Buying and Selling: April 2007 Archives

When we sold our home just over a year ago we were talked into selling for a bit more than the original offer so the person could get money back to do renovations... I objected based on percentages and stuff and my realtor and the other realtor agreed to commissions based only on the original agreed to asking price. Then I could not find any other reason to object, after all, if the loan officer was willing to loan that much money, what reason was it for me to say nay?

But now I hear it is illegal to do this? Yikes? Have you heard of this?

What should I do now?

The same thing anyone should do when they discover they may have inadvertently violated the law: Talk to a lawyer.

For all of this article, please keep in mind that I am not a lawyer. I don't even play one on TV. Not in California nor in any other state, and the laws and precedents can be different from place to place. So please double check everything with someone who is a lawyer, and if there is a conflict, follow their advice.

That said, my understanding is that it is not illegal per se for a seller to give a buyer cash back. If I hand you $500,000 cash - or something worth $500,000 to you - and you hand me back title to the property and $50,000 cash, or something worth $50,000 to me, there is absolutely nothing wrong with it. It's a free exchange, willingly agreed to by competent legal adults. No harm is done.

Where illegality does come into it is when there is another party to the transaction to whom it is not disclosed. In most transactions, there is a lender involved. That lender is loaning what is usually a very large sum of money based upon the representations which were submitted to them. To intentionally and materially falsify those representations in order to persuade a lender to make a loan they would not otherwise make is a textbook case of FRAUD. Loan fraud is, literally, a federal offense. Go to jail for a while, and be a convicted felon for the rest of your life. Whether it's done by lying (stating something that isn't true) or by omission (failure to inform the lender of relevant facts) does not matter. Furthermore, due to the fact that fraud is a felony, there's a good likelihood of adding conspiracy in there - another federal offense felony.

The potential offense here is in failing to disclose the cash back to all parties in the transaction. If the lender knows about it and issues the loan anyway, there is neither a criminal offense nor a civil tort, at least according to my best understanding.

The reason this happens is because if the cash back is disclosed to the lender, then they will treat the purchase price as being the purchase price less the cash back amount. If the purchase contract says $400,000, but the seller is giving the buyer $20,000 back, it isn't really a $400,000 purchase price, is it? Net to the seller is only $380,000. Net cost to the buyer is only $380,000. That looks like a $380,000 piece of property to me, not a $400,000 one. The lender will take the same point of view, and base all of their calculations off of a $380,000 purchase price.

What that means is that if the buyers are not putting at least $20,000 down, they are over 100 percent of the value of the property. Which means the borrowers loan amount will be reduced accordingly. In fact, as I have said elsewhere, it's better for both the buyer and the seller if they don't do this, because it is in both of their interests to use the lower purchase price.

In short, this whole charade is self-defeating if it is disclosed to the lender, as they will only lend based upon the net purchase price. If it's disclosed to the lender, I cannot think of a reason to do it, because whatever purpose you wanted to achieve with the cash back will be defeated. If the buyer wanted the cash to fix the property, they're either going to have to take it out of their down payment or, dollar for dollar, out of the cash they got back. $400,000 minus $20,000 is $380,000. So if they put $20,000 down, it's doable, but it's a 100% loan, and the net benefit they got out of their down payment is zero. Alternatively, they can just take the $20,000 cash and apply it to the purchase price, over and above the $380,000 the lender will base their loan calculations on. Net benefit to doing all of this: Zero. Furthermore, there are drawbacks for both the seller and the buyer. It actually hurts them to do this if they disclose it to the lender.

What was the purpose of that $20,000 again? If it wasn't a down payment, the buyers will need to come up with $20,000 from somewhere else. If it was a down payment, well, why not do 100% financing in the first place? I assure you that a lender to whom this is disclosed will see it this way. Why not just reduce the official sales price by $20,000, pay less in commissions, lower fees, less capital gains, and have the buyer have a lower sales price, which translates into lower property taxes in a lot of places?

