There are no altruistic people in real estate.
Every now and then I look through the real estate listings in my hometown.
Sometimes I get really sick of sharing a house with a couple of other guys. I would really like to buy a house of my own. It's really expensive to buy a house.... fortunately you only need to put a few thousand dollars down in most cases.
Of course, if you want to avoid paying private mortgage insurance you're going to have to put 20% down for the most part.
You also need to be wary of Homeowners Associations. It doesn't always say that there's a Homeowners Association when you first look at a house. You might be surprised to have to pay an additional $200 per month to simply exist.
Source: Pixabay.com
Now, I don't have a lot of money right now. Once upon a time I did.... but that was in another age.
Therefore, I've been looking at houses that aren't in the best neighborhoods.
Most of these houses are less than $100,000, so 20% down will be $20,000.... which is still way more than I have.
However, you don't necessarily have to put 20% down you'll just have to pay for that private mortgage insurance.
Every now and then I find a house that is something like $40,000. Usually it is in the absolute worst area you can find at in the absolute worst condition that you can imagine. I often skip right by it because I simply can't imagine that working out.
Of course, 20% of that is only $8,000.
Yesterday I was browsing through Zillow.com. I really like that site for looking at houses.
I came across a house that was $40,000 even though Zillow said that it was worth $140,000. It wasn't in the best neighborhood, but it also wasn't in the worst neighborhood. In fact, it was in a neighborhood that's up and coming and that I think is actually a pretty good place to live right now.
The price didn't make any sense though. There was also a strange notice on the front of the rental ad.
First time buyers only. No third-party involvement.
Then there was a very long note saying that their family buys houses, and then sells them to first-time home buyers every year. They always take a huge loss because they are really trying to help people buy their first home. Therefore, they always sell houses that are worth way more than $50,000..... for less than $50,000. No matter the actual cost of the house.
Wow what generosity!
No.
Source: Pixabay.com
No third-party involvement. No real estate agents. No lawyers. They don't want you to have anyone involved that could possibly understand what's going on.
They honestly want people to believe that they are just really good-hearted and selling a property at an unbelievably low price in order to help out first-time home buyers.
Let me tell you a secret..... Nobody in the real estate game is good-hearted, I'm sorry to say. Not good hard enough to literally give away money anyway.
Two days ago there was an article in my news feed. People were selling houses that did not belong to them. Apparently in my neighborhood you can go through all the steps to sell a house, including going through all of the agencies, and no one will ever check to make sure that you are the real owner.
Some guy made something like a million dollars selling other people's houses. They had all the stamps and approvals from all of the agencies, and everything seemed to be in order. It's just that he was not the guy that actually owned the houses. When the real owners found out, they kicked out the people that bought the houses and those people had no recourse because they didn't buy them from the real owners.
Now, I was really surprised to find a listing like that on Zillow. It's obviously somebody up to no good. I guess I should probably contact Zillow.com and tell them to take the advertisement down before somebody gets swindled. There are a million people out there who are willing to believe someone will give them something for nothing.
Well guess what? The people that are really rich got rich because they held onto their money for dear life. They aren't going to give you a house. Not only that, if these people really wanted to help first-time home buyers and they had all kinds of money then they really would just give the houses away. Why are they charging any money at all for the house?
Additionally, the ad says something like it all has to happen on the first day. The day you contact us is the day you have to give us the money.
Ridiculous. Don't trust people in real estate.
There are no altruistic people in real estate.
You are right to be suspicious of people who are willing to sell cheap and fast. That is probably an illegal scam.
Be just as suspicious of PMI, it is a scam too - just a legal scam. You, he homeowner pay for PMI, but all of the benefits go to the mortgage company. It is one of the tools that they use to get people to buy houses they can't afford and still get cheap underwriting from Freddy Mac and Fannie Mae. Don't even think about it.
In a lot of cases, even the common 30 year mortgage is a bum deal. If you can get one under 4%, then it is not too bad. When the rates are higher, though, you are getting ripped off in the long run. Better to buy a smaller house and get a 15 year mortgage.
I wish someone had given me this advice 15 years ago. I probably would have have ignored it, but it is still good advice.
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Yep. I would never get involved with something that required me to have private mortgage insurance. I'm actually looking at tiny houses in bad parts of town. It's possible that those areas could eventually increase in value over time. It's possible that I won't get shot there too. It's possible that I will.. That's life though. ;)
Real estate is one of the scariest businesses around my friend! People trust their money in it because they need a place to live, and that is exactly where the taking advantage begins. Shady contracts, real estate dudes who take 20% somewhere down the line, it is just scary!
In a lot of ways the whole thing is a scam. I mean there are only three basic necessities right?
Food, shelter, air to breathe.
Given that shelter is such an important part of our lives it's amazing that people are able to take advantage of so many for this very basic necessity.
That’s actually quite scary I didn’t even know that was an actual trend but good to know! Homes are to me a false sense of security and success, we’re paying well over the odds for something that doesn’t make you money and people tell you it’s an investment, it’s a lie!
Like you said a homes value is mainly it’s location and the perceived risk from those living around you, aka neighbourhood! So people are charging for this and not for the actual value of the structure which doesn’t even bring you in any money in fact it costs you more and more each year in interest and maintenance than the value - inflation will ever be! People are leveraging their future of 20 years even more for this ball and chain and it’s all about profit for the industry! No one gets into real estate because they want to provide a helpful service the people and maket need, they want to make a quick buck for as little work as possible!
I’m hoping as remote work and decentralization becomes more popular that location will begin to matter less and people wanting to horde up in a certain area will eventually turn to people migrating and decreasing demand and we can see this practice out in the past
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Well sometimes a bad location can become a good location.
Everybody really wants to make a quick buck but it's terrible to do it at the expense of others. People in the real estate business will often take advantage when they can.
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Great.
Yeah i also agree with you about this content.
Good "bad" story. Not much in life is free, and what is, is getting scarce.
Whaaaaaaat? This is craziness!!!! LOL It never ceases to amaze me the LENGTHS that people will go for greed!
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