My Adventures in Real Estate

Posted by: Chris Palmeri on July 18, 2008

duplex.jpg

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?

Reader Comments

Snoz

July 18, 2008 9:49 PM

Imagine offering $350K for a 50+ years old house located in gangland and the real estate agent claims your offer is too low. And you thought your used car salesman was honest? Welcome to southern California, the land of real estate scam. What is the biggest scam in California? It's real estate, real estate, real estate. Since the early days when landowners stole cheap semi-arid desert land for $0.25/acre from the natives, and stole water from Owen's Valley, MonoLake, Sacramento Delta and Colorado River, the real estate scamers have resorted to all sorts of PR, ingenious financing, and marketing to load their desert land on the unwary. So long as people believe propaganda that real estate is an "investment" and with no-money down can become a millionaire, the landscamers will continue to reap. The losers, of course, are the tax payers who must bail out banks(IndyMac), investment firms(BearnStearn), and insurance companies. The southern Calif and LA housing prices have been inflated mostly due to hype and cheap money or stolen money. The California housing bust has put most of lies out in the open. However, there will be die-hards who still believe in the real estate religion no matter what happens. For the die-hard scamer still holding the bag, the bad news is that the southern California real estate frenzy, like the historical tulip speculation, will not resurrect again. The projected $2 trillion loss in financial sectors, the havoc on the already weak economy, and the ensuing 10 years of economic depression plus the distasteful government bailout programs will have destroyed whatever confidence there is in real estate "investment." Southern Califoria real estate will never be the same again because the scamers will have been identified, the pyramid schemes exposed, lies busted and CEO imprisoned. Now and forever more, Californians will have to work hard earning a living like other citizens across America. Their only speculations will be where is their next meal, whether there will be enough money for a gas fill-up, and rent money. However, there's still a sliver of hope for California sinners because their scamers always have ingenious ways of concocting the next scam. But be forewarned: Like the locust that descended upon Egypt, the real estate bust will decimate the land of California as an omen of things to come.
For the die-hard flippers and landscamer, The Almight will have already inflicted earthquake, fire, flood and drought upon the Californians for their avarice, dishonesty, immorality, for unrepentant sinful ways.
One way to make amend for pass transgression is to let real estate speculation out of the land of California.

ZF

July 18, 2008 11:40 PM

You were about to take a realtor's word on what similar properties were renting for? Run away screaming, and don't look back. You had a narrow escape.

Jimmy

July 19, 2008 12:34 AM

350 for this shack?!?!? The price alone was reason enough to withdraw the offer. The sleazy tactics were reason number 2.

LT

July 20, 2008 4:37 PM

Since this is a short sale, I don't think what the agent did was bad. The bank still need to approve the sale at the price that was offered. Your realtor and the agent already said your offer was too low. You probably would have spend several month waiting and still not get the place even if the agent didn't do what he did. The agent was trying to gain interest in the place by lowering the price and hopefully have someone bid above the price. He still has a duty to his client to sell the place.

Andy Finkenstadt

July 20, 2008 9:17 PM

There are many properties out there, and going with your gut instinct and withdrawing the offer will let you sleep at night with little worry.

Good call.

Dean Foust

July 21, 2008 12:54 PM

Chris,
As your fellow poster here, my advice is to sit back, wait 12-18 months, and you'll be able to buy that property for $300,000, if you still want it.

mark

July 21, 2008 6:14 PM

I am not sure what the agent did was unethical. All is fair in real estate. You try to get it cheap, they try to get more bids, sounds all good to me. Why not just buy banked owned?

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About

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.

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