Why Caveat Investor ?
There have been many changes in real estate since the boom began in 2010 after the Great Recession . To name a few : 1 ) Real estate licensees have increased about 40 %. 2 ) Syndicators are gobbling up apartments , selfstorage , mobile home parks , and industrial warehouses . 3 ) Brokerage companies are paying cash and “ flipping ” houses using venture capitalists ’ money . 4 ) Brokerages are hiring agents like employees with salaries , vacations , health insurance , retirement plans , and stock options . 5 ) Developers are building whole communities of houses for rent . There ’ s a lot more , of course , but no time to exhaust the subject .
See the accompanying chart . Markets appear to be in the late stage of their upcycle . As always , change is coming .
This article is my survey of many aspects of real estate where readers and investors need to be cautious and diligent in this expansive and innovative real estate environment . Every effort was made to address the major places where investors could get cheated or financially hurt in other ways . So , here goes .
# 1 – Homebuying
Many homebuyers are making offers without inspection contingencies in an attempt to win in competitive bidding . The same is true of “ as is ” purchasing . Buyers are also not scrutinizing property condition disclosures from sellers . All of this is risky and imprudent . Deal with this as best you can . You can always walk .
# 2 – Brokers and Agents
Reportedly , 40 % of the new agents in California were licensed only in the past
two years . ( Other places are probably similar .) The average agent does three to four deals per year , so they might have eight transactions under their belt . These are beginners , or novices , even though their business card might have “ senior ” in their title . “ Junior or apprentice ” would be more like it . Pick an agent with 10 years or more of fulltime experience , and over 60 closed transactions , primarily with the type of property you are working with . Hire a pro .
The other thing you need to watch out for is agent / brokers exaggerating their accomplishments and / or qualifications . I saw a flyer recently where a pair of new agents boasted of selling 250 + listings worth $ 250 + million . What they had done is taken the whole company ’ s production and taken credit for it . Brokers and sales managers are supposed to review and approve all agent advertising , but they don ’ t . So protect yourself . Be skeptical of “ puff ” in the advertising you receive . Or ask for proof , if there is any .
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