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What is "real" about real estate?


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2006 Sep 24, 5:05am   12,178 views  50 comments

by Peter P   ➕follow (2)   💰tip   ignore  

What does the "real" in real estate mean?

"Real" as in " the real thing"? "Real" as in "El Camino Real"?

Probably most people think it is the first one. Hense, real estate is the reality and it will ever go down. But if it is the second one the King owns it. Hmm...

Unreal estate
Under the green fog of a bubble dusk.

#housing

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1   Peter P   2006 Sep 24, 5:14am  

I have damaged my reputation and I have damaged many good relationships through this. I never meant to hurt anyone. So to stop any further damage I am shutting down and laying low.

Ha ha!

Actually I do hope that he turns out all right. I should be nice.

2   astrid   2006 Sep 24, 5:23am  

What a dumbass. He didn't realize this problem after his blog commentors told him about 100 times. But of course, he was trying to scam people into overpaying for his POS properties and bitching about mean commentors.

Oh yeah, also after google cached his website and he got his story into a paper. 90% of the damage is already done.

(In my online persona, I can afford to be wrathful. I tend to think white collar criminals insufficiently punished given the amount of damage they do.)

3   Peter P   2006 Sep 24, 5:51am  

The ones that really piss me off are those that “hoard”, because they’re able to stretch into the payments just enough to keep the property off the market and let inflation eat away at the value.

Those who have attained "neutral cashflow" using option arm will soon find that they need to raise rent at least 7.5% every year just to breakeven. Is this possible in many places? Looks like the hoarders will face reality sooner than you think.

4   astrid   2006 Sep 24, 5:56am  

SFGuy,

I agree that this quick in and out is less damaging for the overall market (I'm a sharp quick dip advocate), but I meant 90% of the damage to this Casey idiot. If anybody wants to prosecute him or the bank wants to play hardball (which they might want to, since he badmouthed and blamed banks and mortgage brokers for his woes), he's already incriminated himself out of any wiggle room. Any drug dealer would be locked up on far less evidence than this guy willingly gave up on himself.

5   astrid   2006 Sep 24, 6:13am  

Peter P,

I don't think the hoarders would dare to raise rent (unless the market allows them to do so), more likely they'll just swallow some of the cost and watch their rental property bleed them dry. The fulltime "real estate investors" are deadmeat, but I know a few parttimers who'll rent out at a loss to the tune of a couple hundred dollars a month per property, hoping to wait this out.

What they and all the stupid financial gurus forget is the real value of money, and that the accumulated losses over 5 or 10 years of waiting this out could dwarf the one time hit of selling at a loss now.

6   lex   2006 Sep 24, 6:20am  

Hmm, I am Facing Foreclosure .com has been shut down but you can still find the original content cached by google: http://tinyurl.com/gc3vp
Was it shutdown for real?

7   Randy H   2006 Sep 24, 7:28am  

I'm off to tour S Marin open houses today. First time in about 2 months. I'm preparing to re-engage making offers, only this time more in line with Doug H's suggestions for putting pressure on the sellers. I'm still not sure how to get around the agent embargo, but we'll give it a whirl. I see some pretty nice homes that have come down $250K-$280K and been on market for over 6 months. Still overpriced by a good 20-30%, but it can't hurt to see what happens with a fair priced offer.

We need to unstick sellers; let them know that the past 2-3 years were fantasy and if they want to sell, they have to be willing to entertain realistic offers. Every bona fide offer they get that's reality-based helps to convince them that much more that they aren't going to get bubble prices.

8   astrid   2006 Sep 24, 7:49am  

Randy,

Have fun and please report back.

9   Peter P   2006 Sep 24, 8:00am  

We need to unstick sellers; let them know that the past 2-3 years were fantasy and if they want to sell, they have to be willing to entertain realistic offers. Every bona fide offer they get that’s reality-based helps to convince them that much more that they aren’t going to get bubble prices.

This may help:

http://www.deeptrancenow.com/remote-influence.htm

10   Different Sean   2006 Sep 24, 8:03am  

that was quite long, ha ha

11   Different Sean   2006 Sep 24, 8:08am  

factoid: 'real estate' etymologically means 'royal estate', as land given to peasants was often carved up out of royal landholdings. (as per units of currency being named the 'real', the crown, etc) so be grateful for your ¼ acre block, you lucky serfs...

