BOOK EXCERPT FROM THE BOOM AFTER THE BUBBLE: ANDREW CORDLE
Then the bubble hit. Okay. Bubble explodes. Real
Estate collapses in 2007-2008. Looking back from
a 2013 perspective, the bubble burst in a very
dramatic way. It was no small burst; it was a very
erratic burst for real estate and it was bad.
As a result of this eruption, the market has
changed. Let’s just walk through what happened.
When the real estate market bubble burst, there
were people who had been living in their house for
15 years. And nearby, perhaps across the street in
the same neighborhood, was someone who had
bought a house in the pre-bubble year of 2005.
Quite likely, they bought it on an option-payment
market is just beginning to wake up. I look around
and I need to know where I stand. Who is my
competition? I am a rehabber. I buy, fix and sell
houses.
type of mortgage, with no money down; perhaps
they even got cash back from the bank at closing.
There were dozens of these people buying houses
in the neighborhood, who could not really afford
the mortgage. Or maybe they COULD afford the
mortgage, but when the collapse began in 20082010, everything went into foreclosure, because of
all the bad mortgages that the bank put out prebubble. And the bursting bubble spelled trouble.
Right now, if I put a house on the market, first of all,
I’m competing against what I call REO (Real Estate
Owned) properties, also known as bank owned
properties on the market. We call these “fixeruppers.”
And
also,
there
are
the
average
homeowners that have lived in their houses, who
are now trying to sell them. Finally, there are rehab
properties. So, when I go to put a house on the
market right now, I’m competing with other
Today it’s eight o’clock a.m. in the world of Real
Estate, and here is what I mean by that: The
investors
who
have
rehabbed
property;
I’m
competing with the homeowner; and I’m competing
with the REO bank.
Now, let’s go back to the years 2008-10. During
these years, the homeowners weren’t really able to
sell their properties. In fact, they did not want to sell
their properties. Why not? Well, they wouldn’t get
paid enough, because across the street the
neighbors were going into foreclosure. Or, their
own house was going into foreclosure, because
they bought it in 2005 on a negative end loan.