Late this afternnoon, I met with new clients. He manages a stock brokerage branch and she is a local newscaster.They have recently relocated to the San Diego area from Conecticut, and we spent time looking at beach properties and sharing stories.

His tale took the cake.

When he revently opened  the Edward James brokerage office in east county, he was referred some clients--a husband and wife, ages 51 and 52. They both wished to liquidate their IRA accounts, pay the 40 percent penalties, so they could invest their money in Nevada real estate, where they were told they could double their money. They did so, despite strong admonishments not to do so from this principled broker.

I felt sick. How could anyone with a conscience or a brain, especially a real estate professional,  ever suggest such a thing? And we wonder why pundits call this a bubble???

 
This post has been included in California Real Estate News

5 Comments on Ouch!

SEP
15
2006
1,418,038 Points 52 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master
About three years ago that may have been true (and only in hindsight). Today's Las Vegas market is brutally competitive. If this couple needs a current opinion on their holdings here I'd be glad to help.
11:18pm • #1
SEP
16
2006
183,439 Points 46 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp

John: Thanks so much for the offer and I will pass your information along to his stockbroker. I recall people cashing in, borrowing and pulling money any way they could to throw it into the stock market in 1999-2000. That did not make the stock market bad, but certainly turned it into an investor's mine field.

Our current real estate market is not dissimilar, and we spend much more time these days educating both buyers and sellers about the market and assessing their needs. Our negotiating skills in representing our clients become more important than ever.

9:52am • #2

What's really sad is that a good financial planner could have let them know that they could have 

BORROWED FROM THEIR IRA PENALTY FREE!

That way they could still put the money back in if the real estate experiment didn' work.

 
3:00pm • #3
158,851 Points 41 Featured Posts Outside Blog
What's not just sad, but scarey, are the folks in our indusrtry who are not CPA's, Financial Planners or Tax Consultants and, who try to practice being all three. And we wonder why Realtors sometimes are not trusted. We need to stick helping people buy, sell or trade real estate - profitably, period.
4:12pm • #4
SEP
26
2006
297,808 Points 110 Featured Posts Outside Blog

I have been in both industries and can tell you that it's just as bad on the other side.  Securities firms are lending on real estate now and encourage homeowners to leverage up to "diversify" their wealth.

Both practices (the liquidation of the IRA for Nevada real estate)  and the leveraging of the homestead for securities purchases are dangerous in a deflationary environment.  Especially if Bill Gross of PIMCO is correct.

www.PIMCO.com 

 
12:20am • #5


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Roberta Murphy -- Carlsbad Real Estate and Homes

San Diego, CA

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