So I’ve decided to take a stab at real estate investing. I found a duplex for sale in Los Angeles. The property is a short sale. The owner bought it in November 2005 for $417,000. He put no money down and promptly took out what looks like another $60,000 in a home equity loan, most likely to remodel it. How he got a home equity loan on a property he had no equity in is beyond me. All the loans were supplied by Countrywide.
When I saw it, the property was listed at $385,000. It’s cute, nicely remodeled. The neighborhood also looked nice and it’s blocks from a pretty college campus. The part of town as a whole is largely blue collar and nearby there are issues with gangs, but more and more artsy types are moving to the area.
I offered $350,000 plus all closing costs, an amount my Realtor and the listing agents suggested was too low. Days later I saw the price knocked down to my $350,000 offer on a real estate Web site. I called the listing agent furious that he was trying to smoke out other offers by advertising my low bid to the world. The agent told me he had reduced the price to $350,000 in the MLS but that turned out not to be true. I grew concerned that other things he had told me might not be true. What if the apartments weren’t really renting for what he said? I withdrew my offer.
Did I do the right thing?
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.