Which is precisely the reason this whole thing does not get disclosed to the lender. The buyers are trying to have their cake and eat it, too. They only want to pay $380,000 for the property, and have the lenders think that they paid $400,000. In other words, a material misrepresentation of the situation in order to induce the lender to make a loan they would not otherwise have made.
In short, FRAUD.

It is mostly the buyers, their agents, and loan officers who pull this kind of nonsense. Some of them are thoroughly blatant about soliciting this kind of crime. I don't know what they're thinking, but this is not harmless, this is not minor, and it has been explained to licensees. I can only presume a willful disregard of the rules. It can be difficult for sellers to even know who the buyer's lender is going to be, and it really isn't any of their business. Nonetheless, if the lender can show that sellers were a party to the deception (side agreements aside from the main contract are pretty much proof on the face of it), they can be dragged into the mess. Actually, sellers and their agents can be dragged in quite easily, side agreement or no, but side agreements are the equivalent of a smoking gun still in your hand. So if you're going to insist upon a side agreement, also insist that it be disclosed to the lender and proof that it was disclosed to the lender. Better still to make it all a part of the main contract. Optimum is not to give or ask for cash back in the first place. It sets you up for a criminal fraud investigation, and no matter how innocent you may be in fact, I have it on good authority that they are no fun to endure. If you're a professional, it shows up in records as a complaint against your license, and I'm not even certain it comes off when you're found not culpable.

Caveat Emptor

Article updated here

Remember how I said moths ago that I could see signs that the market might turn back this year, perhaps around the beginning of July?



That's looking to be a decent guess.



Making offers isn't quite the monopoly situation it was. Last week, I made an offer on behalf of a client, and the listing agent told me they got four offers on the property in a 24 hour period. I take those claims with a cynical mind, but my client's offer was good considering the market, and they have yet to counter. That agent is acting like somebody who does indeed have "offers to burn." If four people send offers to one of my listings, I send out four responses, whether they're rejections for hopeless low-balls or counters for everyone else. So far, it's just silence. Unless they're just going to accept one of the other offers as it sits, that's silly. An agent with more than about a week in the business isn't going to throw more money on the table without a counter from the owner.



However, the ratio of sellers to buyers is still about 30 to 1. Not as great as it was last year when the ratio hung in the 38 to 40 range for months, but buyers still have a lot more power than they had three years ago. And here's a critical difference: Properties that are properly priced to the market are drawing interest. I'm running into about two or two and a half times the number of other agents showing the same property I want to see as I was six months ago.



Condos, in particular, are starting to come back, where they were dead the last couple years. The seller to buyer ratio for condos is almost 10% lower than for detached housing. This is due, in large part, to the long delayed sub-prime lender meltdown. When you can metaphorically wave a magic wand and make it look like people with no down payment who cannot document the necessary income can afford the payment on anything they want, people are going to want single family detached homes. That's just the way it is. I lost at least half a dozen prospects that I can name to other agents because I was showing them the two bedroom condos they could really afford, while the other agents made it look like they could afford brand new four bedroom houses with negative amortization loans, often done on a stated income basis.



But now that lenders standards are in retreat, and some long anticipated legal action is starting to happen on Option ARMs, the loans people are being told about are a little less irresponsible. With most of the gonzo negative amortization 100% loans being gone, that means that agents have to sell something people can pay at least the interest on, or tell them they need a down payment. This existence of a down payment of 5% or more is black and white. People either have it or they don't. If they don't, no negative amortization loans. Since most people don't have it, and most negative amortization lenders are now limiting themselves to 80%, and most lenders don't want to stand second in line behind a negative amortization loan for some reason.



