patrick.net

Apparently a lot.

I just got an e-mail last night that I was outbid (by $80,000) by a couple who had a FORECLOSURE in 2009 on their record for a fixer REO.

As a dog returns to its vomit, so a fool repeats his folly. — Proverbs 26:11

I could get annoyed, or irritated, but on a home that is $500,000+, to bid it all the way past $600,000 just seems insane (comparable sales for FULLY done homes around $570,000). With all the free loan money, who cares anyway? Even someone all-cash like myself gets blown out of the water in the face of nearly $100,000 more leverage.

The punishment for walking away is negligible. I've seen it with my own eyes. People with foreclosures on their records are getting loans for $600,000+ homes. I just wonder what the end game is to this.

Call it Crazy says

You could just up your offers to $700,000. Come on, don't be a cheapskate!! :)

Overpaying on a home by $200,000? This idea is intriguing. No possible downside right?

RentingForHalfTheCost says

I can save around 50-60K/yr, but I'll be damned if any of it is going into an overpriced pile of rotting wood in the BA. Get your own money and stay away from mine you greedy sellers!

I could save 50-60k a year if i moved into my parents basement and lived the life of a hermit eating ramen too...

Goran_K says

As a dog returns to its vomit, so a fool repeats his folly. — Proverbs 26:11

Precisely why bankruptcy laws and laws and prosecutions of those who commited financial FRAUD need to be far more severe.

Down payment and interest has never been lower. The problem is not neither of those, and while a lot of it has to do with it being hard to get a loan these days. At least the requirements are more strict. You don't even need a lot of money in the bank. It only takes about 4 to 5K to buy a house now.

The problem is people want what they can't have. They still want to live in neighborhoods that "location, location, location" dictates the rules. If these are the houses you're bidding on. Then you're perception of the market is, that nothing has changed in 7 or 8 years for the most part. There's just a lot of pressure for such a little stock.
There's more people buying a hose with their emotions, instead of reality.

There's hundreds of thousand of houses out there that don't have competition, would be qualified people, just aren't bidding on them. So investors are scooping them up for cheap. The irony is, when the other lot get exhausted and give up on the posh and swanky part of town, they sometimes end up renting the very same houses they could have bought months even a few years ago.

Call it Crazy says

Maybe that's what they should be doing... buying a "hose" then attaching it to their exhaust pipe and inserting it into the window of the car.....

I see you also subscribe to Raw's newsletter.

Goran_K says

I just got an e-mail last night that I was outbid (by $80,000) by a couple who had a FORECLOSURE in 2009 on their record for a fixer REO.

Didn't we have this discussion before? The ones that got foreclosed or short sold in 2009 would be eligible to buy in 2012. The ones that got foreclosed or short sold in 2010 will be eligible to buy for 2013, and so on.

Squatting for 2-4 years should give people enough money to buy a couple of new cars and put 0.5%-3.5% down payment on a house.

Can they buy again with a little down payment and squat again for another 2-4 years while they save some real cash this time? Who knows? The system is there for people to abuse. All legal with minimal consequences.

E-man says

The system is there for people to abuse. All legal with minimal consequences.

Completely agree. I've experienced it first hand. Short selling or getting foreclosed on for not paying your mortgage is one of the easiest things to do these days and the penalties are minimal at best.

Goran_K says

Completely agree. I've experienced it first hand. Short selling or getting foreclosed on for not paying your mortgage is one of the easiest things to do these days and the penalties are minimal at best.

These people have muscle memory for the over-the-barrel position -- think yoga for financial masochists. The going canard is that there are rewards for such folly. There is not.

Going with the herd isn't very sound advice.

JodyChunder says

These people have muscle memory for the over-the-barrel position -- think yoga for financial masochists. The going canard is that there are rewards for such folly. There is not.

Going with the herd isn't very sound advice.

I don't know Jody. I used to think the same way. But now, I see people with foreclosures on their credit, getting $600k large from banks, and I think, how is this system not rewarding their folly?

Goran_K says

I don't know Jody. I used to think the same way. But now, I see people with foreclosures on their credit, getting $600k large from banks, and I think, how is this system not rewarding their folly?

I think you've gotta zoom out, past the present and the insidious marketing of "new normals." If past is prologue, then I don't think things can go in that direction forever without some deleterious effects to the health of the retail speculator.

Patrick started this site because he is in the bay area. The houses are grossly overpriced there. I cannot imagine wanting to live there as anything but a renter. My extra money would go toward buying in an affordable area worthy of retirement living. I would rent it out until I could move there permanently.

California is full of people who work as hard as they can to buy shit that they can't yet afford with money they don't have to impress people they don't like. It's the rat race, and it makes us all into servitors of The Machine.

Putting 3.5% down is a loser's strategy. If I were to abuse the system, I would buy a homepath house. I don't care if I overpay for it. I will ask for 6% credit. 3% for the down payment and 3% for closing costs. Basically, no skin in the game at all. Well, you know the rest of the story.

If Solyndra can do it, so can we. As far as I know, no one has been arrested for this over $500M scam. :)