[quote=SD Realtor]CAR you and I have had this debate before and I don’t see the need to rehash it. I would point out a few things though… the purchases we make are at trustee sales and are all cash. The return we make is okay but the risk we take is substantial. I think it is VERY arguable that people like us who buy for cash at trustee sale are hardly reducing inventory and in fact are doing the opposite, making inventory more available at a faster pace then it would be in our absence. To say that the “average” homebuyer is one who buys for cash at trustee sales is simply not the case.
I think that your beef is with flippers and speculators who purchase homes and compete with the bulk of homebuyers. Fair enough. However as pointed out earliers, dont hate the players hate the game. True these types are gaming the system, using easy credit to finance the purchases and then flipping them. So you choose to focus your ire at them rather then the fcked up system that allows them to do this. From the government to the lenders to wall street who securitized those same mortgages. So yes there were/are players who gamed the system but I hardly attribute the vast blowup to them. We can agree to disagree there and I am ok with it as you are.
I think making a statement that 40% of the buyers on the market are flippers is laughable. When I went to Andalucia at 9:45 for a visit to look at the models and the place is friggin PACKED with engineers I bet you couldn’t find a single flipper there. Do you think people are swarming la costa valley right now are all flipping? Are PQ homes that are getting swarmed on being flipped? Yes I do see some people and have some clients who are buying homes as rentals but I hardly call them flippers or speculators. Nor would I lump them into the same category as those who bought in 04 simply to sell in inventory and realize 30% gains.
So… I do understand the type of flipper you are targetting. However I think that by far the people I see at trustee sale in no way are that type. I think they/we are taking a very valid risk and earning our return by doing so.[/quote]
When I refer to the ~40% being investors, I’m including the off-market stuff like bulk sales, bulk MBS purchases, etc… in addition to flippers, landlords, second-home “investors,” etc. Hundreds of billions of dollars (trillions???) are being transacted that we are not privy to. What we see on the MLS is likely a very small portion of what’s really going on, IMHO.
There is no doubt that flippers take some risks, but so do gamblers in Vegas. It does not mean that they are entitled to any profits. The kinds of risks that deserve profits are when someone uses their own capital (not borrowed money, not money from stock sales, and no corporate/LLC protections) and starts a new company that will serve to benefit society, IMHO. Our society has tended to over-generalize the notion that excessive risk should equal outsized rewards. There is a big difference between different kinds of risks. Some are simply speculative (including all the garbage “innovations” created by the financial industry) and confer no real benefit to society. Others (like using your own capital to invent new energy-saving technologies, or ways to increase agricultural crop output without dangerous chemicals, etc.) are very worthy of “outsized” rewards. Okay, that’s just my opinion, but there it is.
Anyway, if the banks were to take back these properties and sell them as REOs, buyers would still have the same title and lien “benefits” as they do when buying from a flipper. Difference is, they would probably be getting them for a lower price. I don’t care if we have to wait an additional month for the bank to put them on the market; it’s worth the savings.
For example, note the house on Bolero in 92009 that recently went pending (the modern, white one with 1/2 acre and view). The flipper bought it for ~$645K, IIRC, and without doing any renovations (I prefer they NOT do renovations, for the same reasons stated by other posters in this thread), put it on the market in the high $900K range and it’s pending. Now, if the bank took it back instead, they could have listed it for $750K. The bank/taxpayers would have saved $100K, and the buyer could have saved $200K-$250K. This is a much better outcome than having the flipper make off with ~$300K of the bank’s/taxpayers’/buyer’s money…all for doing nothing, basically. There is a good way to allocate capital, and there is a bad way to allocate capital. IMHO, giving vast sums of money to middlemen is the very worst thing a society can do.
