Congratulations, real estate investors! You’re having a noticably positive impact on the housing recovery and are even being acknowledged in the press. According to the San Francisco Chronicle, the Bay Area local market is seeing bidding wars and multiple offers with ever increasing frequency. What’s the cause?
An analysis by MDA DataQuick suggests the change in fortunes is due largely to the flipping of short sale properties by real estate investors like you!
Furthermore, investors have been increasing their participation in public foreclosure auctions and thus helping to keep REO inventories below catastrophic levels.
***BUT*** the good folks at the San Francisco Chronicle – who have consistently demonstrated themselves to be quite clueless about the way business and the economy really work – suggest that this activity by real estate investors is a BAD thing. Why? A quiet form of class envy: According to this writer, short sale investors are shutting out first-time real estate buyers.
Buyers like Luis Jiminez (who pooled money with family members to buy a rehab as a short sale and then sold it after evaluating eight prospective offers) and all other real estate investors like Jiminez or, “even worse”, those with “ready money” who might not need to garner resources by scraping and pinching, are pushing first-time homebuyers out of the market.
That’s right. Apparently investors like you — in all varieties and with all types of funding sources — have “elbowed out” some first time homebuyers.
Of course, when the reporter in question interviewed realtors dealing with the properties, he got answers indicating investors have “restored the health of neighborhood blocks that had become partly vacant and forlorn.” However, that benefit was not even close to the focus of the article. Instead, the focus was squarely on how you investors are taking too much of the action in the real estate recovery.
Why would anyone trust the general press about anything related to business and investment?
The piece went on to predict that banks would start “rationing” their REOs and to discuss how much real estate investors hate short sales, so obviously, this is not an informed reporter. However, the problem is that people like this guy are covering the market, and they are potentially driving new investors right back out of the market for fear of doing a “bad” thing.
Real estate investors will be the body of businesspeople that bring the real estate market back, and I’m starting to think that they’re going to need a PR resource in addition to funding.
Your comments are welcomed below – thank you for reading http://realestate.BryanEllis.com!
This is the same area of the world that elects Pelosi to be our queen. Think about it!
And people wonder why newspapers are going broke?
Carole, nice article. But sadly I must agree and disagree with your premise as stated above. There are many “investors” out in the market that do not have mission statements, core values or any business acumen in the structure and operations of their companies or individual investing. I think that the word “investor” has become one of today’s most over used words. Most of the short sales and reo flip’s being handled today are by people who have jumped into the “real estate guru mania”. Many have joined the rank of victims and casualties
of the economic crisis, mail because they believed the sales pitch that this business was fast and easy.
We specialize in short sales. However, where I agree with you is in the nature of the service we can (and hopefully do) contribute to our community. My company has both a Mission Statement and Core Values that direct us to help home owners in distress. We coach and counsel our clients (we are actually a residential and personal redevelopment company) to help them navigate through this insane mess. We direct them through the 7 or 8 programs and options that are available to them to help them stay in their home. What we tell them they should NOT opt for is foreclosure and explain to them that as difficult as things are today, a foreclosure on their credit will truly be 5-7 years of hell on earth. We do not charge our clients a dime for this service. As a result, not only do we get properties from our realtor’s and direct marketing efforts, but many of our acquisitions are a result of referrals from these distressed homeowners.
It has become the nation’s favorite past time to blame the government for everything. Again this morning I had to hear how badly the Government runs everything and that if business ran their companies that bad where would we be? Well here is the truth and I would welcome any reader to share, discuss or challenge this position. The Corporate world has changed dramatically. People that are frustrated and angry are so because of the total inept way companies have grown their businesses (not all, but certainly a majority). Anyone that negotiates a short sale today can certainly understand how the average homeowner is angry, frustrated and lost. It is a nightmare to manage. There have not been enough Loan Modifications or Short Sales for lack of demand. The log jam is so severe that there is simply no way to get them all through. The average short sale takes 2-3 months and that is on a good day with a moderately small company. When you get into companies the size of Bank of America, which has gobbled up so many, who here does not want to shoot themselves at the end of the week? I could go on about this nightmare…
When a company splits or add divisions, it would be helpful to everyone if they would put systems and internal processes in place so that the left hand knows what the right hand is doing. They don’t. Then we bemoan the level of customer service or how rude an employee is. The fact is, there are only so many times a front line employee can say “I don’t know” or “I’m sorry”, get yelled at and keep an upbeat and positive attitude.
