San Diego Housing Bubble News and Analysis

Did you mean to say "that has now gone to the bank"?

Oh crap, talk about the worst possible place to have a typo in my post.

Yes, it has now gone to the bank, or is in the process of going to the bank.

Sorry Raptor I am freeking swamped right now. I have no clue why....

If it has not gone to the bank yet then ask your agent to contact the owner and basically send them a letter of intent. Is the home on the MLS (or was it on the MLS?) or is it just a home that is in distress and you have been hawking it. The situation may present an opportunity for you to assume the loan or something of that nature. I guess my answer would depend a little bit more on the details of the situation.

Regardless, contacting the owner is the first thing to do IF THE OWNER IS NOT REPRESENTED. Otherwise contact the agent.

A few months back Asianautica spied a NOD and knew it was one that may interest me. I ended up going to the guys home... left him notes... tried to call him... finally I found out where he worked and went to the store he owned and met him. I know that all sounds kind of stalking like but most people in distress are reclusive because of bill collectors and such. So I wanted him to know I wasn't anything like that. Well he was actually pretty good about all that but ended up curing his default. Anyways that was my short story.

As far as your agent goes. It is a sticky one. Depends on what sort of nomenclature you have used in your representation agreement with him/her.

Where in the default process are they? As long as the owner is still on title you deal with the owner first. Then you may be able to work with someone in the loan workout group if things move forward.

SD Realtor

Thanks. It was on MLS and then dissappared some time back so I stopped thinking about it. I had been asking my agent to dig to find out why and after all this time it looks like it is now going into foreclosure. We did contact the selling agent and they are contacting the bank, but I wanted to know how to go about all this.

If the foreclosure process is not done yet, then it is a short sale offer and I know the pains related to that. If it is in foreclosure, that is where I am more at a loss as to what I can do and how I should do it.

I don't want to cut my agent out of any possible commission even with a foreclosure, but don't know how that works. If the bank won't pay her commission from the proceeds, then I would have to write her a six figure check myself?

If it is in the foreclosure process then yeah it would be a short sale. Yes this is a chore of a process but note that once the trustee sale occurs and the lender becomes the owner, the lender will need to get the owner out of there, then get it BPO'd and back on the market. It will be listed with a different broker.

It may actually be worth the effort to go for a short sale. The effort is much less on your part then it will be on the sellers part. For you it will be write it up and wait. Whether the seller will want to go through the chores of submitting the short sale package is another issue. Have your agent contact the old listing agent and run the idea by them. It couldn't hurt. At least you would be the only buyer. Once it goes REO you can always submit another offer then anyways.

SD Realtor

Raptor,

This is very similar to our situation. We purchased a distressed property back in the fall.

The house had been in the MLS and was overpriced. The house was then pulled from the market and the owners received their NOD a month or two later. We then made an unsolicited, low ball offer directly to the owners.

To make a very long story short, we closed seven months later for less than our original offer.

My advice is for you and your agent to be extremely aggressive with the owners and noteholders.

nccoastalseller

San Diego based website for forclosure info

http://www.foreclosureforum.com/

"Yes, it has now gone to the bank, or is in the process of going to the bank."

There is a huge amount of variability in the strategies that you might take based on the exact situation. Basically you need to interject yourself and cure the owners problems before it goes to the trustee sale and have the owner deed the property to you before the sale occurs. As SDR has said you might assume the loan. If they are defaulting the loan probably isn't something you want. Anyway, rates are really good you would probably just want to open an escrow, which you can do yourself and get the transaction done. You might ask your agent to do it for you on some kind of a flat fee basis if this property was not something she was in the process for procuring for you. People should always think about getting an office to do these things on a flat fee. This is task is potentiall much more more complicated than I am describing.Each situation is differnt.These are the kind of situations the "I buyforeclosure.com" people are often looking for in case the property actually has some equity.

If it goes to the trustee sale this is where you could bid cash. I am not sure if there are individuals or institutions that will front that cash or the terms by which they do it. In this world I would think there is.

Your realtor would probably be out of the picture at this point. I would be shocked if your buyer's broker agreement said you had to compensate an agent for a purchase like this. You should probably take some classes on buying foreclosures to do this or hire a consultant. On the consultant idea take that with a grain of salt because the odds you get the property are so low you wouldn't want to pay much for services. Google SDCIA and go to that site. Generally speaking the bloggers there are more versed on this topic. Google trustee's sale and there is a ton of information. The most important thing is to understand is the encumbrances against the property and which ones will be wiped out by the foreclosure sale. There is a lot of leg work involved in understanding the issues with acquiring properties like this. It is risky. There may be evictions to do and vandalism to repair. The property could have hidden defects. I have not done it yet. Most segments of the market are probably not distressed enough that the benificiary, lender, is going to let an outside bidder steal a property. Before this is all over a few lucky gamblers will still some of the best deals at trustee's sales. I think I have a handle on it enough to buy a rental or two but I probably wouldn't stretch to a high priced property until I had some practice. We couldn't get that much cash anyway. I think trying to get one identified property like this has very low odds. A person likely to have success with it needs to scope out 20 or so properties to bid on. I really is like a part time job.

So that leaves us with waiting for the property to go to an REO auction or the MLS which is where most average people, with regards to buying real estate, will buy distressed property. Nothing wrong with this. It is more realistic for you because the property matters as much as the deal. You need selection and probably some of the guarantees that "what you see is what you get". I would suggest staying in this area and as always taking your time. I almost implore you to wait six months. If things have improved for you wait another six months. Anything can happen now. Big declines can happen now. Look at those big chunks down on Richs' graphs. WOW!

One more idea. What about buying a nice house that is cheap for you, which apparently most of them are, getting back to San Diego and working on the "big score" from here. Not trying to push you to buy and you could still be thrifty for such a deal. I bet you would save enough on the purchase price of the second house to pay for the first more modest one.

I am more or less a believer that it is better to let the market do the work. You can get a better deal with less stress than trying to push too hard.It never hurts to give something a reasonable try like SDR did either.Poeple in trouble just usually aren't in a position to give you a good deal with the houses because they are in trouble due to being over leveraged. The forclosure process wipes out junior leans and the banks are then ready to negotiate, often times below the amount of the remainder.

Thanks guys for the great advice! I will let you know what happens with this one.

I made an offer. So I went down to SD to look at this house and we made an offer on it. We will see what the bank says.

We also decided to look at a bunch of other houses. 4 of them we will make offers on if this foreclosure does not pan out.

Each of these additional 4 houses is about the exact same size and style of house and same price, but they are all in different areas. I have asked this before, but I would like to solicit opinions on the 4 areas again for fresh data. Fairbanks Ranch, Santaluz, the Coventant, and Meadows Del Mar. Lot sizes do range a bit as obviously the CV home is on a very small 1/2 acre lot while the covenant home spralls over several acres. The other two are in between those ranges. Any thoughts on the areas again?

I am bumping this to try to get some fresh solicited feedback on the 4 areas above for those additional homes.

You can ignore the foreclosure now. That turned into a soap opera of sorts. Foreclosures are not for the timid, that is for sure.