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Interestingly, I bought a house to rent in 2011, with cash and fixed it up and filled it. This year, I have spent more than six months trying to get financing
by zero_intp 13y ago
Interestingly, I bought a house to rent in 2011, with cash and fixed it up and filled it. This year, I have spent more than six months trying to get financing on it from the major commercial banks. I am closing soon, but it was a MAJOR hassle.
What I have found,
There is a near conspiracy level arraignment between banks to completely undervalue the properties, give higher interest rates, require a greater stake, and lower the borrowers acceptable debt-to-income ratio.
I had three appraisals come in, the bank appraisals were all manipulated and internally inconsistent, and LOW. The independent appraisal I had done came in rationally.
When I was house hunting (both in 2009 and 2011), my wife and I would break into the empty foreclosed homes to tour them and inspect them for damage. No one, realtors or bankers, would ever respond to calls regarding the properties, no offers were ever responded to by the banks.
All of these properties in our neighborhood were eventually sold, and to big investor groups. They are now predominantly rentals.
Our experiences at the time showed what we perceived to be a fixed market where the realtors were holding out to sell to their friends. Now we realize that they were holding out for the institutional buyers.
- busterarm 13y agoI would believe this even if I hadn't 100% seen this for myself, except that I have. As a side note, realtors are the absolute scum of the earth. Worse than lawyers. Apologies in advance to any lawyers.
- malandrew 13y agoReal estate agents aren't the problem. My mom is a real estate agent and I've known a lot of real estate agents in my life. The absolute scum of the earth in this industry are actually the members of the Board of Realtors that represent the individual agents across the country and rig everything like a cartel. It's a licensed procession with a lot of political influence nationwide, which gives them immense protection from market forces that would have drive the percentage they earn from sales down years ago. Any shitty experiences you've had with real estate agents are probably better explained by Hanlon's Razor. There are a few exceptional real estate agents, but my experience has been that real estate is a profession for those incompetent at everything else. When they say prices are going to keep going up and that it's a great investment, they usually actually believe that fully. They have bought whole hog into the idea that real estate is the best investment and that prices keep going up. You can't even work as an agent if you don't really believe that since that is the only condition in the market that is really in your interest as a broker since it's the condition where liquidity is highest, and liquidity is the best thing for brokers. If you don't harbor that believe you either stay out of the market/profession entirely or you enter the speculative side of the market, buying low and selling high. Those who can do, those who can't do anything, broker real estate. FWIW, this largely applies to residential real estate. In commercial real estate, the brokers are a lot more like the banksters promoting a kleptocracy.
- busterarm 13y agoOverwhelmingly agree. This is exactly my experience. I know the Board of Realtors has been a huge problem, but (as you've touched on) the talent pool of people within who could change things is nonexistent.