, then they need to start acting like it, or we should provide one layer of insulation for the consumer, and start directing the consumers to THAT person as the guide through the process.
This is not dissimilar from a stock broker who must verify that a prospective daytrader is competent to trade options BEFORE allowing him/her to do it, regardless of what the trader wants.
clouseau
clouseau ….Thank God that real estate deals are usually not life and death situations as it is in your field .
These days they have “fill in the blank” purchase contracts ,(designed to absolve all screw ups from the salesperson ). What bothers me is that the realtors have become prediction spinners that the media have taken serious. It’s true that some real estate contracts are complicated enough that the buyer or seller would be in better hands if they had a attorney protecting them .
IMO its up to the buyer or seller to not let the sales agent rush them in such a important financial transation . Alot of realtors should have extra training in real estate ethics and contract writing . Its true that the Real Estate Business sends out alot of incompetent agents . No offense to any good agent .
“Everyone was caught up in the real estate gold rush.”
NO, they weren’t. Not even most people were. Get real.
I know a few people who ended up overpaying for their primary residence because of the inflated prices, but I don’t know anyone other than one aunt who got caught in the rush (my mother-in-law wanted to, but my father-in-law wouldn’t let her). Most people I know just lamented the outrageous prices.
You must know alot of smart people climber because a insane amount of people were caught up in the real estate gold rush .
Again I go back to old time underwriting . If the floors , appliances , heating etc. aren’t in , no closing .
‘ Everyone was caught up in the real estate gold rush, and you didn’t want to be the only one left behind, did you?’
A that is why the home builders were able to arrogate rights over the buyers. If you were a builder it must have been a lot of fun sitting around at night laughing at anecdotes of buyers fighting and tripping over each other to put down deposits. Someone should be writing movie scripts.
But according to Mr Zilbert buyers are making 100 t0 400 % on their money flipping condos.
This is playing out just as predicted. Time to party like its 1980 all over again.
BigD;….Ouch !!…Please don’t say the “1980″’s….My wounds have just barely healed….Many on this blog have know clue what you are speaking of other than statistics….Stat’s are all well and fine but if you personaly went through the experience it felt like we were headed for 1929 again….
I remember it well scdave …painful …..
Very painful
Whew! I first bought in 1979, and didn’t know *anything* about buying a house. LOL! It was a fixer in Berkeley, $39k. But fortunately the city had a redevelopment program AND my (ex) husband was an electrician who had tons of friends in the trades. Sold in ‘89 for $208k. Crazy, but the new owners were happy.
BayQT~
BigD;….Ouch !!…Please don’t say the “1980″’s.
Yes…I’m still grieving because video killed the radio star….
There are major shifts in market mood underway. Have you noticed the rapid rise in confidence on this blog in the last few weeks? In fact, a number of long-term posters who were sometimes treated as trolls seem to have stop posting. I don’t think they were trolls, but just had honest differences of opinion.
The Craig’s list housing forum has had an enormous shift of opinion. Some formerly confident housing bulls have admitted they are experiencing fear. Keep in mind, it is a neutral forum, not a bubble blog, and the bears are no longer being suppressed. Anyone who has all their assets in real estate, and is monitoring recent events has to feel their stomach beginning to churn. Courage in the face of the enemy is a rare trait.
Also, as we all know, the news is beginning to shift rapidly. Maybe some reporters who rent are finally obtaining approval for objective articles from their editors.
Keep this in mind. Nothing brings down a market like a shift in psychology.
i have seen a profound shift in the attitude toward real estate in the last two months…and the beginnings of panic here,i’m a loan broker in sonoma county,and i see appraisals coming in flat yoy for values,loans that were doable in february and a slam dunk in december are now impossible(mostly attempts to refi to a fixed loan).when the elephant in the living room gets diarrhea,it becomes harder to ignore.
The big stink is soon to follow…
Tom I’m still getting the values but the jump from arm to fixed is about $800.00 on average. Most people can’t do it.
….and these people cannot seem to stop their spending!!!!!
I had no idea the number of people who were allowed to buy with 0 down and $20-$30K of credit card debt. Now, 7 months into the deal they “need to refinance”.
Unf__king believable.
Anyone who has all their assets in real estate, and is monitoring recent events has to feel their stomach beginning to churn.
