The New Rules of Real Estate

The old rules of real estate said (for many years), “buy it now, it will be gone tomorrow.”

Those rules appear to be making a comeback; see the following article in Dataquick,  here
(if you don’t read Dataquick’s news, you should; they are quite reliable, if not always “up to date” (they deal only in closed listings, which means that the trends they follow have already happened; if you follow pending sales, you find the trends when they are happening.  There is no reliable way to follow “pendings,” as they are called, except to ask a Realtor in the target area.

The problem that many homebuyers and investors are finding is that properties are once again being “bid up;” the banks are now treating every foreclosure as an opportunity to conduct what we might call a “silent auction”–meaning that every person who submits an offer is treated as a “bidder,” with the bank taking the “highest and best” offer among many.  This virtually insures a bidding war; however, the opportunities are so good that it still makes sense to make those offers–just plan on paying over the listed price and making many offers before you succeed; in the banks’ defense, they must do the best they can for their investors, and in many cases, they are losing a great deal of the value of the loans on the property; for example, I closed a transaction in the Spring of this year in which the bank lost over 40% versus their loan amounts.  That’s about what most stock market investors lost on their portfolios.  We may complain about the way the banks have behaved in all this, from offering loans that were really quite predatory to over-evaluating properties throughout the nation, but the fact is that now the investors have lost an immense amount of their asset value on the bank loans they bought.  Which, of course, means that you really lost that money, since you, as a taxpayer, will bail out the banks no matter what.