buying houses and the foreclosure situation

[kev374]

Due to the upcoming wave of foreclosures it makes sense to think that a lot of the properties available after all is said and done with this market will be REOs. So, is there anything special we should know about buying REOs that is different from regular purchases?

[CAwireman]

Foreclosures purchased on the courthouse steps may not allow for inspections that could otherwise turn up significant deficiencies….

HiggyBaby

[CAwireman]

Foreclosures purchased on the courthouse steps may not allow for inspections that could otherwise turn up significant deficiencies….

HiggyBaby

[CAwireman]

Foreclosures purchased on the courthouse steps may not allow for inspections that could otherwise turn up significant deficiencies….

HiggyBaby

[The OC Scam]

kev374

I believe currently there is a very unique situation in the housing REO market! This is from my own experience currently working with my Agent who specializes in REOs.
Most old timers that have been in the industry for 20 some odd years have a train of thought that Short sales are better deals and allow bigger discounts but this is not completely true from what we are experiencing. Currently the banks after failed auctions are on life support!
Today foreclosure market is flooded I repeat FLOODED with foreclosures mostly purchased with subprime and most at peak prices which I know you already know from reading your previous posts.
The homes being listed right now after auctions failing are coming back on the market lower than the failed attempt at the court house at a discount rate about 35-25% below the first loan taken out on the subCrime loan. We currently have purchased a rental property for 29% below current comps after negotiating for a month as the only offer submitted. The bank needs to sell! They don’t want the property sitting so they are the most desperate position and have bigger pockets then your neighbor’s home purchase in 2003 – 2006.
Currently there is a home that we have fallen in love with that we intend to live in for the next 10 years is a week away from being accepted at 32% percent below current comps. With these homes there absolutely not home warranty included and completely sold as is so a very good home inspection is a life and death decision for us. Also it is very difficult to find an agent who understands the REO process and also there is a chance for the agent to not get the commission they are looking for! Hence the reasons they are avoiding showing them to their buyers.
If you really want to work with an Agent who understands the REO market Google Leo Nordine out if southern CA. This guy understands where the REOs should be priced before the haggling starts. Read his comments in the LA times recently in August about the market.
He recently told me are you sure you want to buy right now? That’s a good listing agent!!

[The OC Scam]

kev374

I believe currently there is a very unique situation in the housing REO market! This is from my own experience currently working with my Agent who specializes in REOs.
Most old timers that have been in the industry for 20 some odd years have a train of thought that Short sales are better deals and allow bigger discounts but this is not completely true from what we are experiencing. Currently the banks after failed auctions are on life support!
Today foreclosure market is flooded I repeat FLOODED with foreclosures mostly purchased with subprime and most at peak prices which I know you already know from reading your previous posts.
The homes being listed right now after auctions failing are coming back on the market lower than the failed attempt at the court house at a discount rate about 35-25% below the first loan taken out on the subCrime loan. We currently have purchased a rental property for 29% below current comps after negotiating for a month as the only offer submitted. The bank needs to sell! They don’t want the property sitting so they are the most desperate position and have bigger pockets then your neighbor’s home purchase in 2003 – 2006.
Currently there is a home that we have fallen in love with that we intend to live in for the next 10 years is a week away from being accepted at 32% percent below current comps. With these homes there absolutely not home warranty included and completely sold as is so a very good home inspection is a life and death decision for us. Also it is very difficult to find an agent who understands the REO process and also there is a chance for the agent to not get the commission they are looking for! Hence the reasons they are avoiding showing them to their buyers.
If you really want to work with an Agent who understands the REO market Google Leo Nordine out if southern CA. This guy understands where the REOs should be priced before the haggling starts. Read his comments in the LA times recently in August about the market.
He recently told me are you sure you want to buy right now? That’s a good listing agent!!

[The OC Scam]

