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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127236  
Subject: Re: house poor? Date: 2/13/2003 4:24 PM
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feydom: "One house I was considering gouged up to over $65,000 in the 4 1/2 months I was searching on the www.realty.com web site. Since I live only 5 houses down from this property, I wanted to see what all the raucous was about! It's in foreclosure/the bank has it!"

How did it gouge up if it is in foreclosure? I do not understand. Can you elaborate?

"And to top it off, in 1990 the very same house sold for $160,000 (courtesy of the Fool's Home Price Check). Remember I said SOLD for, not what it's value was actually assessed at by the tax assessor(www.domania.com listed it's value at $64,500). And the work that that needed to be done was extensive! I don't think the previous owners could even afford a hammer and nails or a bucket of paint! I understand that you usually end up paying the current market frenzy value; But #!*& it all, I want a home to live in, not as an investment instrument that I turn over in 6 or 8 months for a profit!"

Tax assessor values are often not particulary accuarte as to FMV. This is especially true in California because of Prop. 13.

"The homes in the neighborhood across the street and around the corner shot up from an average of $255,000 to $650,000-$850,000 within a period of 9 months! No, I'm not exaggerating! Most of them are still on the market."

FMV requires both a buyer and a seller. If they have not sold and are still on the market, then I would suggest that asking price is too high and FMV is actually lower. Also, if your numbers are accurate, then I suspect there is a missing piece of the story to help explain increases that equate to well over 100% or evn 200% annually.

"Some of these very same homes' with their ever escalating prices have been turned over 2 - 3 times within the last year (courtesy of Fool's Home Price Check). One home had been sold and resold for an eye popping 6 times within 14 months! Price steadily increased....."

Smells like someone is gaming the system by flipping the properties and the last owner will file bankruptcy and stiff the lender. Alternatively, speculators are buying on the come - proposed new rail line, freeway, ballpark, etc.

"I also recently learned at a recent community town hall meeting, that predatory lending practices are rampant in the region. Mayor Hahn has now passed legislation to prohibit the practice!"

I am unsure how a City actually prohibits the practice. Most of the applicable law is state law and cities usually cannot change state law.

Regards, JAFO
(posted before reading entire thread)
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