Ouch!

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Real Estate Agent with San Diego Previews * Previews Luxury Real Estate

Late this afternnoon, I met with new clients. He manages a stock brokerage branch and she is a local newscaster.They have recently relocated to the San Diego area from Conecticut, and we spent time looking at beach properties and sharing stories.

His tale took the cake.

When he revently opened  the Edward James brokerage office in east county, he was referred some clients--a husband and wife, ages 51 and 52. They both wished to liquidate their IRA accounts, pay the 40 percent penalties, so they could invest their money in Nevada real estate, where they were told they could double their money. They did so, despite strong admonishments not to do so from this principled broker.

I felt sick. How could anyone with a conscience or a brain, especially a real estate professional,  ever suggest such a thing? And we wonder why pundits call this a bubble???

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Rainmaker
1,518,056
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate
About three years ago that may have been true (and only in hindsight). Today's Las Vegas market is brutally competitive. If this couple needs a current opinion on their holdings here I'd be glad to help.
Sep 15, 2006 11:18 PM #1
Rainmaker
187,296
Roberta Murphy
San Diego Previews * Previews Luxury Real Estate - San Diego, CA
Carlsbad Real Estate and Homes

John: Thanks so much for the offer and I will pass your information along to his stockbroker. I recall people cashing in, borrowing and pulling money any way they could to throw it into the stock market in 1999-2000. That did not make the stock market bad, but certainly turned it into an investor's mine field.

Our current real estate market is not dissimilar, and we spend much more time these days educating both buyers and sellers about the market and assessing their needs. Our negotiating skills in representing our clients become more important than ever.

Sep 16, 2006 09:52 AM #2
Anonymous
Anonymous

What's really sad is that a good financial planner could have let them know that they could have 

BORROWED FROM THEIR IRA PENALTY FREE!

That way they could still put the money back in if the real estate experiment didn' work.

 

Sep 16, 2006 03:00 PM #3
Rainmaker
163,993
Dave Rosenmarkle
Highland Realty - Arlington, VA
What's not just sad, but scarey, are the folks in our indusrtry who are not CPA's, Financial Planners or Tax Consultants and, who try to practice being all three. And we wonder why Realtors sometimes are not trusted. We need to stick helping people buy, sell or trade real estate - profitably, period.
Sep 16, 2006 04:12 PM #4
Rainmaker
306,034
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA
VA Home Loans/San Diego

I have been in both industries and can tell you that it's just as bad on the other side.  Securities firms are lending on real estate now and encourage homeowners to leverage up to "diversify" their wealth.

Both practices (the liquidation of the IRA for Nevada real estate)  and the leveraging of the homestead for securities purchases are dangerous in a deflationary environment.  Especially if Bill Gross of PIMCO is correct.

www.PIMCO.com 

 

Sep 26, 2006 12:20 AM #5
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Rainmaker
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Roberta Murphy

Carlsbad Real Estate and Homes
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