Quote from stock777:
And then this Bloomberg story today.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aGYlBrRCgtq0&refer=home
I say, real estate brokers were at least as guilty as the mortgage repackagers and other vermin.
House Pimps, trying to say they are now VICTIMS because the gravy train is gone.
RE has to be the biggest scam going with absurd fees, and no oversight.
Obviously the folks in the story above are criminals, and it sounds like the system is getting around to dealing with them exactly as such. However, In my experience the vast majority of Real Estate and Real Estate Loan Brokers were just as caught up in the bubble and stupidity as the average Joe. There were a ton of courses being offered to become a realtor or a mortgage broker and make a ton of money. It was very much like the daytrading craze that happened in the late 90's, and the same type of people were suckered in yet again. Of the real estate and mortgage brokers I know, the vast majority of them are hurting more than any other people I know, especially the ones who had been successful. The reason for this is that they got used to living on nice commissions, but you don't get any commissions if you dont have any buyers or sellers. Not only did they get used to having nice commission checks the majority of them if they had been successful purchased as much investment property as they could afford. They are now in a lot of cases stuck with places that are worth substantially less vs what they paid for it and having to pay mortgages on investment properties when they can't even make their own.
One example of a guy I know who was not a realtor or mortgage broker but got into investing in Condo's. He's 62 years old and is a successful small business owner. Net worth was around $5million. He bought a pre-construction condo in Naples for which he had to agree to put $15,000 and then come up with the mortgage to complete the purchase 30 days before the building was complete. The condo was offered at a reduced price of $325,000 and they would be sold at $375,000 once the building open. Well, as the real estate market took off the places actually started going for about $450-$500 when the place opened. He sold his for $460,000, a pretty sweet profit of $135,000 on a $15,000 investment. I think it took 14 or 16 months. He thought wow this is swell. He took half of the profit and put it away for a rainy day and took $60,000 to find another deal. He found another one, required $12,500 down on a $250,000 unit and he got 5. Fast forward 11 months and they are selling for around $335,000 so he sells with a profit of $85,000 per unit (more profit on one single unit than he invested in all five), or $425,000. Now he got greedy and screwed himself.
He found a luxury building going up in Miami Beach. His plan was that he could invest in several units and add at least 2/3 to his net worth and finally retire. The units in the building where pre-offered at $925,000, and everyone expected them to be going for $1.2 to $1.5 million by the time the building finished up. It cost $50,000 to secure one. Roger's eye's turned to dollar signs and he secured 10 units. Construction ran into several delays and meanwhile the market started to crash in Miami Beach. When the units came available he could have gotten out for around $875,000 to $900,000, but he convinced himself of two things, first that this was just a minor and temporary glitch in the plan, and second that there was no reason for him to lose nearly $400,000 when everyone knew Real Estate in Florida only went up. So he waited. The places are now selling for under half a million dollars and Roger has not been able to meet the mortgage payments on them since June. He faces a loss of around $3 to $4 million, meaning that he worked his ass off since he was 15 years old (47 years) and thought he was very well taken care of. Well, he's not. He'd planned to donate his SSI check to charity every month in 3 years when he started to collect on it, he's now thinking of starting to collect it early because his cash flow situation is terrible.
I think that his story is probably fairly typical of what a lot of realtors are also facing right now in the market.
Brandon
