'Go Ahead and Low-Ball Me'
By Tom Dyson
June 12, 2007
The old man sounded desperate.
"We were planning to retire in Florida. We were going to live in your house," he said. "But my wife passed away and I've had to change the plan."
You know those For Sale signs that realtors put by main roads... with a corporate logo and telephone number on them?
Well, over the last couple of months, so many of those signs have popped up at the entrance to the development I live in, it looks like the circus has arrived. My development has 48 houses. I counted 15 signs on that corner. The old man owns the house I'm renting...
"I listed the house for $249,000 in February. But $229,000 is the going price right now. I really need to sell it quickly, though, so I'm going to ask for $220,000."
He's desperate to sell. But he's not as desperate as Eric.
Last week, I went looking at houses with a local realtor here in north Florida. In one house, the owner was inside, painting the walls. His name was Eric, and he's a professional painter and handyman from Pennsylvania.
"I bought this house as an investment last year," said Eric. "But the market's really moved against me, and I'm upside down now. I thought I might move here eventually, but my mother's really sick and it looks like I'll be stuck in Philadelphia for the next five years. I'm hoping to make a quick sale... I'm listing it at $249,000, but go ahead and low-ball me. I'll try to meet you."
After looking at Eric's house, I looked him up in the county records. Turns out, Eric owns a dozen houses in the area. No wonder he seemed so eager to sell.
Everywhere I turn, it seems like Armageddon in the housing market. The press is full of stories about foreclosure, and investors in my Florida neighborhood are all running for the exits at the same time. Things even look bad for property in the financial markets. Last week, mortgage rates jumped to their highest levels in a year. In the stock market, REITs and homebuilders are tumbling.
Here's the thing, given all the houses for sale, it's a great time to be a buyer.
In my development, where all the houses are the same, owners are scrambling to undercut each other. Then you've got investors like Eric. Their interest payments are rising... they're hemorrhaging more money every month and doing everything they can to unwind their portfolios.
And then there are all those foreclosures. The foreclosure rate so far this year is nearly double the 2006 rate. If I had the time, I'd head to America's foreclosure capital – Detroit – and attend auctions. In the space of five days last month, Hudson and Marshall auctioned 500 homes in Michigan. More than half of them sold for less than $5,000.
In fact, later today maybe I'll get in touch with Eric – the painter from Philly – and see if I can't take one of those houses off his hands. It's become a buyers' market.
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