San Diego Housing Bubble News and Analysis

That is what is to be expected in a credit crunch, isn't it? Cash is King. The banking system needs to build up cash reserves as much as possible and this seems logical. Lower comps will make homes more affordable and help deflate the bubble. What is to complain?

Just found out about another one ... closed earlier this month 15K below my conventional offer, presumably all cash. Another nearby closed 10K below the very reasonable asking price, presumably all cash. Never got a chance to bid on that one ... lasted about two days on market.

Three model matches (two REOs and a short sale) listed within 1/4 mile. What are the chances these will appraise at "true" market value? By that I mean what a sane owner-occupant would offer.

I assume you mean what a "typical" owner occupant would offer. All cash offers don't necessarily mean insanity. It just means someone is trying to take advantage of the system at hand. For all you know these buyers may have borrowed cash from friends/family/401ks etc to be able to make a cash offer for less than you would have, and intend to finance it after the fact. I don't think you can assume they are investors or flippers. Or insane. In fact getting 10k or more off the price sounds rational to me.

To put it in perspective, I'm talking about 15K off 320K, which is roughly 5 percent.

With discounts like that, I think I'm justified in questioning whether banks/servicers are making reasonable efforts to mitigate their own losses and those of MBS investors.

Either that, or I wish I had friends with 300K+ sitting around.

I'll agree with what's going on, I've seen it myself. We wanted to purchase a house. We were told they had already accepted an offer, this was back in October I believe. Well I just looked it up recently and it sold recently for $30k less than we paid for our current home, that's about $70k less than their asking price back in October, doesn't make sense to me. Here's the URL from Zillow http://www.zillow.com/homedetails/2548-W... Kinda makes me wonder if agents/brokers are funneling houses to friends/relatives.

AK if you put out the addresses we can check to see if they were all cash or not.

Threadkiller, when you put an offer on the home on Washington it was a short sale. The home was listed for 300k with Realty Headquarters. The home was being processed but it ended up going to foreclosure on 12/18/08. Now I do not see the home ever being relisted on the MLS. Yes it was purchased for 210k.

So yes this indeed could have been a situation where the home was funneled to someone from an unscrupulous agent who got the listing from an asset manager. There is no mortgage recorded on it so it was an all cash deal.

Thanks for clearing that up SD Realtor. We are happy with the home we have, and we did not have to do a lot to it.

This is what I have been saying and seeing for awhile now, I am glad more people are stepping up and talking about it, the system as it is (be it caused by credit crunch or no) is rigged in favor of the all cash low balling investor (or what ever).

This would be over much faster if people with standard loans were allowed to actually win. We would be back to a normal market in months (normal means 70% organic transactions to me).

Sending by our new private message system :)

Thanks SD R!

Apparently "real" people need to use someone else's money. Which means real people may not be able to actually commit to buying said property.

And yep, there are bidding wars with vapor money and they don't me jack. Why? Because most of them won't qualify for a loan.

It's really simple. The people with the cash are the people that can really BUY. They don't need anybody else's approval to buy. They don't have to dink around for 60 days trying to get appraisals to match, force their paperwork through the bank for the loan or anything else. They can say I will buy, and that's it. They can buy.

The 'real' buyer can't. Pure and simple, all talk no ...

I'll let George Bailey say it for me:

"Now, hold on, Mr. Potter. ... You...you said...What'd you say just a minute ago?...They had to wait and save their money before they even ought to think of a decent home. Wait! Wait for what? Until their children grow up and leave them? Until they're so old and broken-down that they...Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about...they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him, but to you, a warped frustrated old man, they're cattle. Well, in my book he died a much richer man than you'll ever be!"

Again, simple item. Those with cash can make good on their word.

Those without, need someone else to trust them.

Awesome quote AK. One of my all time favorite movies. I think that the cash people will buy now and then it will be time for the normal people who have a down payment to buy. I think their time is almost here.

Aecetia I hope you are right.

However I have a very unsettling feeling that the lesson learned will be that those with the gold rule and the house can rig the game alot longer then joe six pack can save a few thousand a year to add to his downpayment.

In short the government and the banks will continue to be the house and bend the rules to thier own liking. Holding a couple hundred thousand homes for a few years is not to hard to do when trillions of taxpayer money has been pumped into the system, and/or accounting rules may be changed into your favor.

I am now starting to lean in the direction that this market is indeed so manipulated that runaway interest rates will be the only thing that can push pricing down in a heavy manner.

I guess we will see.

I think their time is almost here.

On the contrary, we may be seeing a transition to a new culture of savings and investment rather than borrow and consume. There is an increase in savings rate and decrease in consumption. This is causing the economy to stagnate. If you see the demographics, the baby boomers are retiring; their productive phase of life is coming to an end and from now on they will be net consumers who will live off their savings. Even the governments can only borrow for so long; the lenders are going to demand more.

The problem now is created artificially by the banks
and the NAR with their corrupt practices.