12   frank649   2006 Sep 24, 8:29am  

"... that “hoard”, because they’re able to stretch into the payments just enough to keep the property off the market and let inflation eat away at the value"

Where's the sense in doing that? An investment that returns less than the inflation rate is a bad investment, imo.

13   frank649   2006 Sep 24, 8:44am  

Oil prices and inflation and the future of fed rate hikes...

http://mises.org/story/2331

14   astrid   2006 Sep 24, 9:11am  

As for "real" estate, DS is right. "Real" is an anachronistic connotion back when land held vast majority of the potential wealth and power. It is to distinguish land from personal property. Land was connected to the wealth of particular families, and there were severe restrictions about the transfer of land. A fun way to learn about this origin is to Wikipedia up some medieval kings and queens (Wikipedia links them up together) and see how they married.

Personal property used to mean furniture and a couple of moth eaten gowns. Nowadays personal property includes stocks, bonds, antiques, you name it!

15   astrid   2006 Sep 24, 9:18am  

BTW, I just want to say I now love the Orlando trade uppers. I will now make the same recommendation to all sellers. Have trouble selling your outrageously appreciated POS? Put a koi pond in it.

To me, that even beats the 12 year old jeep offer mentioned a couple weeks ago.

16   frank649   2006 Sep 24, 11:04am  

Where’s the sense in anything going on in Real Estate for the last few years?

We all know very well what has caused the housing bubble... in that sense it all makes "sense", even though we may think it unjust and wish it never happened.

17   Patrick   2006 Sep 24, 11:11am  

A reader just asked me if owners get any property tax break when the value of their house falls. I think no.

Anyone know for sure?

Patrick

18   Different Sean   2006 Sep 24, 11:15am  

there are worse RE scams where mortgage brokers and RE agents collude in an area to buy property from little old ladies cheap and then onsell at inflated market prices...

casey is just a kid who listened to the RE gurus and paid for a seminar -- I think his opening post questioning the whole thing in retrospect summed it up well...

his enthusiasm knows no bounds tho, in whatever he does...

19   frank649   2006 Sep 24, 11:18am  

"The writer at mises.org is in the minority in his conclusions, I think. All we can do is save away, wait and see."

The writer comes from a different school of thought on the subject; it is not as popular (at least here in the US) as some other theories on economics, but it is one that makes a hell of a lot more sense (at least to me).

Randy no doubt would disagree (as he and I have in the past). Nevertheless, I do applaud his efforts to rattle the false realities of these FBs in any which way he can.

20   astrid   2006 Sep 24, 11:35am  

DS,

Casey Serin knowingly broke the law and admitted it. Okay, maybe the federal prosecutors can go easy on him since he fessed up (like asking for the lightest sentence) but they have a duty to charge him and put him away. Better yet, let him turn state's evidence and put all the scumbags he worked with away as well.

I've been reading more on this Serin character from the other blogs, and it looks like this moron (not kid, he's 6 years passed the age of majority, in a country that executes minors) intentionally timed his purchases simultaneously and took money out at most of his purchases, both indicating premeditation.

He was trying to scam people into assuming his hiked up mortgage (hiked up because he took cash when he bought). He was yakking on about retrieving his equity when he had no equity on the houses he "owned." Having been caught and realizing that he still have to deal with the mortgage brokers and bankers and realtors he badmouthed, his dim bulb finally lite up a little and he took the site down.

Put me down as someone who will not be shedding any tears. Yes, the mortgage brokers and realtors are also culpable, but Casey Serin made his own very uncomfortable bed so he deserves lie in it.

21   Paul189   2006 Sep 24, 11:50am  

Could anyone tell me if it is possible to obtain a sellers credit report legally so one would know how desperate they may be in the negotiation?

BTW, I'm with the others here on prosecuting this Serin guy.

Thanks.

22   Different Sean   2006 Sep 24, 11:58am  

i think casey just followed the advice of people like robert g. allen, who has often recommended practices which are fraudulent in his seminars. ditto for the other gurus, as per John T. Reed's view of various real estate investment gurus. (i can say that freely given that john reed has already demonstrated it, and outside US jurisdiction also ;))

the lenders won't be held culpable, because he lied to them on a number of points -- just as the gurus recommend. (working on defence speech) the real guilty party here is the whole american 'get rich quick' mentality and the adulation of conspicuous consumption and (narrowly defined economic) 'success' by any means and at any price. the sheer number of ads you see on the net advising to get rich in shares, get rich in anything, in any way possible, surely has to have an effect on young, tender, developing psyches. the govt fails to regulate the gurus and their seminars. most spam originates from the US in this vein.

is it up to the lenders to prosecute casey for fraud in a civil proceeding -- if they feel like it? or would they turn it over to a state PA? if they wanted jail time and revenge, they could do that, but if they want to recover their money, better off letting him go free and have him learn an economic lesson -- unless they need to garnishee his wages forever also. or perhaps a suspended sentence is appropriate, in case he's a mini-fraudster in the making who will keep repeating...

i think his biggest mistake was believing the gurus and mistiming his run just as the boom was turning, due to insufficient research and awareness -- altho he points out he was trying to take the 'fixer-upper' path as well with little knowledge of construction costs...

