Which one of us would be the sucker in this real estate purchase?
June 27, 2008 8:33 AM   Subscribe

Can someone tell me what the catch is in this real estate ad?

It seems to me this guy is taking a big risk but I just don't know enough about the real estate market to be sure.

I haven't seriously considered it because the place is a bit small for me but it sort of looks like a good deal for someone.
posted by notjustfoxybrown to Work & Money (20 answers total)
Bait and switch, perhaps?
posted by zippy at 8:39 AM on June 27, 2008

I Would Be Generally Wary Of Anyone Who Capitalizes Each Word In A Sentence. I don't know about you.
posted by phunniemee at 8:41 AM on June 27, 2008 [2 favorites]

It might be bait and switch, the photos are pretty out of this world for a condo worth only $139K. You should call and demand a visit to the property. Bring a friend along. Take pictures.
posted by parmanparman at 8:43 AM on June 27, 2008

There is not enough info in the ad to tell. It depends on what real estate values are doing in that area, what the appraised value of the condo is, what condition it is in, what other costs (such as property taxes and insurance) will be added into the payment, and what kind of loan the buyer can get. This phrase "$813 is where payments start" (emphasis mine) makes me wonder if the loan he is describing is an ARM. With a weak real estate market in many areas there are good deals to be had, but careful investigation is alway a good idea.
posted by TedW at 8:49 AM on June 27, 2008

"$813 is where payments start" is what rang my alarm bell. Emphasis on 'start'.
posted by dirtynumbangelboy at 8:49 AM on June 27, 2008

Or, y'know, preview.
posted by dirtynumbangelboy at 8:50 AM on June 27, 2008

I just spoke to the agent. The condo is a two bedroom, the developer is out of town and it has been on the market for three months. It's at 32nd and Indian School, south of Camelback if you want to take a look.

The agent's real problem and why he can't give more info in the ad? The developer is also selling property on its own, so he's not the official listing agent. He gets a commission for every person he brings through the door who buys. Giving more information would jeopardize his part of the cut (This is from the agent directly.)
posted by parmanparman at 8:51 AM on June 27, 2008

It's not so impossible as to be a scam. Could be a balloon payment (starts at $813). Also, sometimes, a certain property has some issue that makes it undesirable for the majority, but perfect for others. Best to just call and visit. They won't kidnap you and force you to sign anything. If you decide to make an offer, have a real estate attorney look everything over.
posted by Fuzzy Skinner at 9:01 AM on June 27, 2008

Looks like it might be a condo-conversion. In the last days if the real-estate bubble, these were all the rage. Convert your apartments to condos, sell them all in an overheated market where people are desperate for anything affordable, and then walk away with millions. There were tons of these in Phoenix and Tucson. A lot of developers started doing these too late, however, and the bubble burst. People were balking at paying $200,000 for a remodeled apartment. So it's possible that this is part of that condo-conversion inventory, and they just haven't been able to sell.
posted by azpenguin at 9:03 AM on June 27, 2008

Thanks all. I know about the glut of condo conversions available in the Valley and I've seen some great deals. A development that was selling places for $500K last year just held an auction with those same units starting at $198K. I'm a natural skeptic though so I thought I'd ask some folks who might be more knowledgeable than I am.
posted by notjustfoxybrown at 9:44 AM on June 27, 2008

There is also an old saying that can a paraphrased as:

In any transaction, if you don't know who is getting screwed, it is most likely you.
posted by Ikazuchi at 10:39 AM on June 27, 2008

The thing in the ad that my spidey sense tingle was this bit:
$813 is where payments start.
Where payments start?
posted by Thorzdad at 11:11 AM on June 27, 2008

Dang. Didn't see dirtynumbangelboy's posts in there.
posted by Thorzdad at 11:12 AM on June 27, 2008

Or, indeed, TedW's ;)
posted by dirtynumbangelboy at 11:18 AM on June 27, 2008

Payments start at $813 assuming you get a loan at 5.25% APR. My guess is that most people looking to put money down with middle-to-good credit won't get that low a rate. So, depending on your credit score and the amount of down payment you are coming up with, $813 may or may not be close to what you will pay.

You can call and find out what the HOA payment is, and what the taxes are. Then, get pre-qualified for a mortgage at a few places based on the total price of 139,900. Plug in the best loan numbers you get into a mortgage calculator, factor in the HOA payment and taxes. This will be close to the monthly amount you, personally, would pay (not factoring what you might negotiate as the final selling price).
posted by mikepop at 12:17 PM on June 27, 2008

Here is the agent's work history and licensing information. You might want to look through it.

Obtained through the Arizona Dept of Real Estate.
posted by hal_c_on at 12:35 PM on June 27, 2008

looks tiny, also not a great part of town.
posted by aquanaut at 2:20 PM on June 27, 2008

I did realize that after I saw the location. It's not a great part of town but it's certainly not bad. Right near the Biltmore and about 10 minutes into Old Town Scottsdale.

The tiny part is what kept me from seriously considering it, along with that part about "credit repair" which I don't need.
posted by notjustfoxybrown at 2:27 PM on June 27, 2008

The tiny part is what kept me from seriously considering it, along with that part about "credit repair" which I don't need.

Yeah, it's kinda unusual. And I can see how it can be off-putting. It just comes across as so hard-sell.

However, it's also understandable that they might assume that many people looking at something in the low price-range might also have some credit issues or might be a first time home buyer, so they are getting over the first objection such people might have to looking at the place. Namely: "I won't qualify for the mortgage."

Along the same lines, the last few cars I have bought have been inexpensive ones I bought for cash. The "cheap used car" lots I went to all had big signs about "no credit - no problem!" and "we finance!" that you don't see at higher-end lots or dealerships. They are just trying to attract customers of their target demographic.

Good luck. I've bought 5 homes and it's always stressful. Much more so than buying a used car! Good luck, whatever your decision.
posted by Fuzzy Skinner at 6:48 PM on June 27, 2008

it is definitely close to some nicer areas, and probably wouldn't need bars on the windows. that said, i see a lot of homeless/seemingly drugged out folks out and about. i play in a bar a mile away pretty often, & there are a lot of interesting characters. and cops. but yeah, clearly another apartment complex that went condo.
posted by aquanaut at 7:49 PM on June 27, 2008

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