Banks don't sell foreclosures since they get free money from the FED, crooked realtors list houses as "Contingent" to allow their friend to buy the houses on the cheap and artificially lowering the supply of "Active" listings (contingent listings are just active listings set aside by realtors for in-house deals).

Cash buyers are actually doing us all a favor: by paying market prices they will lower the comps to where the market would be without government intervention.

Cash buyers/investors are not the source of this mess.

Cash buyers are actually doing us all a favor

I wonder why more people are not appreciating this fact. Cash buyers of REO's will catalyze bubble implosion and bring back home prices to affordable levels (median home prices about 3 times median family income).

AK your info has been sent.

Long sigh to the other posts since then.

SD R very generously researched these two sales ... while I've lost a few to all-cash offers in the past, it turns out that both of these were financed.

My apologies for venting my fury in the wrong direction. It seems the listing agents had motivations other than a quick and pain-free escrow.

listing agents had motivations

Are you implying that your offer was higher but was not accepted in favor of a lower offer? If so, you may have grounds to complain to the seller that he may have been defrauded. I thought only cash buyers get deep discounts; that the sellers agents can be corrupt for financed sales too is an eye opener.

I dunno, my substantially higher offer could've been rejected for any number of reasons. (Including, but not limited to, greed and corruption!)

I could send a certified letter to the audit committee at the Very Big Servicer, but I know they probably couldn't care less.

I could make an ethics complaint against the listing agent, but I suspect the local association couldn't care less. And I'd probably hurt the reputation of my own hard-working and ethical agent.

I have enough melanin in my system to claim racial discrimination, but it would be bad karma to make a serious accusation without more evidence.

Or I could just move on to the next listing. Which is what the dirtbags are hoping. But, what if the dirtbags have that listing too?

If you have the agent/broker's lic # you can report them to the state.

I've made offers with a preapproval letter from a lender and the amount was higher than the accepted cash offer and still they accepted the lower cash offer. Does anybody know why they would rather accept a lower cash offer than a mortgage if it has already been approved?

It is a very sad fact that there is alot of bs out there and listing agents double ending things while other buyers get screwed. We have talked about and we continue to see it. I have had clients of mine who called the listing agent broker after they got aced out and vented to them but with no avail. I have had a client but he lost out on an reo and he was able to somehow reach the asset manager and wanted to make sure his offer was not the highest. As bad as the market was before the way that REO properties are parsed out is just a nightmare. I would be willing to guess that the number of double ended deals for reos verses regular sales is higher, perhaps much higher but that is just me being bitter. There is some oversight by asset management companies but not a hell of alot.

AK,

I think you should write a nice letter to the seller's agent whenever a financed deal went for a lower price than your offer (assuming you have good FICO score etc., so that they can't give a flippant answer). (by email or fax so that they know that you know that it has been delivered). Collect a bunch of the replies and post them here. I am sure the collective smart brains of Piggs will find methods to screw them over.

Perhaps if the seller/bank looked at more than 1 applicant/offer at a time things would be better. I know they feel flooded with REO's, but how do you make a rational decision with no competing offers? By the way AK I love that line too, Good One!

Asset managers look at "highest and best" offers which is typically the second round call-to-action on multiple offers of REO properties.

That does NOT just mean highest offer. They look at the strength of the offer: large down payment, reserves in bank, FICO, prequal letter, etc...

I just beat out an all-cash offer on the house I am buying. Obviously I was the high bidder but I also was a strong offer according to the things I mentioned.

All cash does not always win. Is the decision process always fair? Maybe not. But it worked for me.

ox

Think of it as a risk/reward scenario.

On one end of the spectrum is a non-contingent cash offer. You are basically guaranteed to close and close quickly. There is a premium paid by the bank for this lower risk and liquidity.

On the other end of the spectrum would be a FHA type deal (or worse, FHA + some sort of state DPA) you'll have appraisal issues, qualification issues, long underwriting times, buyers could lose their jobs during that time, etc. But the banks get rewarded for that risk by getting a higher price.

Preapproval doesn't mean the property will appraise, will pass home inspection or that you've gone through full underwriting and cleared all the hurdles.

It's semi-off topic, but wanted to sure you had seen the alternate ending that was cut from the originally distributed version. It's only semi-off topic because it is eerily appropriate for today’s banking environment...

http://tinyurl.com/5hfoxj

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'Cash is king' in market for foreclosed homes

As an aspiring first-time home buyer, Jay Nielsen hoped to find a cheap, bank-held foreclosure in Vallejo that he could finance with a Federal Housing Administration mortgage. What he didn't expect was having to compete with buyers willing to pay in all cash.

"Since January, I've put in 10 bids (on foreclosed homes); some were up to $80,000 over asking price and were still turned down," said Nielsen, 41, a medical assistant. Each time, the banks selected offers from investors with all-cash offers - even when those offers were lower than his, Nielsen said.

http://www.sfgate.com/cgi-bin/article.cg...