The upshot on all of this is that most folks have to make at least the interest every month, and that limits how far over their head unscrupulous agents and loan officers can go. Since it's difficult to make it look like they can afford a property three times more expensive than they should buy, now they are limited to properties no more than about forty percent more expensive than they can buy. Interest only loans are still just as available as they have been, as are short term hybrid ARMs. For people who can afford $300,000, most agents still aren't talking about the $300,000 condo - but they are talking about the $400,000 Planed Unit Development (PUD) instead of the $750,000 house.



Stated Income loans are going through most of the same things that negative amortization loans are. 100% financing has become far more difficult to pull off without a good credit score or ability to document that you make enough money - and "stated income stated asset" loans have been clamped down upon a lot harder than "stated income verified asset" loans. If you've got a down payment, a decent credit score, and money in reserve, you can still get a stated income loan. However, most folks that were buying properties fell into none of these three categories. Stated Income loans were never intended to be "anything goes." They were intended for commissioned sales folk and small business owners who really did make the money and could afford to pay their bills, but had a large number of deductions due to tax laws. With most folks having difficulty with newly tightened stated income guidelines, however, they're having to show they make enough money or go without. This means that they not only have to make the payments, but also that they are restricted to loans where they can prove they can afford the payments. In other words, if you want 100% financing, you may have no choice other than "full documentation."



All of this has consequences for sellers as well. I am going to make my computations off of top of the line A paper full documentation loans with no points, plus California property taxes, etcetera. For loans totaling $300,000 on a $300,000 condominium purchase, it will cost someone approximately $2500 per month for housing, which means they have to make $5000 per month in order to qualify, even if they have no other debts whatsoever. For a $500,000 home, the numbers are cost: $3875 and income: $7750 per month, assuming no other debt service. For someone who wants to buy a $750,000 home without a down payment, the numbers are about $5925 per month expenditure and $11,850 per month in income, assuming no other debts. For every $100 per month in debt service they have, raise the monthly income requirements by $200. How many people do you know with no car payments, no student loan payments, no credit card debt, no computer payments, no furniture payments, no payments at all? Furthermore, since Wikipedia has the median income as being $47,816 per year, or $3984 per month, the median person doesn't qualify for a $300,000 condo even if they didn't have any debt.



The farther up the price scale the property you are trying to sell is, the harder it's going to be to find a potential buyer. The upside is that people want to live in San Diego, and they will do what it takes to make it happen. The downside is that San Diego employers don't want to pay enough so that they can buy a house. You need to be realistic about how many people are competing for your property, and what their means is likely to be. To take the point of view that once you get paid for the property, it isn't your problem is not facing the entire scope of what's out there. Qualified buyers are scarce right now, if not quite so scarce as they were. Furthermore, most of the buyers at the upper end of the income range have already bought at least one property.



I think things are going to stabilize this year. Properties that are correctly priced are moving. Most of what's holding various properties on the market for months is denial on the part of sellers - trying to get more than the neighborhood will support. As a consequence, even though mean time on market is still high at 77 days, properties which are priced correctly are seeing strong activity, and even occasionally, multiple offers. Furthermore, if you're one of those that needs to sell, you are facing a financial deadline, and keeping your head in the sand isn't going to make it more likely you'll beat it. I can see two main tracks for properties out there: The ones that price correctly and get strong activity and a fairly quick sale, versus the ones that list. And sit. And eventually have to lower the asking price even lower than where it should have been to start with. The longer you wait to price correctly, the more it will cost you. In this market, just like any other.



Caveat Emptor

I have found your blog to be very informative. I was out riding my bike and rode past a house for sale. In a few minutes of Internet research I've found out a bit about it. The property is bank owned and it sounds like a property in need of repair. However the information I have found out doesn't add up.

From a real estate web site listing recent sales in the area, I found out that the property last sold for 5% less than the asking price. Apparently the sale happened in October 2006.

The house is now listed in the local MLS service, and the text of the listing leads me to believe that the house was listed in December of 2006. It seems from what I have read on your site a foreclosure takes at least 3 months, and this house apparently was back in the hands of the bank and listed two months after it sold.