If I am good at my job, then when I quick sell the property, I always price it below the CMV so that the average retail buyer, the little guy, can take advantage of a “buyer’s market”. Deep pocketed investors really don’t need a break…the little guy does. It feels wonderful seeing a first time home buyer realize their dreams of living in a nice home in a nice neighborhood. It definitely offsets the depression of having to sit at the table and walk a family through the process of walking them out of their dream home. Homes that are not nice, or in not so nice neighborhoods, we quick sell to investors. They have the money to rehab and redevelop the neighborhood and place responsible tenants in their properties.
However, if more of us do not speak up and state the facts accurately, then policy will be set without our input. It all needs to be fixed…the sooner the better. You would think that the companies that helped to create this mess would hire enough people to help bring it under control. Maybe not..
Typical Media distorting the facts as usual. They also fail to mention that investors are able to get properties that most first time home buyers would not want anyways. I have had countless of first time home buyers turned down awesome fixer upper deals or homes with even minimal TLC touch for the more expensive “finished product” and being willing to pay the premium price. Its all about big rich people screwing the rest of America when it’s them who are doing the destruction. Fact is that if the home is not looking nice, first time home buyers won’t even look at it and why should they?
The establishment news media (full disclosure: I have an M.A. in journalism and worked as a professional journalist for many years) has for more than a century functioned as the government’s fifth column rather than as the fourth estate it claims to be. I personally love what Dan Doran says: We should be proud to be called vultures. Vultures don’t kill anything; they just clean up the mess (in this case, the mess entirely caused by government policies that started forcing lenders to loosen lending requirements way back in the Carter administration). Without vultures, we’d be up to our eyeballs in rotting, stinking carcasses. And the symbol of our country, the bald eagle, spends the majority of its time functioning as a vulture, eating carrion. Don’t take on undeserved guilt, real estate investors. We–when the government doesn’t prevent us–perform a very important role in the market ecosystem.
When you figure over half of all mortgages are now held by Fannie and Freddie, I have never met an AmTrak passenger on the scheduled time and for anyone to think going through a foreclosure is that big of a deal anymore is just using more of the same “government” speak that lead us down this path.
When the banks could make rational decisions about where to make home loans and where to “Red Line” the area and stay away, before the Peanut farmer and his cohorts, decided to continue the total screwing of these country, King Roosevelt was so intent on, we would never had gotten into the current mess.
Every time government has decided what was best, and I do mean every time!, things did not go so well. While there are and will be some corporations that we run by crooks and screwed people, every time these same corporations were turned over to the govenment and the regulators, which are way too many, blew it! And blew it big time!
People are told to trust the government to regulate things and the govenment is going to help the individual and protect them in times of need, what a crock!! Tell me an event and I will show how the government did not follow it’s own rules and regulations, instead offering a false sense of security when none existed.
The country is, has and will be helped by corporations! The government only makes more and more rules to ensure they and their friends have power and jobs from the money they steal from every man, woman and child in this country.
The only reason short sales take so long and are so hard to complete is because of the mountain of government regulations. If the government would get out of our lives we would be able to generate more wealth as individuals and a country, faster, easier and with much less chance of failure.
As for the Media, one of the reasons I left the Media many years ago was because of the strong trend to tell what sold copy and the truth be damned. It has steadily become worse and the only thing really keeping us afloat, is the internet, which Obama desperately wants to take government control of also.
So people are not angry because of the way companies have grown their business and saying that shows a complete misunderstanding of what is happening in this country today.
People are angry at the Unions, Government and the slimy lieing Politicians!
