Future of the Real Estate Market

[IIC]

Well, I won't be buying a house in NJ now (atleast for now). I just found out I will be going to Los Angeles, my job is relocating me there for the rest of the year and there is no way I can afford a house in the bay area.

Any ideas on what/where to rent out in LA? I'm looing at apartments.com and its quite pricey...any suggestions on saving $?

Welcome to LA...Home of the Body Bag...First of all, the "Bay Area" is about 480 miles North of here in S.F.(But maybe you meant another BAY AREA???

LA...Depends on where you want to live...I live on the Westside...If you are looking for an Apt. you are looking at 1 br about 1200...2 br 1600-1900... 3 br 2100+...There are areas that are cheaper and areas that are more...For example some new apts went up in my area about 6 months ago...2995 for a 3 br.

Send me a pm about the area you are looking at...I don't really have any "IN's" on rentals but I might be able to give you some ideas...If you are looking for a nicer place to live but don't mind driving a ways to work...I might be able to help idea-wise...Best, Doug(IIC)

[dmk112]

Well, I won't be buying a house in NJ now (atleast for now). I just found out I will be going to Los Angeles, my job is relocating me there for the rest of the year and there is no way I can afford a house in the bay area.

Any ideas on what/where to rent out in LA? I'm looing at apartments.com and its quite pricey...any suggestions on saving $?

[IIC]

Here is something I’ve been thinking and would love to hear some thoughts from MM members…

Say I find a house in foreclosure and I do my title search and find no liens are on the property. I talk with the owners and find they are 6 months behind in payments. Can I help this person get out of a jam?

I have them sign the appropriate paper work, I catch the payments up and take over the loan. Now say the house is worth 250 and they owe 150. I spent say 6 on back payments and make the payment each month on time.

I get the house prepped and sell it for 220. Would one possibly walk from the table with a little under 94? Then deduct the 15% tax or 14 or clear around 80..

I don’t know if this is how things work, as I do not have a clue about real estate. Was wondering if something like this is possible..

Runner...Here is what I think you should look...You are a bit early in the cycle though for this.

But here is a real life example regarding some people I used to know back in the 90's.

In 1987 they bot a condo for $189,000...They put $38,000dn and financed $151,000 in West LA...3 bed 2 1/2 stories 1350 sq. ft. with a very large rooftop patio.

In early 1994 the husband was transferred to Seattle. The value had gone down so they rented it out for $1,000 mo. The lady who moved in gave them $2,000, moved in and declared BK...They never saw a dime again from her and it took over 6 mos to get her out.

Now, in 7 yrs they had not put much of a dent in their TD...If I knew the interest rate on their loan I could tell 'ya but for argument's sake lets estimate that they owed $135,000.


They put it up for $159,000...then $139,000...then the Bank agrees to a short sale...$129,000...$125,000...meanwhile they have paid a year's worth of $1400mo payments...Finally they just give it back to the Bank...Bank sells it for $119,000 within a month...Last year the place sold for $499,000.

It is not desperation time yet...But you are wise to start planning now IMO...However, the bottom is a ways off...Doug

[IIC]

Over the last several years most states have adopted what is called the "Realtor's Code of Ethics". This is a very multi-faceted set of rules and regulations that outlines the ethical principles that every sales agent or broker must follow. Also over the last several years the concept of "buyers agents" and "sellers agents" has come into being. Before this the sales agents always represented the seller. Now a sales agent has to declare which type of agency he is involved in. They can be a "sellers agent", a buyers agent" or "dual agency". Usually the brokerage where the sales agent has their license hanging declares the type of agency they are going to be and the agents that work there are bound to be that type of agent and usually only represent one of the two. A "dual agency" sales person can represent both parties to the sale but must represent each side in a fair and equal manner.
Since the "Code of Ethics" has been adopted each sales agent or broker is bound by the rules and regulations set forth in that Code. It covers every possible scenario involving how you act, what you say, and who you represent and how you must declare from the start what type of agent you are and who you represent to everyone that you come into contact with regarding the sale of any piece of real estate. Violating any part of the rules and regulations in this Code can and will result in fines, censoring, suspension or the state in which you are licensed can take your license away from you if the violation is serious enough. They keep a very close eye on everyone's actions these days and any buyer, seller or anyone party to a real estate sale can bring ethical charges against an agent for violation of these principles. It has come a long way from how things used to be. Ask your cousin about this and he will assure you about what I have just said.
Realtors, both sales agents and brokers, are in business to make money and that is why they are in the business. But they cannot do as they please and take advantage of the people they represent if they want to stay in business and to keep developing and propogating their clients and customer base. Everything has to be above board and on the up and up in todays marketplace. I'll get you a copy of the "Code of Ethics" that we all have to operate by and mail it to you if you would like a copy to read. I'm sure your cousin would be able to get you a copy also. We also have to re-certify every couple of years by reviewing the Code online and taking a certification test which you must pass or you cannot continue to operate and your license will be taken back by the state.

