Home Buyers!
A cautionary tale, plus a broader look at the industry
I am still looking forward to when we will be making audios and videos, and bringing on guests again. And that time is right soon. We are in the final days of making real estate history. IF ALL GOES WELL AND NOBODY QUEERS THE DEAL we can expect to be living in Yorktown by mid June. But the way this whole exercise has gone, that remains a big “IF”.
My wife and I have bought and sold 11 houses in 30 years. Yes, we do have itchy feet, and that has contributed to our moves. But we’re not rich. A great deal of our wealth is tied up in our real estate. And we see occasional opportunities to change our life style and grow without breaking the bank.
This time was a little different. We are desperate to be closer to kids and grand kids. Most of them are in Philadelphia. But if we moved there the tax man would take more than we can afford to give him. So we decided to move closer to Phil and Ange and our granddaughters on the Peninsula.
We didn’t grow our lifestyle at a discount this time. We actually ended up in a house very similar, if not prettier than our present one…and much more expensive. Not complaining. We will see a lot of the kids this way and the wood shop has an attic!
That said, this has been the worst buying experience we have ever had by a factor of ten. The whole thing has me thinking about the real estate and mortgage industry at the retail and national level. And what I see isn’t pretty.
On this particular house hunt we stumbled onto the perfect house in every way. It was roomy, pretty, late model with a two car garage attached…and a detached wood shop to end all wood shops. Three large bays and an attached man cave WITH furnishings and a pool table. There was even a hydraulic car lift the seller was leaving. The place was wildly expensive by our standards but within our budget. We were home!
We put in an offer on the spot with a contingency to sell our house. It was after a wait of a few days we found out the house was being brokered by a relocation service. I believe the name is Cartus. And they don’t treat buyers the way good buyers and sellers normally treat each other. After too many days waiting we were told to come back when we had a closing date to sell our house.
I was pissed, but we did exactly that. We received an offer on out house got a closing date and put in another offer on the big house. And - you guessed it - it was under contract with someone else by then. GODDAMMIT!
We eventually put an offer on another huge and gorgeous house. It turned out to be a money pit (crawl space issues, serious pluming problems, an old roof and no wood shop). We had to pull the offer. We lost more time against our own closing.
On our next house hunting weekend, we were staying in a hotel in Gloucester. On Friday night we got an excited call from our agent telling us the prefect house was back on the market! The other buyers were not keeping their commitments and had qualification issues, and perhaps some trust issues.
Well!
That same night we drew up the new offer. On Saturday, we redid the entire offer two more times to get the precise language the relo company wanted. We initialed two changes on Monday. The whole time we were under the impression the relo company was standing by to sign the offer THEY HELPED CONSTRUCT.
But NOOOOOOO! They told us it would be up to 7 days to get a response. “They have their process to follow.” We were facing a rapidly approaching closing date on our present home and didn’t have time to dick around. I told the seller’s agent exactly that. We ended up pulling the offer that Wednesday. We couldn’t afford to sit for a week and possibly be told “no” on an offer.
The following day we get a call saying the relo company was ready to accept our offer IF ONLY we had only waited another day. So AGAIN, we ground the gears to get yet another offer back to the relo company.
It is worth noting that during this entire affair, the seller was telling the relo company to quit dickin’ around. We met the sellers on a visit to the house and liked them right off the bat. They wanted the relo company to sell their house to the Jordans.
But we crossed a threshold that week. For 60 days a relo company will work with the seller to do a deal. After that, the relo company gets total control of the house with the purchase money guaranteed to the seller. The day after our Thursday offer (now they get efficient) we were told the relo company was going with the other buyers, who were barely qualified and unreliable, because we had an “FYI ONLY” inspection contingency still in our offer.
Looking back, I don’t know exactly how much of the bullshit was the relo company bureaucracy, how much was the seller’s agent trying to keep all parties on board, and all offers on the table, OR if my agent and theirs were just agreeing to “just tell them XYZ and we’ll see how it all works out”. But I left the experience with further reduced faith in my fellow man…and a new buyer’s agent.
