Just how sick is the housing market? - Page 301 - PhillyBlog

MrBrightside · #**3001** (**permalink**) 05-15-2008, 04:46 PM

Quote:

Originally Posted by SuzyH

So it's legal for the Bella in AC to offer the BMW convertible for purchasing an apartment there?

Last I checked closing costs would not be $35k on a $450k property (of course the apartment is really only worth $250k - definitely wouldn't have $35k in closing costs on a $250k condo). Ummmm how is this legal again? Isn't there a real estate agent representing the buyer who has an obligation to indicate that this practice is illegal (you said yourself, the credit cannot exceed 'closing costs'). As a card carrying member of the NAR (and given their strong ethical guidance) don't you have an obligation to say, yes, this transaction is an illegal one because 1) the new apartment (in the Bella) doesn't need repairs and 2) there is little chance that the closing costs can be $35k on a $450k (really worth $250k) apartment?

Perhaps it's better to just ignore the above and pretend it doesn't exist. Perhaps that way you won't step on the toes of any realtors who are encouraging this illegal practice (the Bella is just one example of thousands). But is that the right thing to do given the circumstances of the current market? Shouldn't those of us who want to see a market that isn't manipulated (so that we have confidence to purchase) at least expect one realtor out of 1MM+ to be able to speak truthfully and indicate that the Bella cannot legally give away a $35k car with the purchase of a mortgaged $450k condo (albeit one that is only worth $250k)?

I think that NAR membership will drop to 300,000 (obviously because of the dramatically slowing demand for house purchases); I didn't know you agreed with this too. Neat!

Quote:

Originally Posted by Tim K

I am not familiar with this offer and had to google to find the place and the offer. I am also not familiar with NJ state laws. All I can do is guess...

1. The advertisement lists units starting at $425k. It also states that only 20 of these "offers" are available. It does not specify which units the offers apply to. It is possible that you have to buy a $900k condo to qualify. It also states that you can opt for UP TO a $30,000 credit at closing. See point 2.

2. Just because they are offering it, doesn't mean that the buyers can accept it in part or in full.

3. We don't know how the agreement and settlement sheets will be written up so we can only speculate.

Not that it is "right" but companies often advertise "offers" that almost no one actually qualifies for. I really don't know. I'd have to see a settlement sheet to really know what is going on. Heck, the HUD-1 which is produced by the US Department of housing and urban development actually has a line on the form for "personal property" that is included with the sale.

Why don't you call or email them and ask how this offer works?

(FYI-I don't carry a NAR membership card. Don't know where mine is, and would rather not be a member if I wasn't required to be. In fact, I refuse to pay the optional $20 a year "donation" to NAR's lobby group in DC that they stick in with the annual dues.)

RESPA has something to say about this, I'm sure. Will look into it a little later.

Despite your disagreement with the practice, SuzyH, buyer incentives are legal. So if a developer throws in a plasma tv with the purchase of a property, it's allowable by law.

Hate it if you will - but agree with TimK on this one that your beef is really with the law, how it is interpreted and how the deed and mortgage is recorded with the local municipality.

SuzyH · #**3002** (**permalink**) 05-15-2008, 06:01 PM

If the lender doesn't know about it it's fraud.

If the lender does know about it, it's my view that it is still a fraud, since subsequent appraisals may be based on the sale and loans are made based on those appraisals. The practice also artificially inflates the comps and county record valuations.

I believe that a real estate agent should be able to say that a transaction that provides a $35k vehicle as part of a $450k sale without knowledge and approval by the lender constitutes a fraud. I don't know the specifics of the Bella deal either, but there certainly were many deals made during the run up like the foregoing as described, and you should absolutely have no problem saying that this, as described, is a fraud. You don't want to because you know that your real estate cronies participated in this. At some point you have to voice your distaste for the fraudsters and criminals. I expect you to do so and think you should do so sooner rather than later.

MrBrightside · #**3003** (**permalink**) 05-16-2008, 06:37 AM

Quote:

Originally Posted by SuzyH

If the lender doesn't know about it it's fraud.

If the lender does know about it, it's my view that it is still a fraud, since subsequent appraisals may be based on the sale and loans are made based on those appraisals. The practice also artificially inflates the comps and county record valuations.

I believe that a real estate agent should be able to say that a transaction that provides a $35k vehicle as part of a $450k sale without knowledge and approval by the lender constitutes a fraud. I don't know the specifics of the Bella deal either, but there certainly were many deals made during the run up like the foregoing as described, and you should absolutely have no problem saying that this, as described, is a fraud. You don't want to because you know that your real estate cronies participated in this. At some point you have to voice your distaste for the fraudsters and criminals. I expect you to do so and think you should do so sooner rather than later.

Anytime there is an assist, credit or gift like a car, the lender has to know about it. So by your theory, the whole system is faulty. It's not just real estate agents, it's the lenders, the title companies, the appraisers and municipalities for the way they record conveyances.

Unfortunately, there is no black and white when it comes to law. The law is interpretable in, at least, more ways than one. That's why we have lawyers - to help us defend your or my interpretation of the law.

For the record, I wholeheartedly agree with you that property values shouldn't be inflated like this. But giving a car away is allowable by law. Like it or not, developers are legally permitted to give incentives in that manner.

MrBrightside · #**3004** (**permalink**) 05-16-2008, 06:40 AM

RELEASE THE HOOOOUNDS!

You freaks are gonna get SOOOO riled up today.

Petra · #**3005** (**permalink**) 05-16-2008, 11:18 AM

Quote:

Originally Posted by MrBrightside

RELEASE THE HOOOOUNDS!