23   frank649   2006 Sep 24, 12:23pm  

"Will cheap oil save the housing bubble?"

Not a chance. The "housing bubble" is doomed by definition. The only thing that can give the "illusion" of the housing bubble being saved is a perpetual campaign of monetary accelaration.

24   astrid   2006 Sep 24, 12:27pm  

DS,

Ignorance of the law is no defence. Wishful thinking is no defence.

Why bother having laws at all if they're not gonna be enforced? Forgiving lawbreakers hurt people who played by the rules and it encourages more law breaking. If this guy gets charged and ends up with a suspended sentence, that should be the judge or the jury's call, not that of the prosecution and certainly not of that of bloggers.

But first, charge his guilty ass.

25   Doug H   2006 Sep 24, 12:57pm  

Paul asked:
"Could anyone tell me if it is possible to obtain a sellers credit report legally so one would know how desperate they may be in the negotiation?"

The answer is NO.......

However, finding out if the seller is desperate is pretty easy to do.

Need info? Ask, and you shall receive. Asking the right questions will get you all the info you need to assess the seller's situation.

Example: If he wants a FAST close; make sure you can accomodate...for a price. If someone wants to close YESTERDAY, do you really need to find out his FICO score?

If he wants to close in four months; accomodate him....for a price.
Whatever he wants.....deliver....at a price.

Financial condition of the seller:
Search public records for all mortgages, loans, judgments, liens, etc. They have to be recorded and it's all open to whomever wishes to peek.

If he's on his last financial breath, drive a stake in his piggy bank. Sound cold?.....such is business.

There's nothing unethical about playing hardball but make sure you are prepared as it can get pretty messy.

26   Different Sean   2006 Sep 24, 1:26pm  

sure. but is defrauding a bank a civil offence or a criminal one? not being legally trained, not taking much interest, and not being much on the side of the banks, i don't know the answer to that.

i know the british army guy who cheated on 'who wants to be a millionaire' was prosecuted for fraud and eventually drummed out of the army...

"Following a trial at Southwark Crown Court lasting a month, Major Ingram, his wife Diana and Tecwen Whittock were convicted of "procuring the execution of a valuable security by deception" on 7 April 2003. Ingram and his wife were each given suspended 18-month prison sentences and fined £15,000, while Whittock received a 12-month suspended sentence and was fined £10,000. Together with legal costs, it is estimated that the Ingrams will have to pay £50,000 in total."

Who Wants to Be a Millionaire? (UK game show) - The Major Charles Ingram affair

oops, not looking good...

27   David J   2006 Sep 24, 1:29pm  

Hi everyone. I've been visiting this site since the middle of last year and this is the first time I've felt compelled to write. I stopped by my parents house in Eagle Rock (the northern part of Los Angeles between Glendale and Pasadena) on Saturday and noticed that a tiny little house in my old neighborhood is for sale again. This place just sold in June 2006 for $545,000 so the first thought that came to mind was FLIPPER! When I got back home I looked the place up on realtor.com to see what the new asking price is. This guy has the place listed for $679,000. A $134,000 increase in just three monthes! Ordinarily I don't wish people harm but this really gets to me. I hope this guy goes down in flames! Eagle Rock has always been a nice mix of blue collar and white collar households but if these prices don't come back to reality only the rich will be able to afford anything there. It is kind of strange having to accept that I am severely priced out of the very neighborhoods I grew up in. My wife and I are saving up a down payment as best we can but if something does'nt give soon I think we'll be forced out of state.

28   astrid   2006 Sep 24, 1:34pm  

Hey, it's the perfect deal for the flipper who knows the market is going to resume its 20% a year appreciation trajectory.

29   Different Sean   2006 Sep 24, 1:37pm  

real = royal. i'll brook no other interpretations... just stop it!

