Repeated calls to the company and the broker for comment went unanswered. Cheryl Oliphant of Santa Monica, Calif., bought a house that lenders shopped to appraisers as being worth $550,000. The registered nurse now thinks the appraisal was inflated.
A novice real-estate investor, Oliphant said she used her retirement savings and bought at the top of the market, thinking she had a great deal and instant equity in the house because it appraised for $50,000 more than the $450,000 sales price.
"The appraisal was wishful thinking," said Oliphant, who could not provide the appraiser's name. "I became a little suspicious later when I went to refinance and the next appraiser was having a hard time finding the value."
Oliphant has been trying to sell the house at a $100,000 loss and plans to file for bankruptcy, losing her $50,000 down payment. She said she might ultimately have to abandon that house and four others she bought in Florida.
It's important to remember that in all of these bubble zones, the amount of rent that people could think about charging tenants came nowhere near the cost of owning. These were investment properties in the sense of "prices go up forever WHEEEEEEEEEEE" not in the sense that there was belief that the properties could generate revenue over and above the costs of holding them.