Flip-flop? Not!

Spring Foreclosures Make Their (Re)Debut

Sorry for the Dr. Seuss-inspired headline (guess who's got little kids they read to?).

My point was, enough time has now elapsed since this Spring's flurry of deeply discounted foreclosure sales that several are now re-appearing on the market as for-sale rehab's. And selling -- quickly.

A good example is this Cape Cod-style home in Minneapolis' Powderhorn Park.

It came on the market in early April for a ridiculously low $88,900, and immediately attracted more than 15 offers (my client's was one of them).

Ultimate selling price? $121,500.

The Buyer, apparently a real estate agent (at least, the same agent represented the Buyer and now-Seller) put new roofs on the house and garage, refinished the hardwood floors, and cleaned up the Kitchen.

New asking price: $199,900.

Did she get it?

Yup, and then some: it just closed for $213,000, which it fetched almost immediately after coming back on the market in July.

Public Loss, Private Gain

So all's well that ends well, right?

I think it's good for the housing market that foreclosures are being absorbed, fixed up, and re-sold.

And it's certainly good for the foreclosure Buyer cum Re-Seller who made a quick $50k (my estimate -- let's hear it for the profit motive!).

And it might even be good for the Buyer's Buyer, who got a nice, cleaned-up house (having been through with my client twice, I can attest to its quality).

So who loses?

All the taxpayers -- us -- who effectively ate the loss on the defaulted mortgage, and never saw the upside on the re-sale.

Add nine zeroes, and that's what just happened with taxpayers and their multiple bailouts of Wall Street investment banks.

"How to File an Ethics Complaint"

By Popular Demand?

The first item in today's online newsletter from the Minnesota Association of Realtors is a YouTube video titled, "Filing an Ethics Complaint."

Quick Summary: it's easier than you think.

Two educated guesses: 1) there are a lot of seething Realtors (and non-Realtors) out there at the moment; 2) the vast majority are upset by how foreclosure sales are being handled (search "foreclosure" on this blog and you'll get an earful).

My take? An ounce of prevention is a lot smarter and more efficient than exacting a pound of flesh.

If you're not sure a foreclosure is for you . . it isn't.

If it makes you feel better, the feeding frenzies attending many of these properties lately is frequently reducing, if not eliminating, any market discount.

Real Estate "Story Time"

Buyer's Market "Stories"

At the market peak around 2006, the real estate "stories" were all told by Sellers: what they had just sold for, and how much it exceeded their (dramatically lower) cost.

So, in a historic Buyer's market, it stands to reason that the stories are now being told by Buyers -- presumably, about the killings they're now making.

In that vein, I recently heard about a Buyer who, in a single deal, had just scooped up 20 North Minneapolis properties for $200k in cash.

Yes, that comes to $10,000 apiece. And yes, there are documented sales recently at that price, in that neighborhood.

So, in theory, it's plausible.

Creative License?

However, before you feel like you missed out, consider a couple things:

--Homes that sell for $10,000 are, by definition, not habitable. Making them habitable can cost many multiples of the purchase price.

--The holding costs associated with buying dilapidated properties are considerable. To pick just one example, the city of Minneapolis now assesses a $6,000 abandoned building fee annually. Many of these homes come with a long trail of unpaid liens, fees, fines, etc. that may -- or may not -- be picked up at closing, leaving the Buyer on the hook.

--Who exactly is going to rent -- or buy -- the rehabbed homes? At the moment, there is no sign that foreclosures are abating, at least in many Twin Cities neighborhoods.

Are there opportunities in foreclosures?

Undoubtedly.

But just like Hollywood, the real estate stories that the public hears have often been edited and/or embellished to spice things up.

P.S.: often, it's the stories you don't hear that are the most interesting. In that vein, there's a saying that the reason dolphins have a reputation for saving drowning swimmers . . . is that you don't hear from all the ones they push out to sea.