The housing market in the Twilight Zone…

The old TV series by Rod Serling called “The Twilight Zone” used to present a lot of episodes based upon irony. Serling liked to use dramatic techniques, like not showing the faces of the actors or lighting them from behind, so that you couldn’t quite make them out . One episode that I remember involved a group of people who spent the entire ½-hour episode discussing in horror how ugly another person, who was never shown during the bulk of the show, was and how she was so different than them and should be cast out of the society. You could never quite see the speakers or the subject that they were discussing, but the disgust of the “regular” people was apparent. At the end, of course, Serling through us a curve ball when he finally allowed the subject girl to be seen. She was stunningly beautiful (by our standards). The Serling allowed the speakers during the episode to be seen and, of course, they were horribly deformed and ugly.

That Twilight Zone episode is a great match to today’s real estate market. The sometimes ugly and many times horrible neglected and, one might say, deformed (deteriorated at least) foreclosed houses are setting the standards by which buyers are judging the market, at least on price. We are truly in a Twilight Zone in housing right now. Decrepit, run-down foreclose or short sale houses are setting the market price standards and getting lots of traffic and sales, while truly beautiful owner-occupied house are being shunned. It is a market that Serling might have found worthy of an episode or two.

So, what are we to do as Realtors to recapture our market and bring it back into the real world? Can we afford to ignore the foreclosed and short sale segment of the market? No! That would be tantamount to suicide. But what we can do is to better educate our clients (especially the amateur investors) and better counsel them about the risks of buying a foreclosed or short sale house that go along with what they see as the obvious rewards.

There are really very few truly professional investors in the market these days – people who really know what they are doing when they buy a run-down foreclosed house. That’s one reason that there are so many “boomerang houses” in the market – those that were bought by naïve “investors”, only to return to the foreclosure market 3-6 months later. As Realtors, we’re probably not doing enough to prevent that from happening. We should be giving better and stronger advice to amateur investors, when we encounter them. Many times that advice should be “Don’t do it.”

What else? I certainly try to advise sellers on how to do the best that they can to sell before bailing out on a property. But, in reality, the economy has taken so much value out of the market that almost a third of the people that I run into are underwater on their homes – they owe more than the home is now worth. They can get relief by refinancing because the banks just won’t talk to them, even with all of the Federal rescue and refi programs. I sometimes feel like I’m also caught in the Twilight Zone as a Realtor. I’m at a loss here, so feel free to jump in and post your advice.