The house is priced well below the market and within my budget, but that the bank got it back that quickly raises a giant red flag for me. Also, given that the MLS listing says the sale is as-is and that there are no contingencies allowed raises another red flag.

How if they don't accept contingencies do you do a home owners inspection? Pay for one before making an offer, and risk you'll be throwing the money away if the seller doesn't take your offer? Or do a home inspection after they accept your offer, and forfeit your deposit if the inspection covers up a big problem.

Actually, foreclosures are perfectly fine for a first time buyer if you've got the wherewithal to work with them.

Lender owned, which means it didn't sell at auction, is an entirely different story than buying at the auction. You can make offers with contingencies for inspection, usually for seven or ten days, and providing it's an attractive offer otherwise, the lender may very well accept. You're always risking the inspection money on any property, because if it comes out that the house is messed up, you still have to pay the inspector. For lender owned (REO) properties, you don't need to forego an inspection contingency. Financing contingencies are also very doable - I've got one in escrow now with both, and I'm working on another. If it wasn't possible, they would reject the offer out of hand, and they haven't. Disallowing an inspection contingency makes the property worth a lot less, because a lot fewer people are willing or able to handle the risks involved. If your particular property is specifically disallowing inspection contingencies, it tells me they know about a problem, and it's almost certainly a big one. It can still be worked, but get yourself a really top-notch buyer's agent. It's worth paying them (or paying them extra) yourself if you need to, because you'll make more on this property, and they will earn it, because there's a lot more liability for them on this kind of property.

If you're looking at an REO, be aware before you even step onto the property that there are going to be maintenance issues. More often than not, there are even sabotage issues. Furthermore, because the lender doesn't live there and almost certainly knows less about the property than an inspection will reveal, they are exempt from transfer disclosures. They are not for Mr. and Ms. Upper Middle Class looking for the perfect house, they are not for Mr. and Ms. Just Barely Scraping Into The Property, and they are not for Mr. and Ms. Fumblefingers, Mr. and Ms. No Time, or even Mr. and Ms. Procrastinate. But if you've got the inclination and the skill or the cash to fix it, foreclosures can be quite lucrative. Foreclosures are always a risk. But if you've got the resources to make that risk a manageable one, you can pick them up well below the price of properties with similar characteristics.

You might also want to read my article, "Why There Is Money in Fixer Properties" if you haven't already.

Caveat Emptor

Article UPDATED here

Every so often I'll say something about misplaced improvements. You may be wondering what a misplaced improvement is.



Simply put, it's something that stands out above the surrounding properties so far that they pull it down. Like having a mansion in a neighborhood of shanties. Yes, it's still a gorgeous house and yes, the functionality is exactly the same, but as soon as your walk out the front door you feel like you're in a third world country.



Repeat after me: Real Estate is only worth whatever I can get someone to pay for it. Real Estate is only worth whatever I can get someone to pay for it. One more time, with feeling: Real Estate is only worth whatever I can get someone to pay for it.



Got that? Good. Now ask yourself, would you be willing to pay more for a beautiful mansion surrounded by other beautiful mansions, or would you be willing to pay more for a beautiful mansion surrounded by cardboard boxes? The vast majority of the people out there want to look out of their beautiful mansion and see other beautiful mansions. I understand that even in the areas of the world where most folks live in shanties, the mansions of the wealthy are clustered together.



Probably the most egregious example of a misplaced improvement I've ever seen was this turkey. Yes, ladies and gentlemen, a Realtor really is making fun of a property. Beautiful brand new 2000 square foot home - actually an entire development of about 30 of them - less than a quarter mile off the departure end of the main use runway at a busy general aviation airport. That airport is open 24 hours per day, 365 days per year, and it has to by the terms of the land grant. I love small planes, and I couldn't have lived there. Plus you have to drive through a white trash neighborhood to get there, and there's a freeway being built that will come within about 75 yards. I have zero idea how the developer sold most of them. There shouldn't have been a housing development there at all. If they had to put something in, they should have run a road in off the other side and put in an industrial park or something, but I know of at least two crashes in the field where this development used to be. A travel trailer hook up would have been a misplaced improvement.



