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real estate speculators

Bidding Up House Prices: A new illusion?

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111208gavelThe other day I was chatting with the guy who’s painting the former Used Car Lot, Marina, and Weed Arboretum across the street, who has four clients in the business of buying, fixing up, and flipping foreclosures. When I remarked that my friends La Maya and La Bethulia had run into a situation where a rather nice little house in foreclosure was bid up in price by competing speculators, he had an explanation for that.

Ken the Painter says that bottom-feeding investors (of course, “bottom-feeder” is not a term he uses for his customers) don’t want any competition from regular folks. So when they spot someone they think is an amateur at an auction, they’ll deliberately bid up the price on a dog. From experience, they have a good feel for how much it will cost to make a place salable and how much the place realistically will fetch. So they engage a little competition with the newcomer, pushing the price above the amount that would allow for a profit, and then drop out of the bidding. This leaves the wannabe investor paying too much for a piece of junk guaranteed to burn his fingers. And that gets him out of their hair.

Nice folks, eh?

At any rate, this phenomenon represents something, all right, but it ain’t upward motion in the prices of real estate. Unfortunate in two respects, is what it is….

PAINT!!!!

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Lhudly sing huzzah! Dave’s [Former] Used Car Lot, Marina, and Weed Arboretum [Under New Management] is getting a paint job!

Drove in from the office and what should I see out in front but a guy on a ladder with a paint brush. That’s right: he’s actually brushing the trim, not spraying it.

It’s a miracle.

The new proprietor’s choice of colors is not what I would’ve favored, had she asked: it’s your basic sh** brown. But beggars can’t be choosers. Who cares what color it is, anyway? It’s PAINT!

Yesterday she had a fly-by-nightish crew sandblasting the pool. This means that instead of doing the job right and replastering (which the pool really, really needed), she did a cosmetic job that will last a year or two, maybe. But: hey! Get rid of the mosquito pond and you get rid of any further complaints from moi.

All the workmen she’s had over there have possessed that fly-by-nightish look: nary a company sign magneted to the side of a truck, and most certainly no hint of a contractor’s license number. Suggests she’s doing the fix-up on the cheap, as fast as she can get it done.

And those two things (quickie pool job, sketchy workmen) suggest she intends to rent or sell. If she’ll just get someone in there who’s quiet, not a criminal, not a volcanic madman, and not given to living in squalor, we’ll be good.

Despite the obscenely low price (we learned the bottom-feeder bought it out of bankruptcy for $162,500—this is a neighborhood of formerly $300,000-plus houses), just cleaning that dump up has transformed this whole end of the street. Dave’s mess was dragging all the properties around him down. This afternoon I actually felt GOOD about driving up to the front of my house, for a change. Now we have only two seriously run-down houses in our little tract, and one of those is for sale.

No question we have some dark clouds scudding overhead, boding hard times. But maybe now and again we’ll see the occasional silver lining.