Why doesn't 2+2 = 4? It doesn't. It's all screwed up.

By
Real Estate Mortgage Broker with Level 4 Funding

Something is going on.  I can't figure it out.  Maybe you can help.  

I use to buy home at the court room steps and flip them.  We would purchase them at a 70 - 80 % of comp value.  Put them on the market and make some cash.  

 

BUT THIS IS NOT WORKING ANY MORE.

 

Today the homes at the court room steps are selling for and even above the comp values.  People seem not to care what the price is.  It's getting crazy.  I've heard rumors that there are billions of dollars in the market scooping up all the homes and turning them into rentals.  

There are three price levels,  auction, wholesale and retail.   If flippers are buying at the court room steps are paying auction prices,  then what is the retail price?  30% more?  It seems that it is and our current method of determining value based on prior sales is wrong.  

So 2+2 really equals 6  in today's market.

If this continues I expect to see lines and lotteries at new home sales.   

 

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Rainmaker
1,163,075
Gene Riemenschneider
Turning Houses into Homes
Home Point Real Estate

The margins at the court house steps have been getting thinner and some have been loosing big. 

May 02, 2012 08:44 PM
Rainmaker
749,513
Marte Cliff
your real estate writer
Marte Cliff Copywriting

I'm glad to read about recovery in the housing market - but would hate to see prices go insane again. We don't need a re-run of the past few years.

May 03, 2012 11:33 AM
Rainmaker
612,958
Bob Miller
The Ruiz/Miller Team - Ocala's Dream Team
Keller Williams Cornerstone Realty

Hi Dennis, I assume you are being facetious.  I am so glad the AZ market is doing so well.

May 03, 2012 05:21 PM
Rainer
15,438
Brian Park

The auction effect in action. I often used to follow up on these new level sales and there were many mistakes being met. On some there were economic factors in play and the buyers were not stupid but could have done better elsewhere. Some bid on junior liens unaware they were bidding on a home and the loan wasn't the most senior. Some were investors willing to do a deal at a level equal to earning a commission rather then sit and do nothing.

May 05, 2012 03:56 PM
Rainmaker
277,979
Marnie Matarese
Showing you the best of Sarasota!
J Wood Realty

I am finding that buyers can get a much better deal on homes that are listed at a fair price by the owner.  Time after time I see moldy, run down homes selling at auction and short sale for much more than homes in better shape that are really for sale just by their owners.  It is kind of funny how much people will pay to get "a deal".

May 09, 2012 01:07 PM
Anonymous
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Rainmaker
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Dennis Dahlberg

Do you do Hard Money Loans
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