Now misplaced improvements aren't always that much of a waste. Matter of fact, if a buyer isn't looking at a property for its investment value, but rather for something like housing five or six kids as cheaply as practical, they can be a good way to find a property that meets your needs less expensively than comparable properties. Why? Because everything around it drags it down, where most like properties are surrounded by other properties of comparable features. You never want to buy the best house on the block if investment is your criterion - but you might want to if you're just trying to find housing for a family of seven and you don't make two million dollars per year.



For instance, about six months ago I found a gorgeous 5 bedroom 3 bathroom property in a sixty year old business route neighborhood, surrounded by trailer parks and older offices and apartments. Some nincompoop had wasted at least $60,000 fixing it up to look like some big executive's entertainment house - but the chance of some big executive buying the property was nil. Across the street was an old office building with chunks out of the stairs, the neighbors all look lower middle class, and there's a trailer park entrance at the end of the block. So I can guarantee that the target market wasn't interested, which is too bad, because it really was a nice place. The guy was asking $80,000 above what I thought the market might actually support, and he eventually lost the property because he couldn't afford the payments on a vacant property and nobody was willing to pay what he wanted. But if he had asked what the neighborhood would support, it would have sold quick to some working family who needed somewhere for their kids to sleep. But the brand new kitchen and travertine floors were just wasted money on the owner's part. Before you improve a property, if selling for a profit is your intention, always look around at the rest of your neighborhood to see if there's anybody else with that level of improvements. If not, you're wasting your money. Don't waste your money, because I guarantee you that potential buyers are going to look around before they make an offer.



Some misplaced improvements aren't as extreme. Just a couple of weeks ago, I found a beautiful property for a couple of my clients that was nonetheless a misplaced improvement. This was beautifully refurbished 3 bedroom 1.75 bathroom home in a neighborhood where those go for $450-460 thousand. The ask was a little over 550, and let me tell you, it was gorgeous. It might have been the nicest kitchen I'd ever seen in a property of that price range, the public areas were beautiful and open, and had a nice mountain view. The bathrooms were new and extremely attractive, not to mention a downright cozy place to take baths, and the bedrooms were great, too. Everything was just wonderfully laid out, and it even had an atrium that lit up the middle of the house. The owners did everything right except one: They didn't consider the neighborhood, which really was a pretty good neighborhood, but houses in this configuration and with this square footage just weren't selling for anything like 550. I consulted an appraiser, who said that if everything was as I described, they might have been able to justify as much as 510 on the appraisal. My clients were looking for a nice place to live and entertain for the rest of their lives, and they had a down payment, so the fact that it wouldn't appraise for 100% of purchase price was not an insurmountable obstacle, like it would be to someone without much of a down payment - which is to say 90% of everyone out there looking. Furthermore, it had sat vacant for seven months with no action (typical for misplaced improvements). We put an offer in, trying to jaw it down to something not too hugely above the neighborhood, and despite all of the evidence I cited, the owners blew us off. I understand that nobody likes to take a loss, but it's not the buyer's problem if you do, just like it's none of their concern how much you might be making. Residential properties are only worth what they are worth, and whereas this one didn't have many of the usual mandatory deductions, there really is no way to make a silk purse out of a sow's ear. The neighborhood is the neighborhood, and this one wasn't Rancho Santa Fe.