Etymology
real; from French royale, from Latin regalis, royal, regal, from combining form reg- (nominative rex), king, + adjective suffix -alis

estate; from Latin status, condition, state

In spite of the name, real estate has no connection with the concept of reality. It derives instead from the feudal principle that in a monarchy, all land was considered the property of the king. Thus originally the term real estate was equivalent to "royal estate", real originating from the French royale, as it was the French-speaking Normans who introduced feudalism to England in the 11th century and thus the English language; cognate to Spanish 'real'.

real estate - Wiktionary

'real property' probably has the same origin -- it's just been fudged by too much butchery from L. to F. to E.: L. regalis vs realis...

30   frank649   2006 Sep 24, 1:47pm  

"...if something does’nt give soon I think we’ll be forced out of state."

Don't put yourself in a situation you will regret even more. The plunging sales are just a first sign of a major melt down. The worst is yet to come.

31   David J   2006 Sep 24, 1:59pm  

David J., just watch a bit. Things seem to have stalled and I think we are going to see the market drop out of a lot of the really frothy areas.

Don't worry about me buying in at these prices. I work to hard for my money to throw it away on overpriced real estate. Our goal is to start looking when we have at least $200,000 put away and baring some unfotunate circumstance that should be around summer of 2008. Until then I plan to sit by and watch the market tank.

32   Different Sean   2006 Sep 24, 2:00pm  

i think casey serin would be shown to be extremely naive, although very enthusiastic and motivated and reasonably intelligent. this is someone who unquestioningly believed all the courseware of RE 'gurus', didn't think about the illegality of the suggestions, then went on to unknowingly publicise his misdeeds to the entire world without recognising the ramifications for personal prosecution. this does not sound like the actions of a dyed in the wool conman in the making, more like someone who embraces advice from anywhere enthusiastically and uncritically, and is merely somewhat gullible. the judge would probably let him off with a warning or suspended sentence and recommend he go into a safe job and career where he doesn't need to make too many judgement calls... i've got a mate here who is somewhat like that who is notoriously gullible and has attended a lot of 'personal development' seminars but who luckily hasn't tried pulling off any property tricks -- altho he ended up becoming a mortgage broker, hmm...

33   FormerAptBroker   2006 Sep 24, 2:09pm  

frank Says:

> An investment that returns less than the
> inflation rate is a bad investment, imo

One thing the flippers that try to hang on waiting for real estate values to go back up will soon learn is that real estate has “Real” expenses…

Cisco is not going to call any of the stockholders and ask for $50K to help with R&D while they hang on waiting for the stock price to go back up…

In the past week I’ve hired guys to fix a leaking pool (where the leaking pipes are under the pool) for $22K in “Real” dollars, and hired guys to replace a fence for $8.5K in “Real” dollars…

Real Estate returns are also “Real” volatile… What other “investment” can go from thousands per month in positive cash flow to thousands (or even tens of thousands if tenants thrash the place) of negative cash flow overnight?

34   astrid   2006 Sep 24, 2:21pm  

Welcome to David J.

35   astrid   2006 Sep 24, 2:26pm  

DS,

It doesn't matter, ignorance of law is no defense. Since this guy appears to be in the US on a green card, he's doubly screwed. Even if he gets a suspended sentence he will be deported back to Uzebekistan and never allowed back.

Once again, remember that the US is a country that executes minors and retarded people. I don't think the prosecutors and the judiciary will look too kindly on a dumbass who was in too much of hurry to read the fine print.

36   skibum   2006 Sep 24, 2:33pm  

More RE fodder from the NYT, this time about ARM resets and the sad FB's using them:

http://www.nytimes.com/2006/09/24/realestate/24cov.html?_r=1&ref=realestate&oref=slogin

"It Seemed Like a Good Bet at the Time ... "

By BOB TEDESCHI
Published: September 24, 2006

"On Nov. 1, the adjustable-rate mortgage, or ARM, she took out three years ago at the spectacular rate of 3.875 percent will get considerably more expensive. Ms. Rogers, a single mother of two living in a three-bedroom ranch in suburban Boston, faces a rate increase of three percentage points, raising her monthly house payment by $300, to $1,419, and putting her at a financial crossroads.

Her choices: keep the loan and run the risk of future increases, or ditch her adjustable mortgage in favor of a more stable loan with a higher monthly payment.

Ms. Rogers, a hairstylist working 32 hours a week, will have to work more in either case. The 6.85 percent 30-year fixed-rate loan she is considering would cost $100 a month more than her higher ARM payment, but it would at least protect her from future increases that could go far higher."

