Uncle Sam's bailout of Fannie Mae, Freddie Mac from the trenches;Cleveland Ohio realestate

As a small broker in Cleveland Ohio my impression "from the trenches" of this latest government bail out is definitely a different perspective. What I saw in the industry before the Fannie Mae Freddie Mac bail out of the bank owned properties were selling for pennies on the dollar. It was like the wild wild west in real estate. A great big give a way! This had a huge effect on the regular market. The inner city and the first ring of suburbs are the ones that have suffered the most. High end markets are not feeling this as badly as our middle class properties. High end markets have suffered some losses in value but it appears that it is still moving along unlike the lessor priced properties. Why would someone buy a home on the resale market if it wasn't hugely discounted like many of these bank owned properties. The answer is few were. You could buy a double for 80k or less and put a few thousand dollars into it and end up with a huge equity savings. I have seen some of these bank owned single family homes in very good condition. You will see that they were on the market before the people lost their home. Then when the bank takes it over they put the property up for half the price. I have seen banks turn down offers on these properties only to turn around and put them up for far less than they would of made. I personally have been involved in three of these recently. The new buzz word in real estate is short sale. I have been doing short sales for 24 years. Sometimes you work out a deal but most of the time you get caught up in a bureaucratic web of who's on first base who's on second. Half of the people presently employed in the loss mitigation departments have no real estate background. They don't understand the dynamics of the industry. They just do what they are told and carry a huge work load. Since the bail out any bank owned property that was listed has had a really hard time getting answers on offers. I have had an offer in on one for over a week. Before the bail out anything in escrow seemed to be tied up. Now that the bail out occurred the properties that are in escrow are all getting cleared off the books and the deals appear to be set to close. All the brokers that I know who work the REO market are complaining that the listings are all dying out. Their sources of business continually keeps changing. Maybe this is a good thing! Maybe the slow down in the marketing of these bank owned properties will give the regular market a chance to catch up. I do know that "from the trenches" this last week made the phones stop ringing. It is the end of September and we have a long winter a head of us in Cleveland. Making a living in this continually declining environment has never been more challenging.

Rant on Community Development Programs

The other day I had a client that I sold a home to in 1995 come into my office for advice on investing in real estate. A lot of agents would listen to this persons situation and figure how many homes they can sell them. This is what I call making a fast buck. I explained to this person the good and bad of owning rental property. Call me a Buzz kill but until you own it outright there really isn't much profit. You used to be able to count on inflation to help make the profit grow. By this I mean as value went up you could raise the rents and try to pay off your loan quicker or use that money as extra income. I own rental property and I haven't raised rents for 4 going on 5 years now. My taxes have gone up and the cost of repairs,services, gas, water and sewer have gone up. As I sat there I realized that this person has a great background in Human resources. I suggested starting a non profit community development program. My idea is that you get some government grants and funding, or find private benefactors to finance people in depressed areas of town. This community service would be like an old fashioned bank. The goal is to teach people how to purchase and own a home. It also would have programs on simple home repairs along with how to balance a check book and even open a checking acct.,write a check and avoid penalties. This service would also look to develop businesses in the area to support the neighborhood. A dry cleaner, florist, funeral home, grocery store, shoe repair, ect. Isn't this how banks got started? Isn't this how we started the American dream? The problem is there are all these community service organizations collecting funds to do just this but not delivering the goods. Yes a few people earn a paycheck and some people benefit. We need to revamp the system and make some huge changes and hold people accountable when they get these funds. All I see as a Realtor is a bunch of smoke and mirrors. Lets have a housing fair put a few homes on tour and serve lunch! We need a grass roots campaign that starts with educating those who want to live in a community and help build one. We have to start making opportunities for these people instead of just handing them a house or free rent. Everyone feels better when they have earned something and can be proud. There is an organization called Habitat for humanity. It gets a bunch of do gooders together to build a new home that they turn over to some lucky family. This is what I call a hand out. It is not teaching them how to survive.there is an old statement about teaching a man to fish.when you teach how to fish you teach him how to eat for life. Give him a fish and you only feed him for one day. We need to pull together as a community and start teaching the people in these lower valued communities how start being a part of a community with home ownershipb usiness, and pride. Cleveland magazine just had an article about beigna true suburbanite. You took a quiz and it was funny but it said a lot about values and neighbors. A great example of one man making a huge difference is Clint Williams who owns a small real estate company in Berea and Olmsted Falls. About 30 years ago before I got into real estate I went on a job interview to be a decorator. The man I met was Clint Williams if my memory is correct. I didn't know him or of him in any way. I was young and he was trying to explain to me his vision. I met him at his commercial development in Olmsted Falls. Back then it was a couple of old buildings. They didn't have anything but shells. They were kind of old looking like frontier land at an amusement park. I don't know if it was because I was young or if he just couldn't explain his vision to me but quite frankly I thought he was crazy. I left the interview not wanting the job and went on with my life. Many years later I got into real estate and again crossed paths with this man. Now I am not saying I like this person, we never could see eye to eye. He beat me out of a couple of sales because I was working in his area or neighborhood. The man was shrewd and and good business man. I never take getting beat out of a deal well so I can't say I like the guy, but I respect him. If I ran into him he wouldn't know who I am. My response to him has been to stay out of his way and kind of fly under the radar when operating business in his part of town. That was back when he listed and sold property. Now I think he is into developing commercial deals more. Back to how he is a good example of developing a community and making a profit too. He took what I thought was a bunch of ugly buildings and built a old western style outdoor market with cute little shops and restaurants some of which I have blogged about already. This one man created what I believe is the core of what makes Olmsted Falls charming and quaint. He was working in this town before anyone else thougth it was worth while. When I was new in the business he ruled. You couldn't compete with him on his turf. He has moved on to bigger things and is not such a formidable force now but he has left behind a community that he shaped and formed to be a viable community. He had a vision which I couldn't see 30 years ago but today I marvel at it. I remember that interview and how I thought he was crazy. I bet a lot of other people did too! I don't believe he did this because of great community spirit. I know from my meetings with him it was for profit. Good old fashioned American greed done the right way where everybody wins. Kind of like Legacy Village and Crocker Park but on a much smaller scale. This is what we need to do. Congress just passed a bill to give our community some funds for revitalization. We need to hold these people who get these funds responsible. I am tired of smoke and mirrors and bullshit. Maybe they should stop giving this money to non profits and start letting some dreams come true with old fashioned entrepreneurship.

The best time to buy in Cleveland Ohio

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Some good news in The Cleveland Real Estate Market

I have never seen such opportunity to get into ownership as I have seen in this recent market. If you have ever dreamed of becoming a land baron this is the time to make your dreams a reality. If you have a stable income, good credit, some cash to work with and the ability to fix property it is time for you to get off the bench! The bank owned properties are selling for a substantially lower prices than normal resale properties. You have to be ready to replace torn out plumbing, update electrical and probably replace the furnace and hot water tank. Other than that some of these homes have really nice interiors. Years back when a bank owned property came on the market it was pretty beat up. With the pace of foreclosures and people just simply giving back their homes it has become and incredible opportunity for the wanna be investor. Some words of advise though, don't bite off more than you can handle. I have seen some really good people take on too many properties or extend themselves to far out just to find themselves in the same boat as the people they hoped to profit from. http://sandymaline.blogspot.com