Real Estate Investing

I once wrote an article about what I really meant when I wrote or spoke different descriptions for real estate.  For example, if I said something could use a decorator’s touch I meant, “What are you thinking? You want to buy this ugly house?!”  My editor did not like the post at all and I sadly had to pull it.

I think everyone who has ever been involved in the home-buying process knows, however, that sometimes words and photos do not reveal the true nature of the home.  For example I showed a house several months ago that looked just wonderful in the photo… taken from the Southeast corner of the house looking toward the porch and front door.  When we pulled up, we saw something entirely different. Covering the Northwest half of the roof was a giant blue tarp that kept the rain from seeping into the ruined roof.

Perhaps you read something is a “doll house.”  Ever walked in only to find hundreds of doll eyes staring at you?  Maybe the house could use some TLC.  You might find that everything inside has been either gutted, ruined, or all the walls are painted the color of pepto bismol and lime green.

All of these thoughts crossed my mind when I saw Clint Miller’s post  A (Tongue-In Cheek) Common Man’s Dictionary to Real Estate Advertising.  Here are some of my favorites:

And much, much more: Truthfully, nothing else comes to mind. But, we can’t tell you that.

Build sweat equity: The house is not habitable currently and unless you plan on working your hind end off to make it livable, it would be easier to bulldoze this place and live in a tent.

Close to Schools: You will spend a generous portion of your morning and evening commute stuck behind buses in just about every street you attempt to take to avoid them.

Immaculate: Remove your shoes. Chances are the carpet is white along with the walls, furniture, cabinets, appliances, and the family pet.

Meticulously maintained in the original condition: The avocado-colored appliances are 50 years old. Minimum.

Secluded setting: The only thing further away from civilization is a polar ice cap. Grizzly Adams once lived here.

YOU’LL LOVE IT: No. No, you wont.

Remembering this is TONGUE IN CHEEK, it does make me laugh because every now and then you actually DO find homes listed by agents who’ve perhaps stretched the truth quite a bit.  Never me, though.  And no one I work with!

What has been called “jingle mail” for several years starting in the 1980’s – where a homeowner simply walks away from their home and mails the keys back to the lender – is now becoming both more commonplace and described more grimly.  House Arrest has become the term for being upside-down on the mortgage, and the grumbling is becoming louder and the pain more severe when real estate is worth 75 percent or less than the actual amount mortgaged in one out of 10 homes.

According to MSNBC.com, even lenders are asking why pay on a house an amount that it’s not even worth?

When you default on a home loan, it remains on your credit report for seven years.  The older the default, the less potential impact it has especially if credit has been clean since the incident.  Keeping this in mind as home owners consider that it could be 20 or 30 years before their homes are worth the original balance of the loan, it begins to make sense why people sacrifice their credit reputation.  Seven years of parole v. 30 years under house arrest is a significant consideration.

Lenders, of course, are not happy that the public is viewing jingle mail as an option today.  The argument against foreclosure is it sends a terrible message to children, family and friends.  However, when 10.7 million families are affected, the action becomes far less stigmatized.

Further adding to the argument that foreclosure is a good option are the lenders and banks themselves.  Through some magical calculation and formula process, they determine that it’s okay for them to walk away from their own investments because they are worth more dead than alive.  In addition, most lenders don’t even keep the mortgages they’ve loaned – they sell them to other money machines like Fannie Mae, Freddie Mac, etc.

There is no solution on the horizon short of government intervention.  For example, some states allow lenders to go after other assets of the homeowners like savings accounts, cars, and other property.  I can only imagine how loud the uproar would be if the federal government passed legislation of this nature.  Another solution is for home owners to just stay put and honor their financial commitments…. a hard, bitter pill for many to swallow.

If only we could pick our neighbors while out shopping for that prime piece of real estate we’ll eventually call home.  Unfortunately, it’s only friends who fall into the those-we-can-select-category, not families, not co-workers, not neighbors.

This is why I always recommend to buyers that they should drive around neighborhoods during a variety of hours (morning, noon, evening, night) and be brave enough to knock on a few doors to ask what it’s like to live there.  If the dude right next to the house you want slams the door in your face, you may realize they won’t be the best of neighbors.

My friend told me last night about her dog – a cute little shih-tzu – being attacked when the neighbor’s black lab jumped a six foot fence and grabbed the itty-bitty puppy.  Fortunately adults were around to rescue the shih-tzu.  The neighbor was mortified and went with my friend to the emergency animal hospital to pay all the veterinary expenses.  While the attack wasn’t very neighborly of the black lab, that the dog’s owner stepped up and took responsibility was very amicable.

Sometimes neighbors aren’t so nice, though.  Take for instance the people next door who didn’t like the bark of the neighbor’s dog. They demanded that the dog’s vocal chords be surgically altered,

The dog’s vocal cords were apparently clipped “after a neighbor in the family’s apartment building on the Upper East Side threatened to complain to the co-op board about the noisy dog,” writes The Times.

Is any real estate really worth that?  I suppose if I had an affordable mortgage in a desirable area controlled by noise laws, I would consider it.  Or would I?   Maybe time to find my family and me another place to call home.

Photo is my dog, Cocoa.  She’s a rabbit killer, therefore not a very
good neighbor to the hare community. Dumb dog.