Misplaced improvements can be frustrating as anything to sell. Even if you do get an offer for $550,000, when the appraisal comes in at $490,000, that's all the lender will loan on. In fact, the vast majority of lenders won't fund if the total encumbrances are more than the appraisal, so even if you are in a position to offer a seller carryback for part of the price, it's just not going to work unless the down payment is at least equal to the difference between the appraisal and purchase price. How many people do you think want to put down $60,000 of their own money just so they can go through the hassle of obtaining 100% financing, breaking the loan into a first and a second or paying PMI? How many people are even going to have $60,000 to put down if they wanted to? Vanishingly few right now. What happens to most accepted offers is they waste 30 to 60 days in "pending," and then they fall out of escrow and you are back to square one. It's just a cold hard fact that if the proposed down payment won't at least cover the difference, you almost certainly don't have a transaction.



The way appraisers find comps is not by going out five, ten, or fifteen miles to find the comparable properties. Comps almost always have to be within one mile, and lenders prefer with half a mile. Further out, the appraiser is going to have to justify picking those properties as opposed to closer ones. The character of the neighborhood has to be very similar as well as the characteristics of the properties.



Often, in the case of misplaced improvements, someone suggests appraisal fraud. By some strange coincidence, this is almost always the owner, the listing agent, or both. Find an accommodating appraiser. Except that appraisal fraud is, well, fraud. Not to mention a violation of fiduciary duty, unless the buyer is stupid enough to choose to be unrepresented, and even there a good case can be made in law that this nasty seller and their agent took advantage of this poor ignorant buyer. No. Thank. You. There are reasons why there are limits to the lengths good agents will go to to make a transaction happen, and this is one of those cases where those limits are short, sharp, and crystal clear.



So we have seem that misplaced improvements are a disaster for the seller, while being a limited opportunity for a certain class of buyer, but they are tough transactions to make happen for a listing agent, and there is no glory in them. The seller is not going to be happy with the sales price, and it's almost certainly going to take longer than everything else around it to sell. I'm brutally frank with owners of misplaced improvements, because if they don't want to listen to what I tell them, they're not going to price the property appropriately or negotiate in the proper frame of mind, both of which are elements of a failed listing. Failed listings don't do anything good for anyone, and I prefer not to be a part of them. I'm not going to get paid, and everybody's going to end up angry at everyone else, which means it's likely to cost me some future clients also. I'd rather walk away before it gets started.



Caveat Emptor

Article UPDATED here

"what can a consumer recover from title company for undisclosed easement"



Basically, the cost of the immediate remedy, at least here in California.



Here's a standard example. Mr. and Ms. Smith buy a property and they wish to put a pool in. The purchase process reveals no easements and they quickly take possession of the property and start digging. Three hours later, the contractor hits a four foot water pipe buried six feet deep and cutting right across exactly where the pool needs to be.



With a standard owner's policy of title insurance, the title company will pay for the contractor's bill, including the cost of filling in that hole they dug. There may also be a small settlement made for the decreased utility of the property. After all, you can't really do anything about that easement, now can you? Nor can you build anything that conflicts with the easement holder's right of access. No pool, no granny flat, no game room or detached office, at least on that segment of the property, which, given the size of most recent lots, means not at all.



The title company will not, under the basic policy, purchase the property or make a large settlement. The reason for this is that if the standard policy made them liable for things like frustrated purpose of purchase, the standard policy would be far more expensive. People wouldn't want to purchase policies of title insurance, because they insured against risks which are relatively rare, but extremely expensive when they do occur. Who pays for that? The other policyholders, of course.



You can purchase a rider or endorsement for extended title coverage, of course. Furthermore, if certain purposes are critical to your reasons for acquiring the property, you can do additional research, or pay to have it done. It can be expensive, but if you don't want this $500,000 property unless you can build a pool, an office, or a granny flat on it, spending the money can be an excellent insurance policy. Which would you rather do: Spend a half million dollars based on "hope there's nothing wrong" or spend a couple hundred to a couple thousand in advance to make certain there isn't?



Caveat Emptor

UPDATED here

This originally appeared May 19, 2006, but still has some relevance

I simply love: "Fear and Greed, or How Did the Housing Bubble Get so big?



I'm not sure if you are aware that there is a grass-roots group that is starting a "boycott on housing." They feel that the prices in the San Francisco Bay Area are unreasonable.



