Good news folk; one of the foundations of economic prosperity in the 2000s - house flipping - is making a comeback as trillions of free money is borrowed / printed, and thrown into the system. Combined with near (or above) record Wall Street bonuses and you'd think this was 2006. Kudos to Ben Bernanke... he is succeeding on his master plan. No need to actual produce things of value - simply increase the money supply, let people flip paper stock certificates or real estate... and we all feel richer.
- Four years after the collapse of the U.S. housing bubble, flipping homes is back in fashion.
- During the housing boom, millions of Americans tried to make money by buying and then quickly reselling new houses and condominiums. That kind of flipping stopped several years ago as home sales stalled amid a surge in foreclosures and curtailed lending.
- Now, a different breed of flipper is proliferating: one who seeks bargains at foreclosure auctions. Investors compete mostly with other full-time professionals who monitor foreclosure auctions at county courthouses across the country. The bidders often haven't had a chance to inspect the property (who needs to actually see a propery to flip during a boom? no one - there are only winners when money is free. Heck people were bidding on Phoenix or Las Vegas property in 2006 sight unseen, from other states ...) or determine whether it's occupied by tenants, who may be hard to evict.
- Flippers swoop in at public auctions of foreclosed homes, known as trustee or sheriff sales. In many states, the lender sets the minimum bid, and takes possession of the property only if no one bids more. In the past, the minimum generally was about equal to the mortgage balance due. But in today's market, in which many home values have dropped far below the loan balance, lenders wouldn't attract investors if they set the minimum at that level.
Cursory anecdotal story
- Jon Mirmelli, a Phoenix real-estate investor, learned late in the morning of Sept. 28 that a never-occupied custom house on the northern fringes of this Phoenix suburb was going up for auction around noon the same day. The six-bedroom home, built on a three-acre desert plot, has a kitchen with two dishwashers, four ovens, antibacterial copper sinks, and a master spa bathroom with space for a flat-screen TV visible from the tub.
- The minimum bid, as set by a unit of Citigroup Inc., which had a $1.3 million mortgage on the home, was $379,900. After several minutes of bidding among investors and their representatives, some wearing shorts and flip-flops, Mr. Mirmelli won the home for $486,300. A week later, he agreed to sell it for $690,000 to a woman who moved in this month. (ah, what a productive boon to society - multiply this by hundreds of thousands, perhaps millions of transactions - and the increase to GDP must be overwhelming)