Real Estate News

Florida Real Estate on Ulitzer

Florida Real Estate on Ulitzer- I remember seeing this woman, Barbara Corcoran, on TV walking inside a house with a fortune teller, spreading fumes as the fortune teller whispered some sort of prayer so that the house would sell real fast. What a crackpot scene that was. Anyway, Barbara Corcoran's fortune teller and magic spelling gypsies have not helped Florida residents sell their homes or pay their mortgages since the housing slump hit America. I thought that scene was a candid camera joke on me; I looked around my living room to see if there were hidden cameras secretly taping my reaction.

I usually work with CNBC on in the background. For some strange reason I woke up to NBC this morning with Matt Lauer talking to Barbara Corcoran.

Matt said, "Barbara, lots of home owners are walking away from their homes as they're not worth the mortgage they are paying, and buying the same house down the street for half price, defaulting on their home mortgages. What do you say?"

Her answer was, "Yes Matt, it is a very troubling situation. All these poor big banks are losing billions of dollars, because what these homeowners are doing is not a moral thing to do."

What a Crackpot!

These poor big banks, losing billions of dollars because these immoral home owners who don't have jobs and money to pay their mortgage are walking away from their homes just to hurt the big banks?

What an Idiot!

If you must keep this woman's face on TV, keep her on for entertainment, not to give expert advice on real estate, because she has none.

I am one of those people who live in Florida and going through the same dilemma as everyone else.

I bought my home in 2001 for $2.2m before the real-estate craziness hit the market in Florida. At the peak, my house was worth as high as $3.2m. Today similar homes in the same town are sold for a $1m.

Now, here is my dilemma in a slightly larger dollar amount than the median home price in Florida.

Two years ago I spoke to a financial advisor to go over my five-year financial plan. He advised me to stop making mortgage payments right away, since it did not make any financial sense. I fired him and continued paying my monthly mortgage, real estate taxes, and other direct expenses, which amounts to roughly $20,000 per month, $250,000 per year.

Last year I spoke to another financial advisor to go over my five-year financial plan. He advised me to stop making mortgage payments in Florida right away; he would throw me from his 4^th floor office window if I did not listen to his advice.

Here is what the financial advisors are telling me on this subject:

1)      The real-estate disaster in Florida has not even hit bottom yet. It will continue getting worse before getting better.

2)      I have been the only homeowner in my intra-coastal town who has been paying his mortgage on time every month. All my neighbors are either gone or stopped making mortgage payments a long time ago.

3)      I will save $1,250,000 cash by walking away.

4)      The question then remains: Do you want to keep your perfect credit score or $1.25m cash in the bank in five years, if you can't have both?

The decision for homeowners in Florida is simple: It will take 5-7 years for their home values to get back to where they were. It will also take 5-7 years to repair their credit damage if they walk away and they will keep their cash.

This is not a moral decision for home owners Barbara, they are not walking away from their homes to hurt the poor big banks. The day you understand that your TV appearances may turn into a more serious show than the comedy of errors.