The New York Times reports “the real estate market along the New York and New Jersey coastlines has been as upended by Hurricane Sandy as the houses tossed from their foundations. In places where waterfront views once commanded substantial premiums, housing prices have tumbled amid uncertainty about the costs of rebuilding and the dangers of seaside living.”
The article tells us here that many locations, considered prime just two months ago, are now crawling with real estate “prospectors” (evidently detecting opportunities a lot bigger than lost jewelry at the beach). The prospectors began arriving almost immediately after the storm, “patrolling the waterlogged neighborhoods” with offers to buy distressed homes for cash. Many homeowners “who lack the means or the desire to rebuild say they have no choice but to try to get out from under these properties for whatever they can. Because many banks have been unwilling to provide mortgages to people seeking to buy in an area at risk for another catastrophe, or even to refinance properties so homeowners can pay for their own repairs, a cut-price cash sale is sometimes the only option.”
Ryan Case, a partner at Seaside Funding, a national “flip company” that often offers 60 percent to 70 percent below market rate for properties, acknowledged that would-be sellers would be wise to ignore his agents’ offers. “We are not your best option,” he said. Yet those who find bargain-basement offers tough to swallow – compared with the value their houses had before the storm – sometimes find themselves with little alternative. Mr. Case recounted how one New Jersey woman reacted with outrage at his company’s offer. “She said, ‘I’ll burn the house before I sell it to you guys to make a profit,’ ” he said. But she called back a week later to see if the offer still stood.