Housing Doom

Even some of the sharpest folks [Or perhaps I should say ESPECIALLY the sharpest folks] in real estate have gotten out of house "flipping". In a declining economy, with a glut of homes on the market, and financing difficult- it’s next to impossible to have flipping make financial sense.  That doesn’t stop government from wanting to get in the business though. On May 8, Representative Maxine Walters (D-CA) posted these comments about legislation she had introduced on her website:

By a vote of 239-188, the House passed The Neighborhood Stabilization Act (H.R. 5818), which authorizes a $15 billion federal grant and loan program to help state and local governments purchase, rehabilitate, and resell or rent foreclosed homes.

“To understand the urgent need to enact this legislation, you just need to visit — as I have —communities like Cleveland, Detroit, or the San Bernardino and Stockton metropolitan areas in California, where block after block is dotted by foreclosed properties, many of them suffering from neglect or actual vandalism.  These abandoned and foreclosed properties drag down the value of the homes still occupied by working families, contribute to a cascade effect whereby plummeting home prices erode the tax base of state and local governments and harm real estate related industries such as the construction trades,” Congresswoman Waters said.

Using well-accepted construction activity multipliers, the National Foreclosure Prevention and Neighborhood Stabilization Task Force calculates that the bill’s proposed $15 billion investment will generate at least $38 billion in direct and "ripple effect" economic activity nationwide, employ 120,000 people, and restore nearly $225 million per year in local government real estate tax collections.

Reality often doesn’t work as well as theory.  From today’s Toledo Blade:

Read the rest of this entry »

Real estate fraud hasn’t died, it’s just shifted gears a little. A brazen scammer working in Round Rock, north of Texas showed his "customers" several properties before renting out a home- that wasn’t for rent:

Timothy Alonzo Nero did everything he could to convince customers he was a legitimate real estate agent, Round Rock police say.

The 25-year-old had business cards, a convincing company name — BGN Management— and two office addresses. In at least one case, he had a key to the home he was trying to rent out.

But after Nero collected $25 for an application fee and $499 for a discounted first month’s rent, his potential renters found that the key he’d given them to 1008 Howell Terrace Place home didn’t work, police say.

They’d been scammed, police say. Nero’s story worked on at least five people between May 24 and Tuesday, Round Rock police officer Eric Poteet said.

"He would walk each victim through the process just as if he was a real estate agent leasing a house to somebody," Poteet said. "He took care of every detail."

 After the deal was cut, his victims started noticing the holes in his story-

The wrong key, Poteet said, "was the first indication of a problem."

They then found that the home was for sale, not for lease. And Nero wasn’t selling it.

The phone number on Nero’s business card was for a disposable phone that was turned off, Poteet said. The addresses on his card were for the San Marcos City Hall and the Hays County landfill.

Nero has never been licensed as a real estate agent by the Texas Real Estate Commission, according to an arrest warrant affidavit.

 So how did he lure his victims in?

The alleged victims had responded to a posting on the Web site Craig’s List for a four-bedroom home with hardwood floors, a large kitchen pantry and fenced-in backyard for $800 a month without a credit check, the affidavit said.

Nero, who went by the last name of Hero, showed several homes in Round Rock to the potential renters before convincing them that the house on Howell Terrace Place was the best buy, Poteet said.

Most of the victims were convinced after looking at the home from the outside, Poteet said. At least one person saw the home’s interior, he said.

Poteet said investigators do not know how Nero obtained a key to the home.

"He aroused not a single suspicion," Poteet said.

Moral of the story-

Read the rest of this entry »