Lawyers have a Code of Ethics too...LOL

[IIC]

Hey Doug.... I don't understand your argument here if Runner's cousin was just a listing agent.... An agent can't lower the price without the owners OK anyway. .

But a slick agent can try to talk the owner into lowering the price even when it not necessary just to get a quick commish and since I didn't realize he owned it himself that is how it appeared to me.

[IIC]

Doug,
Believe me I did read your post. Did I miss something here or are you trying to wiggle out of what you said. You should read your quote. You're the one that said what you said! I just thought it was somewhat inflammatory on your part to make a statement like that. I read the post several times and still it rings the same way to me. I don't see how you can see it or try to explain it away any differently. I thought it was a foolish statement and still do. This is how people do real estate sales. It is the most used strategy in the business. If after a period of time it doesn't sell it's overpriced for whatever reasons and the price has to be readjusted. But that doesn't have a thing to do with your statement being off the wall. You don't even know the guy. What would your reaction be if someone said the same thing about your cousin? Or was it supposed to be a joke? And you should spend a moment reading my other post. It will provide some insight as to how it works. Your last post just doesn't hold any water at all. It is just the way real estate transactions get done.

That was not the part I quoted in my last response Ski...I was under the assumption that he talked the seller into taking less than market value just to get a quick sale.

My comment was tongue in cheek since I don't know the guy.

Say anything you want about my cousin...It won't bother me.

[IIC]

Doug, he owns the houses he sells..

Well...that was not the impression I got from your original post...my mistake.

Ski, thanks for the info. I guess things have changed for the better. I’ll ask my cousin about this next time I talk with him..

[skiracer]

Ski, once again you raise some awesome points. I was always under the assumption that the realtor does not have the sellers best interest at heart..

Over the last several years most states have adopted what is called the "Realtor's Code of Ethics". This is a very multi-faceted set of rules and regulations that outlines the ethical principles that every sales agent or broker must follow. Also over the last several years the concept of "buyers agents" and "sellers agents" has come into being. Before this the sales agents always represented the seller. Now a sales agent has to declare which type of agency he is involved in. They can be a "sellers agent", a buyers agent" or "dual agency". Usually the brokerage where the sales agent has their license hanging declares the type of agency they are going to be and the agents that work there are bound to be that type of agent and usually only represent one of the two. A "dual agency" sales person can represent both parties to the sale but must represent each side in a fair and equal manner.
Since the "Code of Ethics" has been adopted each sales agent or broker is bound by the rules and regulations set forth in that Code. It covers every possible scenario involving how you act, what you say, and who you represent and how you must declare from the start what type of agent you are and who you represent to everyone that you come into contact with regarding the sale of any piece of real estate. Violating any part of the rules and regulations in this Code can and will result in fines, censoring, suspension or the state in which you are licensed can take your license away from you if the violation is serious enough. They keep a very close eye on everyone's actions these days and any buyer, seller or anyone party to a real estate sale can bring ethical charges against an agent for violation of these principles. It has come a long way from how things used to be. Ask your cousin about this and he will assure you about what I have just said.
Realtors, both sales agents and brokers, are in business to make money and that is why they are in the business. But they cannot do as they please and take advantage of the people they represent if they want to stay in business and to keep developing and propogating their clients and customer base. Everything has to be above board and on the up and up in todays marketplace. I'll get you a copy of the "Code of Ethics" that we all have to operate by and mail it to you if you would like a copy to read. I'm sure your cousin would be able to get you a copy also. We also have to re-certify every couple of years by reviewing the Code online and taking a certification test which you must pass or you cannot continue to operate and your license will be taken back by the state.

[dmk112]

Yea I agree with Ski on his response.

[dmk112]

Do you agree with anything he has to say about it being a bubble?

Well he's from the Bay area so I can't comment...It is much different than the Market here in the Jersey area..

Although, I do think that we are in some type of bubble GEOGRAPHICALLY. If prices increase until the point that the people can no longer afford the houses then something must give.

It the balance on their mortgage is 150,000 then they have about 90,000/100,000 in equity less the 6 months in arrears give or take a few thousand. Would you expect them to walk away without taking anything with them for that just because they are behind 6 months on their mortgage payments and in the foreclosure process. If they knew the house was worth 250,000 do you think they could find a buyer somewhere that would give them 40,000/50,000 for the house as is and sell the house to them before the bank actually foreclosed and took the house away from them. Then the new owner owns the balance of the mortgage (the house) for 150,000 plus the 40/50,000 they gave the old owners which puts them in the home for around 200,000 and the new owner now owns the equity of 50,000 themselves which is the worth of the home less the 50,000 they gave to the original owners and the mortgage balance. The mortgage lenders don't want to be in the "owning homes business" as much as they want to lend the money out for 20/30 years and make the interest off the loan or sell the loan to Fannie Mae and take their profit and go. It would be a great deal for you if you could find someone that would do that but I don't see many people walking away from 90,000/100,000 equity in a home for just someone catching them up and taking everything just for doing that. Unless I'm not understanding what you are saying Runner. Please correct me if I'm misunderstanding something about what you are talking about.