kev374

I believe currently there is a very unique situation in the housing REO market! This is from my own experience currently working with my Agent who specializes in REOs.
Most old timers that have been in the industry for 20 some odd years have a train of thought that Short sales are better deals and allow bigger discounts but this is not completely true from what we are experiencing. Currently the banks after failed auctions are on life support!
Today foreclosure market is flooded I repeat FLOODED with foreclosures mostly purchased with subprime and most at peak prices which I know you already know from reading your previous posts.
The homes being listed right now after auctions failing are coming back on the market lower than the failed attempt at the court house at a discount rate about 35-25% below the first loan taken out on the subCrime loan. We currently have purchased a rental property for 29% below current comps after negotiating for a month as the only offer submitted. The bank needs to sell! They don’t want the property sitting so they are the most desperate position and have bigger pockets then your neighbor’s home purchase in 2003 – 2006.
Currently there is a home that we have fallen in love with that we intend to live in for the next 10 years is a week away from being accepted at 32% percent below current comps. With these homes there absolutely not home warranty included and completely sold as is so a very good home inspection is a life and death decision for us. Also it is very difficult to find an agent who understands the REO process and also there is a chance for the agent to not get the commission they are looking for! Hence the reasons they are avoiding showing them to their buyers.
If you really want to work with an Agent who understands the REO market Google Leo Nordine out if southern CA. This guy understands where the REOs should be priced before the haggling starts. Read his comments in the LA times recently in August about the market.
He recently told me are you sure you want to buy right now? That’s a good listing agent!!

[SD Realtor]

kev –

I would by no means call my self an expert at foreclosures. I would say though that in my experiences right now with short sales they are by far more of a pain in the -ss then simply purchasing an reo property. The response time from the lenders are just to much to deal with. Additionally in SOME CASES the list price on the MLS for short sales does not really seem to correlate with the reality of what the lender will accept. I think that once the property does finally become an REO that there is much more motivation by the lender.

With regards to an REO note that any REO you purchase will pretty much be exempt from any and all disclosure. Lenders have never lived in or occupied the home so they have no knowledge of any existing problems. They will also have a pretty hefty release of liability for you to accept. There is nothing wrong or abnormal about this. It just merits that you do as thorough a job as possible performing your own diligence. Whil eyou do have the right to ask for a termite clearance and request any repairs you find during the due diligence period, it is best to assume the lender will not remedy any requests made.. they may credit you some money, they may not. It never hurts to ask right?

At any rate, the final question is how do you think the market will do in the future AND to be more specific in your target area? Do you think there will be further depreciation? Do you envision foreclosures in that target market? The answer is most likely yes in both cases. So hanging out and waiting a few more years may be the best strategy.

Again though, the main point is with the REO properties, just do a very thorough job with your due diligence and you can save alot of money.

Also do not confuse an REO or private auction with a trustee sale. The trustee sale is an auction of sorts where you can purchase properties but the vast majority of trustee sales end up with the property going back to the lender.
SD Realtor

[SD Realtor]

kev –

I would by no means call my self an expert at foreclosures. I would say though that in my experiences right now with short sales they are by far more of a pain in the -ss then simply purchasing an reo property. The response time from the lenders are just to much to deal with. Additionally in SOME CASES the list price on the MLS for short sales does not really seem to correlate with the reality of what the lender will accept. I think that once the property does finally become an REO that there is much more motivation by the lender.

With regards to an REO note that any REO you purchase will pretty much be exempt from any and all disclosure. Lenders have never lived in or occupied the home so they have no knowledge of any existing problems. They will also have a pretty hefty release of liability for you to accept. There is nothing wrong or abnormal about this. It just merits that you do as thorough a job as possible performing your own diligence. Whil eyou do have the right to ask for a termite clearance and request any repairs you find during the due diligence period, it is best to assume the lender will not remedy any requests made.. they may credit you some money, they may not. It never hurts to ask right?

At any rate, the final question is how do you think the market will do in the future AND to be more specific in your target area? Do you think there will be further depreciation? Do you envision foreclosures in that target market? The answer is most likely yes in both cases. So hanging out and waiting a few more years may be the best strategy.

Again though, the main point is with the REO properties, just do a very thorough job with your due diligence and you can save alot of money.

Also do not confuse an REO or private auction with a trustee sale. The trustee sale is an auction of sorts where you can purchase properties but the vast majority of trustee sales end up with the property going back to the lender.
SD Realtor

[SD Realtor]

kev –

I would by no means call my self an expert at foreclosures. I would say though that in my experiences right now with short sales they are by far more of a pain in the -ss then simply purchasing an reo property. The response time from the lenders are just to much to deal with. Additionally in SOME CASES the list price on the MLS for short sales does not really seem to correlate with the reality of what the lender will accept. I think that once the property does finally become an REO that there is much more motivation by the lender.

With regards to an REO note that any REO you purchase will pretty much be exempt from any and all disclosure. Lenders have never lived in or occupied the home so they have no knowledge of any existing problems. They will also have a pretty hefty release of liability for you to accept. There is nothing wrong or abnormal about this. It just merits that you do as thorough a job as possible performing your own diligence. Whil eyou do have the right to ask for a termite clearance and request any repairs you find during the due diligence period, it is best to assume the lender will not remedy any requests made.. they may credit you some money, they may not. It never hurts to ask right?

