NEW YORK (MainStreet)Among the first real estate-themed reality TV shows that launched in the 1990s was House Hunters produced by Pie Town Productions. A lot has changed since then.
"People are much more willing to talk about details that were once considered too intimate like how much they've spent on a home and how much profit they made on the sale of a home," said Jennifer Davidson, a principal at Pie Town, which recently launched Flip or Flop, a real estate-themed reality tv show that began airing this year on HGTV.
The show is about Tarek and Christina, who buy homes and make them over before selling.
"It's doing well in the ratings, because they are a couple not a corporation," Davidson said. Premiering this summer on Bravo-TV, is Property Envy. The show is produced by World of Wonder, the same production company that launched Getting on the Property Ladder, Million Dollar Listing, Million Dollar Listing NY and Hometown Renovation.
"The most important aspects of real estate investing make very boring television and by overlooking them, production companies make real estate investing look far too easy," said Victor Menasce, a professional real estate investor. "The hosts of shows like property wars are nice people who do good work but it's deceptive, because they are focusing only on 20% of the work."
Davidson defends the reality TV genre.
"Networks and production companies are conscious of this issue especially since the housing bubble burst," she said.
Other popular real estate reality TV shows over the years have included Flip This House¸ Moving Up, Bought & Sold, My House is Worth What?, Extreme Makeover: Home Edition, Trading Spaces, Dream House and Get It Sold on networks such as TLC, ABC and Discovery.
"Most of the shows are balanced and fair when it comes to showing the reality of dollars and cents of what goes into a home and what comes out of it again," said Davidson.
While standing on the court house steps in Scottsdale, Ariz., Menasce has observed cameras with a telephoto lens filming the Discovery Channel's Property Wars from across the street.
Launched in 2012, Property Wars follows bidder rivals, such as Lou Amoroso.
"I've worked with Lou," said Menasce. "On the tv show, it appears to be a competition between four teams of professional bidders converging on a property just minutes before the auction starts. To create drama, they yell at each other and call each other names, but in reality there's often no competition, because at an auction with 300 properties, if you don't get one property, there's another opportunity in 20 seconds."
Among the important aspects of real estate investing that are excluded on today's real estate-themed reality TV shows, such as Property Wars, are :
- 1. Title search work. When purchasing a home to flip or rehab, Menasce advises taking time to check the property's history with a local title company. "There could be an IRS lien on the property," said Menasce. "If there's a lien, the new owner would have to pay the IRS so it's not just the simply the price of rehabbing the property."
- 2. Auctioneers expect a deposit , which gives investors the right to bid. "In Phoenix, if you don't get a property at the end of the auction, the $10,000 deposit is returned to you," said Menasce.
- 3. Where does the financing come from? "Reality tv shows don't touch on where the money will come from or how the investor raised the capital," said Menasce. "It's an important piece but it's not discussed much."
- 4. Most financing to purchase a property will come through loans or equity lines of credit but there isn't time to process a loan on most real estate reality shows. "Investors who purchase at auction tend to pay in cash because underwriting takes a minimum of 30 days and when you buy at auction you are required to settle up in 24 hours," said Menasce.
--Written by Juliette Fairley for MainStreet