It's kind of interesting.



The website is at: http://www.boycotthousing.com/home.aspx



What do you think about websites like this? Do you think that something like this is "catch on?" I submitted my vote (I'm currently boycotting myself until my six figure downpayments actually matters in this wacky market). But I was just wondering what your thoughts would be on this issue.



Can boycotters make a difference in the "real estate" game?

I'm outraged at the high cost of food. Do you think me boycotting buying food will have an effect?



Well, if enough of us did, it would have a marginal effect for a while. But people have to have food to live, and creating all of your own food yourself is just not an option for most folks. This leaves your choices as supermarket or starve. Given those choices, I'll take the supermarket (much as a couple weeks without food might benefit my waistline)



The same goes with housing. I went and poked around that site, and just couldn't find any evidence of knowledge of the laws of economics. The only effect that boycotters will have is to marginally reduce demand, thereby slightly reducing prices for those who are buying, for which my clients surely thank you. If you couldn't afford to buy anyway, it makes zero difference. If it makes sense for you to buy but you choose not to, then you are hurting no one except yourself. If you want to do something real about the high cost of housing, you'd do better to read my article on The Economics of Housing Development and act accordingly.



There are circumstances where I straightforwardly recommend against buying. Right now, given the state of the market, those are a lot of circumstances. I could have made a lot more money than I have these last eighteen months had I been a shark. But the recommendation to buy or not to buy is always based upon individual circumstances balanced against the state of the market.



The clients I'm pursuing right now are those who are looking for a place they can be happy in for the next ten years. Speculators, Flippers, and other players of real estate roulette have mostly gotten the message and dropped out of the market anyway. Given past performance and the approximate size of the bubble (roughly 30 percent at peak in San Diego, in my estimation, which has since deflated by about 10 percent), the speculators who are left are like participants in a game of musical chairs who don't yet realize that the music has stopped. On the other hand, those who need a place to live and can afford it will do very well once prices recover in a few years. I know this from personal experience; I was one of those folks who bought near the peak of the last cycle. Furthermore, with the desperation of many sellers, the bargaining is highly favorable to my buyer clients right now.



There are also significant and increasing opportunities in distressed properties, providing you've got some cash and are willing to buy and hold for a while, or do some significant work. Distressed properties are not a game for the weak of wallet, because you've got to have a certain amount of cash to play the game decently. Given the state of the market, it's very possible to lose significant money even there, mostly if you're a do-nothing flipper. If you're a buy-and-holder or a fixer upper, there are still places for you to do very well in this market segment.



The third group of clients I'm seeking out is those who were taken advantage of by their agents and/or loan officers, to see if I can fix the situation with a new loan. These are folks who were sold on unstable or unsustainable loans in order to get into the property. I'm not an altruist by any means, I'm getting paid for my work, but that doesn't alter the fact that the client wins also, by being put into a better situation if it can be done. If it can't, I am set up to handle a distress sale to get them out of the situation before it gets worse. I'm not a magician who can make it never happen (and nobody else is, either!), but I can stop the green bleeding. Once the bleeding is stopped, then you can talk about getting some money back for having been the target of a Dastardly Deed™, but those sorts of solutions take years. If you try to get your pound of flesh first, you'll bleed to death long before you might possibly get it, with all kinds of unpleasant consequences.



To summarize, housing is a necessary good, one third of the basic "food, clothing, shelter" that everyone is familiar with. This creates a "need" as opposed to a "want". Mind you, most folks have wants bigger than their needs (and eyes bigger than their pocketbooks), but some market segment boycotting housing will hurt only themselves as rents get higher so that the landlords can feed the loan alligator. High demand is not going away. If you really want to make housing more affordable, start doing something about the low supply of new housing. Artificial scarcity benefits only those who are already owners, and that includes the flippers and speculators who are probably the largest part of the reason for the current bubble.



Caveat Emptor

Original here