Folks,
There have always been crews working on the fringes (let's call them bottom
fishers) picking up foreclosed homes at auction, and then flipping them.
They way it usually works is banks know these people well, trust them, and
let them know when an owner is so distressed a sale on the courthouse steps
of a given property is inevitable.
In one instance I know of, these bottom fishers actually meet weekly in
some restaurant backroom and go through the list of properties and work out
deals with the banks, giving the banks something better than the courthouse
steps would yield. The hapless "homeowner" is happy to be rid of his
burden. "Investors flip the property for a tidy sum.
These bottom fishers welcome asset-rich individuals to get in on the
purchases, and lend these asset-rich/cash poor people "hard-money."
Well the properties are not flipping. Things are backing up. People who
borrowed hard money at high interest are finding their debts compounding.
This pressure relief valve appears to be clogged. If so, the bank will have
to be more creative. It does give a borrower some more leverage, since
banks prefer income, any income, over a loss.
Remember, the bottom of the market is not low prices, but "no buyers".
John
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Posted By Editor, "How Business Happens" to How Business Happens at 10/21/2007 05:06:00 PM
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