I love articles like this.
Miller, 29, and his wife bought a fixer-upper on Melrose Drive in southwest Atlanta in December 2006, lured by ever-rising property values. They saw it as a long-term investment, buying it for around $90,000 — about $20,000 less than what other homes in the neighborhood were going for.
The Millers spent $75,000 and six months cleaning and refurbishing the home before hiring a property manager to find tenants. Potential renters, however, only wanted to pay about half of what the Millers needed to cover most of the mortgage. Quinon Miller refused to lower the rent, not wanting to attract bad renters that could lower the value of the property. It's been a year and a half and the home is still empty, forcing Miller and his wife to cover two mortgages.
"It broke us — without a doubt," Miller said. "It sucked us dry." Burglaries made it worse. They've had at least eight so far, he says. "Me and my wife will not ever, ever invest in real estate again," Miller said. "As far as we're concerned, we're done."
I can see the conversation that took place in 2006:
Dunbass buyer: I don't know about buying a house here.
Idiot realtor: But now is a great time to buy. You are getting this house well below market value. You have instant equity.
Dumbass buyer: I don't know man, it's pretty risky.
Idiot Realtor: If you don't buy now you will be priced out forever. And think of the investment income you will get. Investing in real estate is how people get rich. Real estate never goes down.
Dumbass buyer: But the housing market is slowing and it may be in a bubble that is about to pop
Idiot realtor: In Atlanta? No way Jose. Maybe in California or Phoenix. But Atlanta is different. Everyone in the world wants to live in Atlanta. It is the fastest growing city ever. You will have no problem renting your home out. All the projections say the city will boom in the next 15 years.
Dumbass buyer: But this is a crime infested part of town. I doubt anyone will pay the rent I will need to just break even.
Iidot realtor: It's a crime infested area now. But it is on the upswing. You are getting in on the bottom floor. Five years from now your house will be worth $500K. Trust me on this one. I've been doing this for a long time and I can tell this area will turn around fast.
Dumbass buyer: OK I suppose, but what if it doesn't, we're going to be broke.
Idiot realtor: Not at all. Just get an interest only negative option ARM. Then in 2 years refinance. Everyone's doing it and getting rich. You don't want to miss out on this do you?
Dumbass buyer: No I suppose not. OK so I get a negative whatever something loan and then I refinance in 2 years and so that means I won't lose any money right?
Idiot realtor: Exactly. Now let me give you the number of my friend at Countrywide, she will set it all up for you. Don't bother reading any of the documents. It's just broing legal stuff, I don't even understand any of it. Just go in to her office, sign and this house will be yours in 2 weeks.
Dumbass buyer: Sweet I am now a home owner!
And this same kind of bullshit is still being spewed by idiotic realtors today. I went to look at an open house a couple of weeks ago not far from where I live. The asking price was $550K. I told the realtor there I would be interested at $350K. She started her usual "now is a great time to buy" crap. I told her for someone to afford $550K using the traditional mortgage approval process, they would need an income of $125K a year minimum. And only less than 10% of the population in the area makes that much. And of that less than 10%, 90% already owns a home. So the pool of people who can realistically afford that house is about oh, nobody. It was kind of funny because I think she clued in when I put it in those terms. But even then she went on with the "now is a great time to buy" gibberish. I',m not sure if she was truly that stupid or if she has been drinking the kool-aid for so long that she can't help herself from speaking in NAR (National Association of LYING Realtors) doublespeak.
The house has been for sale for 3 months in a subdivision where the last house to sell - not be listed, actually sold - was over a year ago. And yet she thinks that someone will pay an asking price of what the house last sold for 3 years ago.
But like I said at $350K I would be interested.