Here’s my take away. I will never consider buying a home from a relo company. There are too many people preforming acts of mental masturbation over the paperwork. They have no consideration for the buyer. This is my opinion anyway.
Me being me…
When I am in real estate mode, I obsess. I am at the computer all day. In between fake snake prank videos, I am looking at and researching houses, neighborhoods, crime, local trends and the wider real estate world. Both this recent experience and my reading have me looking at the RE/mortgage industries and shaking my head.
Since 2008 we have learned nothing. We learned nothing about a stable housing markets or how investors play with the underlying paper. And the retail mortgage industry had gone backward. We see it in issues large and small. And it all continues apace, at our peril.
Let’s look at a big picture issue. I have said many times since my early Wordpress days, around 2012, that we are STILL doing the things we did between 2000 and 2008 to create an inevitable crash, nearly destroying the economy. Among the most dangerous and corrupt practices were Collateralized Debt Obligations (CDO). The name was meant to dress up a turd to impress sleepy Wall Street regulators. Basically, it translates to get this shit off my books!
In 2016, I put out one of my historical pieces around the 2008 crash. The people who caused it - bankers, hedge funds, regulators and political whores - all saw the crash coming. For many, the pending disaster wasn’t even a theory. It was absolutely going to happen. And the key players responsible for it kept playing the same game until Lehman Brothers and Bear Stearns closed their doors. Within months the game was back on, bigger and better than ever.
Now these shell games are called Bespoke Tranche Opportunities (BTO). Now there’s a serious bullshit term if ever there was one. They are basically CDOs sold in smaller chunks, and they sell ONE AT A TIME. They say is supposed to make the market less risky.
So…if I am a hedge fund guy, I can only get one of these things to put in my portfolio, right? Wrong! The one-at-a-time thing is a tiny fig leaf to cover the same sick practice that destroyed our housing market 17 years ago. Big investment houses can buy as many as they want.
But they’re “bespoke” right? The buyer can tailor them to the buyer’s wishes, right? If there were an infinite number of ways to do that, you could say yes, that is correct. But the tailoring is very finite, and the more we create, the greater the risk to the system
But they are more transparent, right? Not really. The sale of the garbage is observable, but how the risk is spread is “proprietary”. Without going too deep, it’s basically the same thing as a CDO with different colored tinsel.
And they are still “insuring” this bullshit with Credit Default Swaps! The phrase is almost a cliche: Don’t worry. It’s insured. The CDS is the backbone behind CDOs. Along with easy money from the Fed they drove the moral hazard created pre-2008.
But wait! There’s more!
Before the crash, the government contributed to the moral hazard orgy by buying up shit mortgages. Then for more than a decade they bought even more.
Every once in a while you’ll hear a piece in the the financial media about this or that reform, and adjustments to mortgage or investment regulations. Pull the curtain back and you’ll find these often mean more OKAY E-Z credit or other help going to Wall Street to keep all the plates spinning.
Like so many crony industries in this country, the lending and housing industries are constantly being propped up artificially. If you ever looked at a car loan or closing document you’d be hard pressed to think these people need a dime’s worth of consideration from the the government (your tax money). They get paid every time an employee picks his nose! And the charges are listed in your documents. And still they get your tax money in the form of buyouts and eventually…bailouts. Yes. It absolutely will happen again.
That’s not all Chevy…
We are only now feeling the effects of another phenomenon that’s been screwing up the housing market. Illegals, who should not own homes in this country to begin with, are now defaulting on their mortgages. For all manner of reasons, all of them were predicable and avoidable had the industries followed the letter and spirit of the law to begin with.