#########

OK, I'm all for the American dream and all, but what is a single mother of 3 hairstylist doing with a $1400/month mortgage?

37   skibum   2006 Sep 24, 2:36pm  

And another NYT article, this one more insipid and evil:

http://www.nytimes.com/2006/09/24/realestate/24books.html?_r=1&ref=realestate&oref=slogin

"A Soothing Voice Amid the Market’s Chicken Littles"

By FRED BROCK
Published: September 24, 2006

"NO WORRIES “The market is not crashing,” said Blanche Evans, the author of “Bubbles, Booms, and Busts: Make Money in Any Real Estate Market,” who sees the current housing slump as more of a breather.

But Blanche Evans, the author of “Bubbles, Booms, and Busts: Make Money in Any Real Estate Market” (McGraw-Hill, 2006), isn’t buying it. She sees the current slump as more of a breather, as well as a chance for buyers and sellers to “reposition” themselves to take advantage of the long-term upward trend in housing prices.

In other words, she contends there is money to be made in real estate even if prices head south for a while.

Ms. Evans, who is also the editor of Realty Times (realtytimes.com), an online real estate news service based in Dallas, says the current slump has mainly forced a lot of quick-money speculators out of the housing market. "

Blanche Evans is one of the biggest rah-rah RE cheerleader douchebags out there. The NYT has truly sunk to a new low, publishing a shill piece for the RE industry. It's pathetic.

38   astrid   2006 Sep 24, 2:42pm  

NYT's lifestyle sections have always been about tempting people to spend too much and making multi-millionaires feel poor.

39   David J   2006 Sep 24, 3:04pm  

Hello Allah. My wife and I do plan to wait for a bit before we try to buy. Our preference is to stay here in the L.A. area as this is were the vast majority of family and friends live. When you spend your entire life in an area I guess thats expected. At the moment we have a nice apartment in Burbank that we rent for $675 a month and since we live well below our means we are able to put a decent amount of our income away each month. We've been at it for a while now so we're well on the way towards meeting our goal but it requires doing without a lot the things that others might take for granted. We've become so frugal that on the surface we may even appear poor, especially when compared to the spending habbits of the cash out refinancing crowd. Hopefully, in the end it will all be worth it. Finding this web site and reading Patricks detailed explanation of the current housing market, and the comments of all of you that regularly contribute realy saved my financial neck. Thanks to all.

40   Different Sean   2006 Sep 24, 3:15pm  

no, no, he came out 15 years ago or something, when he was presumably 9 or 11. must be completely naturalised and enculturated by now -- no sending him back. great melting pot etc etc, remember?

i know the US has the highest incarceration rate in the OECD by an order of magnitude, and equal to russia, oh well, that's your choice. maybe it has the highest incarceration rate because the answer to all problems by most of the populace is: 'charge his guilty ass' -- america is a country full of B&W splitters, after all, which seems to cause more problems than it solves...

meanwhile, a huge beer brewer near me is angling to get 100 m (33 storey) towers built next to 4 storey residential in a quiet area, they have simply co-opted the dept of planning chief architect and the minister for planning himself as cheerleaders for the proposal, and the 'expert panel' is made up of an ex-mayor and 4 state govt personnel -- if they get these towers thru and destroy the area, that's not illegal -- mainly because they ARE the law. one little pipsqueak like casey serin, who is the only one suffering at this stage, mind you (except for the lenders), is supposed to get the book thrown at him for being silly and taking risks to 'get ahead in property', but it's ok for big business to exploit real estate by building huge towers for extra profit with a nod from the govt and some brown paper envelopes changing hands between the elite for the eternal ruin of the area. and no-one ever gets prosecuted, they just walk away with the 'legally earned' moolah by abusing the process of urban planning.

after all, Karl Marx argued that the law is the mechanism by which one social class, usually referred to as the "ruling class", keeps all the other classes in a disadvantaged position.

prosecuting casey is small target stuff, and just shows how the RE 'gurus' are operating providing dubious advice to uneducated, inexperienced, nearly broke people, e.g.: John T. Reed's analysis of Carleton H. Sheets' books and tapes

plenty of gurus get murdered, or go bust, and many of their students go bust also trying to carry out the 'strategies' or even to pay for the courses...

but that's fine, black and white thinkers self-select as prosecuting DAs, shade of grey thinkers go into defence...

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