At any rate, the final question is how do you think the market will do in the future AND to be more specific in your target area? Do you think there will be further depreciation? Do you envision foreclosures in that target market? The answer is most likely yes in both cases. So hanging out and waiting a few more years may be the best strategy.

Again though, the main point is with the REO properties, just do a very thorough job with your due diligence and you can save alot of money.

Also do not confuse an REO or private auction with a trustee sale. The trustee sale is an auction of sorts where you can purchase properties but the vast majority of trustee sales end up with the property going back to the lender.
SD Realtor

[rocket science]

Oddly enough there was an article associated with this on the front page of the LA Times today.

 http://www.latimes.com/business/la-fi-foreclose27oct27,0,5892547.story?coll=la-home-business 

In addition to implying that the foreclosure activity trend is creeping into affluent communities it included a couple of other interesting points:

 The mortgage deals driving those high prices proved too good to be true, DataQuick President Marshall Prentice said. "We know now, in emerging detail, that a lot of these loans shouldn't have been made," Prentice said. We know now?????? 

And despite Enorah’s prediction back in July

http://piggington.com/the_tipping_point_is_here

We are lead to believe that we have not reached a tipping point.

 As foreclosures multiply in Los Angeles and Orange counties, it is too early to gauge the effect these properties will have on home values there, said Patrick Veling, president of Real Data Strategies Inc., a Brea real estate consulting firm. "Is there a tipping point?" he asked. "I don't know, but we haven't reached it yet." 

It is unfortunate the online story doesn’t come with the graph with the vertical line of foreclosure data.

rs

[rocket science]

Oddly enough there was an article associated with this on the front page of the LA Times today.

 http://www.latimes.com/business/la-fi-foreclose27oct27,0,5892547.story?coll=la-home-business 

In addition to implying that the foreclosure activity trend is creeping into affluent communities it included a couple of other interesting points:

 The mortgage deals driving those high prices proved too good to be true, DataQuick President Marshall Prentice said. "We know now, in emerging detail, that a lot of these loans shouldn't have been made," Prentice said. We know now?????? 

And despite Enorah’s prediction back in July

http://piggington.com/the_tipping_point_is_here

We are lead to believe that we have not reached a tipping point.

 As foreclosures multiply in Los Angeles and Orange counties, it is too early to gauge the effect these properties will have on home values there, said Patrick Veling, president of Real Data Strategies Inc., a Brea real estate consulting firm. "Is there a tipping point?" he asked. "I don't know, but we haven't reached it yet." 

It is unfortunate the online story doesn’t come with the graph with the vertical line of foreclosure data.

rs

[rocket science]

Oddly enough there was an article associated with this on the front page of the LA Times today.

 http://www.latimes.com/business/la-fi-foreclose27oct27,0,5892547.story?coll=la-home-business 

In addition to implying that the foreclosure activity trend is creeping into affluent communities it included a couple of other interesting points:

 The mortgage deals driving those high prices proved too good to be true, DataQuick President Marshall Prentice said. "We know now, in emerging detail, that a lot of these loans shouldn't have been made," Prentice said. We know now?????? 

And despite Enorah’s prediction back in July

http://piggington.com/the_tipping_point_is_here

We are lead to believe that we have not reached a tipping point.

 As foreclosures multiply in Los Angeles and Orange counties, it is too early to gauge the effect these properties will have on home values there, said Patrick Veling, president of Real Data Strategies Inc., a Brea real estate consulting firm. "Is there a tipping point?" he asked. "I don't know, but we haven't reached it yet." 

It is unfortunate the online story doesn’t come with the graph with the vertical line of foreclosure data.

rs

[SD Realtor]

Pretty funny you brought up Enorahs post… I recall it well because I personally poo pood all over it and like a few days later the credit crunch hit the fan…and I looked like the idiot… not the first time either…

I don’t really see any tipping point… just a slide down that will be uneven throughout the next 3-4 years.

SD Realtor

[SD Realtor]

Pretty funny you brought up Enorahs post… I recall it well because I personally poo pood all over it and like a few days later the credit crunch hit the fan…and I looked like the idiot… not the first time either…

I don’t really see any tipping point… just a slide down that will be uneven throughout the next 3-4 years.

SD Realtor

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