Ski, you understood my post correctly. I see your point as to why would they walk with out getting something for the deal… I made this up and was curious as to if this might work. I can see your point crystal clear…. Thanks for posting

[skiracer]

Here is something I’ve been thinking and would love to hear some thoughts from MM members…

Say I find a house in foreclosure and I do my title search and find no liens are on the property. I talk with the owners and find they are 6 months behind in payments. Can I help this person get out of a jam?

I have them sign the appropriate paper work, I catch the payments up and take over the loan. Now say the house is worth 250 and they owe 150. I spent say 6 on back payments and make the payment each month on time.

I get the house prepped and sell it for 220. Would one possibly walk from the table with a little under 94? Then deduct the 15% tax or 14 or clear around 80..

I don’t know if this is how things work, as I do not have a clue about real estate. Was wondering if something like this is possible..

It the balance on their mortgage is 150,000 then they have about 90,000/100,000 in equity less the 6 months in arrears give or take a few thousand. Would you expect them to walk away without taking anything with them for that just because they are behind 6 months on their mortgage payments and in the foreclosure process. If they knew the house was worth 250,000 do you think they could find a buyer somewhere that would give them 40,000/50,000 for the house as is and sell the house to them before the bank actually foreclosed and took the house away from them. Then the new owner owns the balance of the mortgage (the house) for 150,000 plus the 40/50,000 they gave the old owners which puts them in the home for around 200,000 and the new owner now owns the equity of 50,000 themselves which is the worth of the home less the 50,000 they gave to the original owners and the mortgage balance. The mortgage lenders don't want to be in the "owning homes business" as much as they want to lend the money out for 20/30 years and make the interest off the loan or sell the loan to Fannie Mae and take their profit and go. It would be a great deal for you if you could find someone that would do that but I don't see many people walking away from 90,000/100,000 equity in a home for just someone catching them up and taking everything just for doing that. Unless I'm not understanding what you are saying Runner. Please correct me if I'm misunderstanding something about what you are talking about.

Runner,
Whenever a parcel, whether residental or commercial, isn't selling at the price you are trying to market it at the first and foremost item that a realtor can and will do is to lower the price whatever they think it enough to stimulate interest. Alot depends on the owner/seller as to what they have to get out of the property as to what you as the realtor can do in lowering the price. Whenever I do a CMA, comparable market analysis, on a prospective listing I always have a plan that takes in what the seller's needs are in netting out on the deal, what the comparable homes or properties in that area are being priced at in that days market, what comparable homes have sold for in the past 3/6 months in that area, and what the seller's bottom line is as far as consideration in regard to dropping the price if the parcel doesn't sell at the initial pricing. It's like everything else in business or trading. You have to have a well thought out plan that tries to cover everything that may come up in marketing the home or the trade.
The first line of defense is to lower the price. Secondly we try to include some of the appliances to generate lagging interest. Sometimes we will ask the seller to help with the points if the mortgage application involves points. Sometimes I even give back some of my end of the commission but I try to avoid that and it only happens under extreme circumstances.
Commercial properties are similiar to residential properties but the commission structure is quite different and the pricing and bargaining is much more complex. Your cousin is right on the money in his logic about lowering the price. Money talks especially when you can specifically show that by lowering the price accordingly you are presenting the prospective buyer with a good deal comparatively speaking. And I have found in life that you always catch more flies with honey even if you don't necessarily mean to be nice to them.

Ski, once again you raise some awesome points. I was always under the assumption that the realtor does not have the sellers best interest at heart..

[Lyehopper]

Read it again Ski...

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

This is a classic...although legal... con for agents to pull. The house is worth $250,000...right???...But his cousin, being Mr. Nice Guy, drops his commission a little...By how much???...My guess is about $300 off the $7,500 he would've made...And of course the buyer is happy...He just got a house for less than it's worth...BUT WHAT ABOUT THE SELLER???...he just got over $9,000 less than his house was worth because Mr. Nice Guy was not greedy.

Everybody is happy...WHAT ABOUT THE SELLER that Runner's cousin screwed over???...Runner's cousin can twist words around any way he wants...But saying he is not greedy is something I don't buy...He wanted to take what he could get and get on to the next deal IMO. Heck, if he could convince enough suckers to lower their price $50,000 below what it's worth he'd be a friggin' billionaire next year.

PS...Runner, no offense personally...there are plenty of guys like your cousin running around.

Doug-E-FRESH! DUDE! Runner's cousin owns the freakin' house.LOL!.... His point is this; Why be greedy? Sell that house for a lesser profit, beat out the competition and move on to the next deal, much like a stock trade.... Read his post again.

Hey Doug.... I don't understand your argument here if Runner's cousin was just a listing agent.... An agent can't lower the price without the owners OK anyway. AND what's wrong with an agent taking a hit on his commission if he needs to. I've made "deals" with my RE broker a few times for him to cut his commission for the "sake of the deal". And he does it.... Because he wants to continue to be my agent.