Kinda a fluff article isn't it? So the luxury market is "ok"ish, that says nothing about the bread and butter market most people will be buying into and selling out of. Everyone admits (even Tim) that sales are down, way down in absolute numbers and inventory has remained the same or slightly climbed. He also leaves out how sales are doing this year. Last time I checked comps are done with in weeks or days not "oh hey this unit sold for a million last year." Leaving out that the place next to it went into foreclosure for 600k.

Or you can just read what Toll has to say:

The Bucks County Courier Times. “Nervous homebuyers looked but didn’t buy during the second quarter, cutting Toll Brothers’ homebuilding revenue by 30 percent.”
“‘When we have held promotions, buyers have come out to play and put down deposits,’ CEO Robert Toll said during a conference call Tuesday with investors. ‘Often, however, a lack of confidence in the direction of home prices overcomes their enthusiasm and they don’t take the next step of going to contract.’”

“Toll also said potential homebuyers are afraid they won’t be able to sell their existing homes.”

“Sales contracts after cancellations totaled 929 homes for $496.4 million, a decline of 44 percent in number of homes and 58 percent in dollars from the same period last year.”
“‘It’s clearly a buyer’s market, but buyers can only take advantage of it if they buy,’ Toll said. ‘Sooner or later they will, but unfortunately, we can’t predict when.’”

“Toll said most U.S. home markets have weakened. But a surprising high point has been Naples, Fla., an area that’s among the hardest hit by the housing downturn. He gave the area an A-minus, while all other markets in Florida were given an F. He said Philadelphia suburbs are a C-minus, but the Pocono Mountain region is an F-minus.”

“‘You can’t give away stuff in the East right now,’ he said. ‘It’s very surprising.’”

BTW: isn't the reason the foreclosure rate in Phila is so low because there was/is a moratorium on them? Isn't it kinda hard to compare the rate of foreclosure when banks haven't been allowed to foreclosure here (just lifted in May so we'll see)?

Philadelphia Foreclosed Homes have been quite high in past years, and accounted for roughly 1% of the city’s real estate at some points during 2007, and one of the highest regional rates among Pennsylvania foreclosure homes rates. The amount of Philadelphia foreclosure listings has been expected to climb in 2008, but the city is making solid efforts to battle the trend, which has especially wreaked havoc on the less affluent western and northern regions of the city.

So either Levy didn't know about the moratorium or he's deliberately trying to deceive.

Edit: I take that back, he's not a Realtor just the president and CEO of "the Center City District."

Petra · #**3006** (**permalink**) 05-16-2008, 11:37 AM

Quote:

Originally Posted by SuzyH

If the lender doesn't know about it it's fraud.

I agree that the lender should know about this BUT the lender should also have good appraisers working for them. The house shouldn't be able to appraise for more than it is worth (not enough to cover the cost of a car).

So really I put the blame of this on careless banks. When they foreclose on the home the owner will take the car, the plasma,the appliances and probably the copper pipes with them, all they'll be left with is the house. They'd better make damned sure that house is worth what they think it is.

Malloy · #**3007** (**permalink**) 05-16-2008, 12:20 PM

Everywhere I look in East Falls I see sold signs

SuzyH · #**3008** (**permalink**) 05-16-2008, 12:37 PM

Quote:

Originally Posted by Petra

I agree that the lender should know about this BUT the lender should also have good appraisers working for them. The house shouldn't be able to appraise for more than it is worth (not enough to cover the cost of a car).

So really I put the blame of this on careless banks. When they foreclose on the home the owner will take the car, the plasma,the appliances and probably the copper pipes with them, all they'll be left with is the house. They'd better make damned sure that house is worth what they think it is.

Unfortunately it isn't a bank that is left holding the bag. It's increasingly looking like it's going to be US taxpayers, because the Fed has exchanged Treasuries for bad debt (CDOs and MBS). As a result the dollar has dropped, and may drop quite a bit further. Look at your gasoline and food prices - those overinflated appraisals are having a severe (and negative) impact on the middle class. The purchasing power of savers has gone down as a result, and the US standard of living (with $127/bbl oil) is dropping. Those fake appraisals are hurting anyone who is impacted by the rising cost of commodities and falling dollar.

Petra · #**3009** (**permalink**) 05-16-2008, 01:38 PM

Quote:

Originally Posted by SuzyH

Unfortunately it isn't a bank that is left holding the bag. It's increasingly looking like it's going to be US taxpayers,

I share your outrage and while I think it will be disastrous for the US I don't think any kind of bail out will work. We're talking trillions of dollars here. Not 1 or 2 trillion either, but 20-40 trillion. There just isn't that much money.

So we'll try to shore up the dike as it were but it's going to result in a lot of hand waving and "Do SOMETHINGs" but the end will be the same.

MrBrightside · #**3010** (**permalink**) 05-16-2008, 03:18 PM

Quote:

Originally Posted by Petra

Kinda a fluff article isn't it? So the luxury market is "ok"ish, that says nothing about the bread and butter market most people will be buying into and selling out of. Everyone admits (even Tim) that sales are down, way down in absolute numbers and inventory has remained the same or slightly climbed. He also leaves out how sales are doing this year. Last time I checked comps are done with in weeks or days not "oh hey this unit sold for a million last year." Leaving out that the place next to it went into foreclosure for 600k."

Oh, come on now, Petra.

I actually didn't post that link to make any point. I only posted it to have a little fun with the doomsdayers. I don't think anyone here thinks that sales are good or even great.

I kid, I kid!

Quote:

Originally Posted by Petra

BUT the lender should also have good appraisers working for them.

For the record, appraisers are supposed to be independent contractors who don't work for or are affiliated with the bank in any way. They are hired to make their assessment and state their opinion on value based on their expertise and comparables of like-units sold.