The Creel Deal

Last year I had a client that was the victim of a Straw Mortgage scam artist. I handled the short sell on the property and in the process learned more about straw mortgages than I ever cared to.

One thing that was clear, there is no shortage of homes that were sold in this manner. Typically they involve an inflated appraiser, an unscrupulous mortgage broker, and a very crooked closing agent (usually an attorney).

In the end obviously the home is "sold" for far more than it's worth (almost always a FSBO). Then a few months later the home is abandoned and foreclosed on. What was also apparent was that often comps were skewed by the presence of such homes in some areas. In one case I saw 2 such homes on one block, and the other homes for sale weren't selling because they were over priced. The prices were based on the sellers and agents belief that homes on the street were selling for far more than they actually had.

I've warned many clients that are licking their chops looking at the list of foreclosures to be careful. Just because there's a debt of 700k on the home and you may be able to get it for 80% of that, doesn't mean it's a deal. It may have only actually sold for 80% of that and the difference was pocketed. Often the seller was still paid more than it was worth (even at 80%) as an enticement to go along with the scam.

So in the end you're buying homes you can't preview, can't inspect, and have to pay cash for; for possibly more than it's worth. I'm certainly not saying most repossessed homes fall into this category, but one never knows. I tell them to look and see how long the owners had it before walking away; that can be a clue.

This type of activity certainly played a role in the collapse of the mortgage industry.

I thought I had heard it all, but then a salesman tried to sell me fake grass (no, not the smokable kind). I sometimes wish I had bought it; especially when paying the bill for a certain chemical company to treat my lawn every six weeks. I don't even want to talk about the water bills for the months of May, June, and July or the weekends lost to cutting the grass and trimming the foliage.

These days if your lawn looks raggedy your neighbors give you the evil eye and the homeowner's association puts a nasty little note on your door, so you gotta pay to a bundle to have a lawn that looks like it should have a little flag on it. When I was a kid growing up under the hot Texas sun we never once watered or fertilized our lawn. It looked great during the cooler months and it baked to a nice golden brown in the summer. I rather enjoyed the crunchy sound it made when you walked on it.

I still daydream about calling that fella and buying that fake grass, especially when those bills come. I am curious though, who has this modern day Astro Turf in their yard? I've never run into it while showing homes, so I was curious if any of you had? Would it raise or hurt a homes value?

I wish it would catch on so I could jump on the band wagon; I could then slowly replace the trees and shrubbery with plastic versions. Maybe even put a few fake birds in the trees, and,...yes, even pipe in a sound track so you could hear the birds singing.

My own little plastic Utopia!

Lately I've seen some truly remarkable price reduction e-flyers landing in my email. They seem to tout the reduction as a great thing that should make my clients happy and eager to buy their home. I don't see it that way, and I feel these massive reductions are hurting all of us.

Obviously as agents many are being asked to list homes at absurd prices that do not accurately reflect the marketable value of the home at the time of the listing. I view it as seller's denial. Apparently some people out there feel they still hold a lottery ticket that will enable them to reap huge profits in a short amount of time. Because of that belief, they still want to list their homes at dream prices in hopes they can cash in on the sales frenzy of yesteryear.

All this has accomplished (because their certainly not getting those crazy prices) is that buyers out there are lead to believe the market is crashing. I recently received an email from a client that has been looking at homes and she said she wanted to wait until next year when prices have stopped tumbling downward. Her belief this was happening is based on the fact that homes she has viewed now reflect price reductions of up to $65,000 shortly after hitting the market. Also many homes that the MLS list as Sold are showing accepted offers 25k under asking and often more.

I really don't see this as a market crash, but more of a reality check. If you list a home, and then two weeks later drop the price sixty five thousand, then I suggest you listed it absurdly overpriced to begin with. I tell my clients if you put a crazy price on your house it will not sell, it's that simple.

I realize we can't control what people ask for their homes, but we can educate them, and when necessary decline the listing. We are doing them no favors by listing the home at a crazy price to appease them (knowing it won't sell), and then dropping the price drastically once they realize we were correct in our assessment. We are in fact creating an illusion of a market crash.

I recently had a client that wanted to list her home $50,000 more than it was actually worth. I suggested we get an appraisal to support the price and she declined. She then went forward and listed it at an appropriate price. It hurts the entire market when we inflate the listing  price and then tumble it down in a couple of weeks; or do so knowing it will likely sell for an offer that's considerably less and more appropriate.

But, that just my opinion.