They’re belatedly realizing that owning RE in different places doesn’t mean that they’re “diversified”.
tom stone - nice metaphor re. the diarrhetic elephant. LOL
A big leak in the housing bubble
Recession in 2007?
yep
07 = 1991
Nooooo Flat;…1991 was mild compared to 1981….
scdave …I agree . The 1981 crash was harder to take than the 1991 turn down . Boy did people have to do creative financing during that nightmare . I happened to be in the business at the time and the interest rates were increasing so quickly I remember selling one house 5 times before the rate held long enough for the deal to hold .
YUP….Seller secondary financing was the way to “do the deal”…Lenders wanted a down stroke of at least 20-25%…
OT, but some observers are conjecturing that Toll Bros’ order book is “in a meltdown.” Strange that its stock price is so sticky around $30, neh?
“Toll’s second quarter order decline is confirmation of even grimmer portents for prices and the first signs of a coming debacle in housing. The WSJ article cites Bank of America securities analyst Daniel Oppenheim who points out that Toll’s 32% decline in orders came despite a 15% increase in the number of new Toll subdivisions being built. To us, Toll’s order book looks to be in a meltdown.”
http://capuchinomics.com/news/index.php?option=content&task=view&id=242&Itemid
I don’t understand the street’s response to the bad news from TOL, PHM, CTX, HOV and some other builders. the stocks aren’t moving, except for CTX which inexplicably has been rising the past few days while I have it on watch for a short opportunity, but no dice. WLS absolutely tanked in March but it’s way back up now.
what planet is this anyway? sheesh.
NO NEED TO WORRY ACCORDING TO SNOW:
Rising mortgage interest rates are natural at this stage of the economic cycle, and the impact on homeowners with adjustable-rate mortgages — including interest-only and payment-option ARMs — should be “relatively small,” according to Treasury Secretary John Snow
Ben - please shut down this blog and refer all further comments to Mr. Snow. Not to be political but this admin is as big a joke as all the others.
snow job. n. Slang. An effort to deceive, overwhelm, or persuade with insincere talk; a long and elaborate misrepresentation.
Can we have this as a weekend topic? I can’t believe he said this. Then again, yes I can.
I second that. What a completely priceless statement. Snow must have watermellon-sized balls…… do you think he was sniffing a lot while he said/wrote that?
610 Clematis
To me it’s unbelievable that anyone at all lives down there! I used to hang out down in that area when I was a kid - it used to be a wasteland. I guess it’s different now.
“Decorator ready” condos are so yesterday. Everyone should move up to “Roof-ready” SFHs.
I’m told that Florida precosntruction condos required a 20% deposit. A $5k or so deposit wouldn’t cut it. So the “walkaway” cost is pretty high depending on how many a speculator bought and at what price and how much leveraged.
$400K condo = $80K down.
Eeven worse most of that “deposit” money was borrowed with their primary (or soon to be past) residence as collateral.
One of the things that needs to be done in Florida at least is require more education for realtors. You can go from Joe handyman/Jan housewife to being a licensed realter in around 90 days or so. As others have mentioned this allegedly qualifies you to advise people on what is likely to be the largest purchase they will ever make. What an effin joke. Full disclosure—I am a re appraiser in FL and have been predicting this unfolding scenario for some time. I am heavily into commercial re but it has all been paid for for a long time so I can weather just about any storm. I do not do a lot of mortgage work. I saw how slimey/unethical that was becoming about five years ago and changed the focus of my practice more towards estate/litigation valuation. I have more work than I can do most of the time and I don’t even advertise.
A lot of people are going to get creamed in the condo mania here in NW FL and as far as I am concerned it can’t happen soon enough. I saw so many people who had no clue about re jumping into re deals with huge risks but all they saw were $$$.
RM
Destin…are you the same fellow posting on the Microsoft Money message boards?
RM
Actually, it’s a lot less than 90 days. Spend 7 straught days in a real estate schools class, pass the state test and you are licensed to sell real estate in Florida. Training in contracts? legal language? closing paperwork? NO WAY. You are trained to pass the state exam.
Yes you can spend 7 days in class and have the info crammed down your throat. But by the time the state does a background check on you (including fingerprints) and you actually schedule to take the state exam you are way beyond 7 days. It might could be done in 45 days IF you know the right people in Tally or Orlando. The processing of the application is what takes time not the actual classwork. It is effin joke.
RM