We are not in trouble because of Wall Street, we are not in trouble because of Big Business, we are not in trouble because of Investors, (learn what the term means), We are in trouble because of Big Government and the liars in government and the Press.
Research is easy at this time because of the net! Research paints a very different picture of Who, What and Why. Easy voice and easy research is why Obama and his ilk want to own the web also, just like they own Education, not completely, by owning the Unions, and now Student Loans. Control the money, control the education, control the food. When you control all of those, as is now the case, you control everything, people just may not understand it yet.
It is sad how the media portrays free market dynamics as a bad thing.
Poor sad buyers, that can’t get financing at overpriced market, but cash buyers can “steal” a property from the bank.
Forget that the REI usually turns the property over to a buyer below or behind market value, and this allows for 3rd party financing to be obtained.
I am losing sleep thinking about all the people I beat to buy a property behind market valuations, except that preapproved mtgs are still getting declined right up to closing; by the vary people that caused the problem – the banks.
Keep in mind, foreclosure laws differ among 50 states.
For instance, to say short sale is BETTER THAN foreclosure begs the question, “For whom is short sale better than foreclosure?”
“office@lift4ullc.com” says, “What we tell them they should NOT opt for is foreclosure and explain to them that as difficult as things are today, a foreclosure on their credit will truly be 5-7 years of hell on earth.”
If you’re unlicensed, perhaps you can make such blanket statements.
I NEVER would make such statements to a property owner. I am licensed and many investors work with me.
Situations and state laws differ. Further, I don’t know what examples you cite, but foreclosure is NOT “5-7 years of hell on earth.”
(IF) my team and I are able to negotiate a FULL PAYOFF & SATISFACTION payoff (and not just lien release), a short is better than a foreclosure.
You see, credit is NOT the main concern (and if you know what you’re doing you will see this).
The main concern SHOULD be working with the borrower’s attorneys to negotiate and ensure full payoff & satisfaction of mortgage.
NO Deficiency…NO Judgment…NO rabid debt collectors.
Here’s something many of you might not know. I won’t pretend to know your state’s laws or act like an attorney.
Here’s what I know: many investors/vultures (whatever you want to call them) could give a damn about the homeowners. They care about B-C profit.
They think saving the borrower from foreclosure (BUT NOT from deficiency) is their only obligation…legally and morally.
In Florida, a debt owner ONLY releasing lien can pursue JUDGMENT for up to 5 years and debt collections (including garnishment and/or bank levying) up to 20 years!
TWENTY YEARS….
Talk all you want about short sale vs foreclosure. UNLESS short sale in recourse state includes satisfaction of mortgage, it’s a WIN only for the investor-buyer.
That’s why many investors-vultures earn (and deserve) pejorative labels. Naturally, I refuse to associate with investors who do NOT fully disclose and try to help borrowers first.
In no way am I suggesting “office@lift4ullc.com” does anything wrong, legally or ethically.
We licensed people must behave differently to protect our licenses…and that’s a good thing. I always insist property owners involve a tax professional and informed real estate attorney.
Regardless of what you think about too many people muddying the water, this MUST take place…100% of the time.
Good luck to all of you.
Mike
I’m not surprised that this article appeared on APRIL 1ST! I COMPLETELY disagree with the author of this diatribe. Any benefit to the real estate market afforded by investors is very short-term. Specifically speaking, it amounts to the commissions received by the agents and the instant cash received by the banks in the process. It is this same greedy screw-the-average-homebuyer type of thinking and actions, by same bunch of individuals and organizations that got this country into the mess it is in today! What neighborhoods need most now are owner-occupiers, who have some pride in the house they are purchasing, to re-inject some health and vitality back into neighborhoods (of course this cannot be factored into a spreadsheet!). And to say that the houses that investor’s buy are houses that owner-occupier’s wouldn’t touch is absolutely false! I know many a homebuyer (self included) who have an will purchased fixer-upper houses to live in, if it is a good deal. Investor’s typically purchase these houses and quickly and half-@ssedly repair them and mark them up for sale at inflated prices. “Screw thy neighbor for a buck!” is their typical motto!!