Ever waited by your phone for hours waiting for that exact minute when you could buy tickets to a concert for you favorite artist? Your phone is programmed with the number of the box office so you could just hit redial when the clock struck the proverbial, high noon - - you were prepared to get the best seats? Then it's time - you hit redial - you get the box office and all the really good tickets are gone - cause a corporate entity with pull and lots of money robo-d all the best seats so they could resell them. Pissed you off right?
Well, a similar thing is happening now in the real estate markets. A scam that leads me to mistrust any statements made in the press about the current state of the real estate market. Most people have never heard of this - so let me build you the story below the squiggle.
I was driving to work one day when I heard a radio news blurb about how the commercial real estate investors were snatching up all the foreclosure properties in Arizona. That sat in the back of my mind as I pondered what that meant to the normal regular buyer - looking for a home. I thought about the statement in the news broadcast that the commercial investors were buying the houses so they could "rent them out" and then sell them later at a price higher than they purchased the property for.
An article posted noted the following items:
Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out.
Now, investment companies like the Blackstone Group have swooped in, buying thousands of houses
Joe Cusumano, a real estate agent in Riverside County, Calif., said that in recent months 90 percent of his business had been for companies like Invitation Homes, a Blackstone subsidiary.
90% of his business!
Where does that leave the typical homebuyer? With a 10% chance - cause these investment companies have an advantage in the market that typical homebuyers do not have.
"ordinary buyers are feeling squeezed out".
In fact, private equity alternative investment firm Blackstone Group LP (NYSE: BX) is now the nation's largest owner of single-family homes. Founding partner Stephen Schwarzman recently said the firm is spending $100 million a week buying homes.
$100 million - per week
"the nation's largest owner of single-family homes."
In a wide-ranging conversation, Steve Schwarzman, Blackstone Group chairman & CEO, discusses his company's pledge to support innovation and weighs in on Dell's LBO, the private equity space, and the outlook on the market.
"Blackstone is now the largest owner of individual houses in the United States," Schwarzman told CNBC's "Squawk on the Street" Monday, pointing to his company's $3 billion portfolio of residential real estate.
Residential property - not owned by owner occupants - but controlled by Wall Street.
The very Wall Streeters who don't care about anyone except themselves.
Fix the Debt financier Peter G. Peterson knows a thing or two about debt: he’s an expert at creating it. Peterson founded the private equity firm Blackstone Group in 1985 with Stephen Schwarzman (who compared raising taxes to “when Hitler invaded Poland”). Private equity firms don’t contribute much to the economy; they don’t make cars or milk the cows. Too frequently, they buy firms to loot them.
And now they are buying up America's residential market.
The phenomena seems to be evolving into something that is really nasty for the typical home buyer and is a god send to the large investment companies - a kinda robo-d ponzi scheme type real estate market - controlled by the bankers and Wall Street.
What has morphed is a collusion between foreclosure bankers and real estate investment companies (and real estate agents) that leaves the typical home buyer - without the purchase they want - having been screwed by big business and the banks.
The bankers and the investment firms screwed the US during the housing bubble - that ended in a lot of people losing their homes.
Now the bankers and the investment firms are in collusion again to stop people from even being able to buy a home (more on that in a minute).
Flopping
In 'flopping,' a home is purchased by insiders at a steep discount, then immediately sold for a big profit.
" at a steep discount"
But the resale doesn't necessarily happen right away - they can and will buy the home and rent it out first and then boot the renters out when the market price of the house increases.
A realtor referred to this practice as
"It's just robbery," she says. "And I don't know how to stop the robbery."
This after clients of hers made an offer higher than the asking price and lost the purchase - BUT the house sold for WAY less to an investor - $40,000 less than her clients had offered.
When she asked the listing agent why, she was told to "leave it alone."
"leave it alone."
We can't afford to do that!
This is literally stealing - but they very seldom get caught or prosecuted.
Which is becoming the norm for big banks and Wall Street.
Let's look at it again from another perspective:
flopping involves selling an asset at less than market price (to a friendly party, of course) and then reselling it to market
"less than market price (to a friendly party, of course)"
Of course
Now, of course, we have to pay the price. A study released this spring by CoreLogic, a market research firm, estimates the cost of flopping will exceed $375 million this year, up 20 percent from 2010.
Both of those articles focused on short sales - but as I said earlier - this type of dealing may have evolved into something much more expansive.
And it's no longer limited to just a few cities - or depressed properties.
And it's not just about resale.
From an article in the Charlotte Observer - Charlotte’s Wall Street landlords move quickly to evict renters
Combined, their purchases have made Charlotte the second-busiest market in the country among single-family home investors. Over the summer, one in every five Charlotte-area homes sold was bought by an investment group.
One in five!
"It's abuse what these companies are doing around Charlotte," she said. "They only want the money, and that's it."
It is all about corporate greed.
"They have investors who want to see a rate of return," Gosser said.
Wall Street - buying up the residential market at bargain prices to turn it around and sell it at a higher price - either right away - or after they have rented it out.
Some might call this just plain old capitalism.
But when the market is rigged so that Wall Street and the Big Banks are the winners - it's not capitalism - it's cronyism.
This wall street/big bank practice does affect people who are the typical homebuyer - trying to buy a home in today's market.
Now the typical homebuyer not only has to compete with other typical homebuyers for a property, but they have to deal with an insider collusion of bankers and investment firms that have now turned residential properties for corporate profit - again.
Lets look at what this looks like based on the true experience of a typical homebuyer I know:
This was the third time that this is happened to me - but, it is the first time that I have pushed my realtor to take it to what is now the final, predictable conclusion.
Every day, repeat every day - I keep 3 realty webpages open - I check them >>every 15 minutes<< for new listings or new price changes. I have been doing this now for three months. I am currently renting a room from a friend, as I have not been able to purchase a new home yet. I would venture that no one in the Metro area is following the real estate market as closely as I am - except investors.
The problem I have encountered is:
A property listing will post with a dramatic change in the asking price.
I will immediately contact my realtor and tell him I want to see the property.
The first two times this happened - my realtor called me back and told me he had spoke to the listing realtor and they already had multiple offers (usually less than 1/2 hr after the price change posted on the web page, less than 1/2 hour). The first two times I let it go and did not pursue it.
Yesterday - the same thing happened. A property posted with a >50% reduction in price< . I immediately contacted my realtor and told him I wanted to see the property. Fifteen minutes later he sent me this email "I spoke with the agent and the price is correct. He has already received an offer." Fifteen minutes - to an OFFER!
This time - I pushed back, telling my realtor that the listing agent can entertain more than one offer, and I want to see the property as soon as possible. We inspected the property 3 hours later, I made a FULL PRICE OFFER-CASH, and told my realtor that I was willing to increase my offering price. Within hours, I received a call from my realtor telling me that the listing agent had received multiple offers and I would not be getting the house. I was not given the option to counter any offer the listing agent had - I was just told I wouldn't be getting the house. I am convinced that the property was already committed to another buyer >at a 50% discount< before I even set foot on the property. They had no intention of selling this home to anyone but an investment company.
Someone got a hell of a deal, 50% off - and I'll bet it wasn't a citizen, it was a corporation.
Someone got a hell of a deal, 50% off - it was probably a corporation.
"leave it alone."
"It's just robbery," she says. "And I don't know how to stop the robbery."
"It's abuse what these companies are doing around Charlotte," she said. "They only want the money, and that's it."
It is all about corporate greed.
"They have investors who want to see a rate of return," Gosser said.
The collusion of bankers and investment firms
- stealing what's left of the American Dream.
Because
"They have investors who want to see a rate of return," Gosser said.