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Fifty Cents On The Dollar ... What Does That Mean?

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Real Estate Technology with Content, coding, marketing, host.

Stop giggling! I know 95% of the people who read this will say "everybody knows that" but they don't. I know because I get people who call in and ask what it means! I never treat them like they don't know anything because many of them are very brilliant people who just do not know what those words mean. So this is for those who really are not completely sure what those words mean and to help some of the rest of you be genteel when being asked.

Simply put it is a way of saying "percentage of the original price or value". Normally you will hear this phrase in association with foreclosures, distress sales and bank held properties. You will hear people say, "Oh, you can pick that up at fifty cents on the dollar" or "seventy cents on the dollar". That simply means 50% of the original value or 70% of the original value.

Investing in real estate is simple to say and really simple to do but you better be working with a lender who knows what they are doing. I have rescued hundreds of people for very experienced loan officers who have done hundreds of home mortgages but only a few, if any, real estate investment loans. There is a HUGE difference between the qualifications and specification for a real estate investment loan and a primary residence. Even the way income and assets are calculated are different.

If you are interested in an investment property purchase or refinance in Georgia or Florida I can assure you nobody has more experience. Listen to this short interview with me on the John Adam's Radio Show.

 

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I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!

Comments(6)

Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Let me attest to you Ken...you da man....people doing business with you are smart people...really.

Feb 23, 2009 11:33 AM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Ken,

I don't agree with your definition, but this is excellent!

When even experts can disagree and neather be wrong your advice is great. "Investing in real estate is simple to say and really simple to do but you better be working with a lender who knows what they are doing."

Bill

Feb 24, 2009 01:21 AM
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

You truly get people asking you what that means?

Feb 24, 2009 04:03 AM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Larry - thanks. I do have some smart callers.

Bill - hit us with your definition - you know I'm easily corrected. Thanks.

John - yes. Then again my niche is first time real estate investors and that's who I market to.

Feb 24, 2009 05:31 AM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Ken,

As I said: "experts can disagree and nether be wrong"  You suggest: "percentage of the original price or value". I would have said the highest value ever imagined! It makes no difference because the people telling you you can buy it for 50 cents on the dollar are lying. Like the robot said: "Warning, Warning, Warning!" It's rare that your not going to pay current market value!

Buying for 50 cents on the dollar or any other major discount is like all those "Free" offers at the end of commercials. Did you ever try to order just the free one?

It's just a pet peeve! It's smoke and mirrors a distraction. Today's houses provided great value for a much lower price that just a few months ago, but the average consumer is going to pay 100%/cents of the current value/dollar.

Like you I believe: "Investing in real estate is simple to say and really simple to do but you better be working with a lender who knows what they are doing."Consumers need a pro who can see through the smoke! It wasn't long ago that that real estate mistakes were fleeting, if you paid to much so what just hold it a few more months, but those days a gone.

Bill

Feb 24, 2009 07:10 AM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Bill - I see your point and agree and have taught that as well. I say the value of a thing is what someone just paid for it. However (I didn't say but) for the sake of the measurement of perceived values and for a number to put down in a book (where perception is often obscured by the emotion of [mostly] greed) we need a reference number. That reference number, for the sake of comparison, is thus ascribed "penny on the dollar". It isn't science and it isn't even good math. It is, however, a huge part of the modern vernacular. Thanks!

Feb 24, 2009 08:04 AM