Thousands have self-deported. For whatever reason, they decided it was time to split. They leave the house and default on the mortgage. Others are deported by DHS and leave everything. The result is the same. Still others will buy a house, load it up with other illegals, who live like pigs and destroy the neighborhood.12
While they have the place, the illegals slumming there cut the owner on for some of their paychecks. The illegal landlord, renting illegally to illegals, while local governments turn a blind eye, will make a regular profit. Eventually, the place gets torn up. The owner at that point stops making payments whether he or anyone else is living there. It still a process of years to get the now ruined house back from the scumbag.
Thanks to the illegal immigration insanity of Barry O’s 3rd term, there are more than 5 million units that fall into one of these categories. That’s a lot of units. And we’ll see more in coming years. So the corrupt sanctuary city bullshit is contributing to present and future heartaches in the housing market. When it begins to cascade, nice areas will be ruined. Then you won’t just see white flight. You’ll see every responsible adult flight from these areas, leaving them to become shit holes. While the sudden availability of housing increases as a result, no one will want to move into these areas except for what we used to call Section 8 people.
Matt Walsh does a some good work on this issue. It’s worth seeing. And he’s not as brash as Charlie.
Essay continues below video.
Add to this problem the housing that’s been bought up by BlackRock and other banks intended to make home ownership more difficult for everyone, especially young adults trying to buy their first home. There are several of these huge banks, cronies of the Democrats and in the thrall of the Davos/WEF cult. “You will own nothing and you will be happy.” Do you remember that one?
The government and their big investor cronies play Russian roulette with the economy and YOUR money every single day. But they’re happy, because before every time the spin the chamber, they take a few million off the table for themselves. Then they aim the gun at YOU. Click, click, click. When will we get the next BANG!
Let’s bring it all down to a little more micro.
When we bought and sold most of our houses, we traveled to an office on closing day and sat with agents, mortgage people and the Title people. We would be taken through each document, an ever increasing number each time.3 We and our agent would look at the documents and sign them. It was a bit of a hassle, but home buying is an important and expensive endeavor.
At the time, if you were overseas, or in some way prevented from coming to the table all parties would have to agree to execute your part of the deal remotely. A bonded, trusted courier service would travel to you to get your signatures. It was recognized as a risky arrangement because the remote party might not have had the benefit of an agent with them to check the documents.
This process was streamlined with the Docu-sign type services that allowed everything to be done electronically. But it was still intended for extreme circumstances.
Not for nuthin’, but absentee (mail-in) ballots were designed and used for decades for the same reasons. It was understood that there were circumstances that required consideration, and a risk of fraud. But voting in person was the norm.
Then Covid hit. Along with a laundry list of “emergency” procedures were established, was mass mail-in, remote voting, another was remote closings for loans. Both, we were told, we intended for use DURING the pandemic. Dems specifically, when challenged on the stupidity of remote voting, insisted it was not intended to be permanent thing. It was, of course. As was remote signing.
In the case of marketing and sales, people just got lazy. As early as 2021, I heard mortgage guys bragging that they rarely, if ever, attend a closing. It is easier, we are told.
It is easier for the industry people. They know what the documents are and how everything works. But it is not actually easier for the buyer or seller. They have to figure out questions or wait for someone to help them when there is a question. And there are times, to be certain, where things may be very wrong, but the NON-EXPERT customer has no way to know that they need to ask a question. So important questions don’t get asked.
Between the stress of waiting for everything to occur out of their sight, the texts, emails, voicemails, and the repeated signing of documents (we don’t do this for a living) it would be a lot easier to just go to closing at an office and be done with it.
But, post Covid, people who handle legal documents, no matter how valuable, found a way to save on effort and gas. Similarly, with mail-in voting, politicians - almost ALL Democrat - found a way to cheat like hell from now on.
Good for them. Not necessarily good for the end user.
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As discussed in the video attached, few, if any of these illegals qualified to buy a house to begin with. Their status as illegals disqualifies them without any other consideration. But too often these house are sold to illegals with very little money down. So when they do default on the house the cash lost is not very painful. The ones who rented out the flop houses to other illegals could not care less abut a few thousand lost in the down payment.
Thank a Democrat