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Buying someone else's problem is not always an answer

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By : Jean Lawrence    99 or more times read
I am retired from real estate now, having mowed from the state where I was licensed and deciding it was too much to seek another license and apprentice again under another broker, while I'd rather just be an observer,and investor and pursue my first love, writing fiction and non-fiction.

But during my "newbie" years I had the opportunity to work for two Realtors who each specialized in buying properties in distress. Each was known for doing this, so people in trouble with mortgage payments or other urgent needs,such as having to relocate for a new job,would seek them out and offer the houses as assumptions, just to get "out from under" without suffering through foreclosure.

The two men had entirely different operating systems. Mr. D was an elderly man, extremely wealthy and conservative with a generous line of credit at his local bank. On his signature alone he could get all the money he needed because he always repaid it quickly.

His technique was simple. He would offer the homeowner the least he could, payment of all past due loan amounts and a small equity. If they were under stress, they would usually say yes.

He had someone who would come in and quickly make repairs, clean the house, mow the grass. If the house had painted walls they were all painted white. The house was reasonably priced and sold quickly before the next mortgage payment came due. He would repay his loan, and be ready for the next profitable deal.

Mr. M, on the other hand,operated strictly on his emotions. He bought all sorts of houses, mostly large, many in poor shape, many in bad neighborhoods and often because he simply felt sorry for the owners. He would find himself meeting mortgage payments, struggling to make extensive repairs, spending money on ads, and often ended up renting out the houses to try to recoup a little money. The stress he put himself through was enormous and he was forced to turn to his other business, running a gas station, to be able to pay his own bills.

Watching them and trailing along behind them I often marveled at the difference in the two men. And I learned a valuable lesson. Buying a house in distressed conditions is not always a good idea or a great investment unless you have it down to a simple system, as Mr. D did.

Today there are vast numbers of houses that have been repossessed and are eligible for purchase but buying one is not always a wise thing to do. Many houses today were enormously overbuilt. A family of four doesn't need 8000 square feet, multiple bedrooms and baths. Even just buying one of these monsters can become a major money drain to maintain as your own home or as a candidate for resale.

While homebuilders were offering extravagant homes to people who couldn't afford them, they got carried away with things like size and amenities.

Now, a new trend is on the horizon...smaller, more efficient, "greener" homes. That's why anyone seeking to clean up financially on the current glut of available homes needs to consider first. is this really a good thing to buy? Sometimes the answer is no.
Although I'm no longer active in real estate, I like to just observe and write about it now and then, along with other subjects.

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