Input requested: What Would You Offer for this Home

[NotCranky]

http://piggington.com/slow_decline_or_is_a_big_chunk_about_to_be_ripped_out

I live in Jamul which has some similiarities to Fallbrook. Prices on the few closed are pretty high. Very few transactions occuring on about 100 listings. It has been that way for months.

That’s a link to what I thought was one of the better discussions we had on this topic. I was the “big chunk guy”.There are some smart an likeable posters here who are certain things will be slow, 3-5% per year. Maybe, generally things will be slow, with some big percentage losses happening quickly on individual house or zip codes.
I bought a house in 1992 for 38% of what the previous owner paid less than a year before. I bought another one in 1995 for more than 40% less than what the previous owner paid less than six months earlier. The first was a hud repo the second was a short sale.These purchases might bias my opinion. I think there is a good chance the banks will get this rolling soon, in some zips at least. It has to be the banks, IMO,through aggressive divestment of REO’s.

[NotCranky]

http://piggington.com/slow_decline_or_is_a_big_chunk_about_to_be_ripped_out

I live in Jamul which has some similiarities to Fallbrook. Prices on the few closed are pretty high. Very few transactions occuring on about 100 listings. It has been that way for months.

That’s a link to what I thought was one of the better discussions we had on this topic. I was the “big chunk guy”.There are some smart an likeable posters here who are certain things will be slow, 3-5% per year. Maybe, generally things will be slow, with some big percentage losses happening quickly on individual house or zip codes.
I bought a house in 1992 for 38% of what the previous owner paid less than a year before. I bought another one in 1995 for more than 40% less than what the previous owner paid less than six months earlier. The first was a hud repo the second was a short sale.These purchases might bias my opinion. I think there is a good chance the banks will get this rolling soon, in some zips at least. It has to be the banks, IMO,through aggressive divestment of REO’s.

[bsrsharma]

No beating around the bush, it is basically worthless. However, if someone puts a gun to my head, I may say $50K. (I am not kidding). Seriously, when you can get a pretty nice property for about $250K – 300K in a couple of years, why even bother with dumps like that?

[bsrsharma]

No beating around the bush, it is basically worthless. However, if someone puts a gun to my head, I may say $50K. (I am not kidding). Seriously, when you can get a pretty nice property for about $250K – 300K in a couple of years, why even bother with dumps like that?

[Arraya]

Can’t talk specifics regarding the house. However 92104 is one the zips I monitor. I’ve been tracking # of SFRs under 400K as a marker. 4 months ago there was around 2-3 under, now last count was like 15+ and and a few peeking under 300. HUGE drop in the houses not by park. It’s sliding fast…

[Arraya]

Can’t talk specifics regarding the house. However 92104 is one the zips I monitor. I’ve been tracking # of SFRs under 400K as a marker. 4 months ago there was around 2-3 under, now last count was like 15+ and and a few peeking under 300. HUGE drop in the houses not by park. It’s sliding fast…

[Allan from Fallbrook]

Rustico: I would think that as we approach year end, there will be some pressure on the banks to clear REO properties off the books.

Non-performing assets generally create a fair amount of drag on the financial statements (speaking as an accountant now) and, given the amount of foreclosures out there right now, I have to believe we are talking about a significant amount of inventory.

I spoke with a friend who is in banking and he told me that there is a huge amount of concern throughout banking in SoCal about the amount of houses that have gone back to the banks. He also said that beyond that, there was the fear at what a wholesale “dump” of REO properties would do to pricing and values.

[Allan from Fallbrook]

Rustico: I would think that as we approach year end, there will be some pressure on the banks to clear REO properties off the books.

Non-performing assets generally create a fair amount of drag on the financial statements (speaking as an accountant now) and, given the amount of foreclosures out there right now, I have to believe we are talking about a significant amount of inventory.

I spoke with a friend who is in banking and he told me that there is a huge amount of concern throughout banking in SoCal about the amount of houses that have gone back to the banks. He also said that beyond that, there was the fear at what a wholesale “dump” of REO properties would do to pricing and values.

[NotCranky]

Allan,
Do you think if one institution dumps they will all have to follow suit? What is to stop the weakest link from dumping or even being forced to liquidate REO property? I think it is possible that if one goes they all have to go or else they wait for their competitors to make the bottom.

[NotCranky]

Allan,
Do you think if one institution dumps they will all have to follow suit? What is to stop the weakest link from dumping or even being forced to liquidate REO property? I think it is possible that if one goes they all have to go or else they wait for their competitors to make the bottom.

[Allan from Fallbrook]

Rustico: I don’t have experience with publicly traded institutions, but I have to believe between SOX (Sarbanes Oxley Act) and banking regulations and compliance guidelines that there is going to be significant pressure to move sub- and non-performing assets (houses) and loans off the books.

If a company is forced between a write down (sale at a loss) or a write off (complete liquidation), they will universally choose the former.

I mentioned the Wall Street expression, “Don’t panic, but if you panic, panic first” in another thread/posting here, and I believe that it definitely applies here. These banks have to know that other institutions are facing the same situation they are and, if forced to move expeditiously to clear the books, they will and do their level best to mitigate losses by moving first and fast.

The other key difference between banks and homeowners trying to sell is that at some point, the bank will take the hit because they have to – no matter how painful in the short-term. Homeowners are more driven by emotion and thus will try to hold off and sell dear.

Just my $.02.

[Allan from Fallbrook]

Rustico: I don’t have experience with publicly traded institutions, but I have to believe between SOX (Sarbanes Oxley Act) and banking regulations and compliance guidelines that there is going to be significant pressure to move sub- and non-performing assets (houses) and loans off the books.

If a company is forced between a write down (sale at a loss) or a write off (complete liquidation), they will universally choose the former.

I mentioned the Wall Street expression, “Don’t panic, but if you panic, panic first” in another thread/posting here, and I believe that it definitely applies here. These banks have to know that other institutions are facing the same situation they are and, if forced to move expeditiously to clear the books, they will and do their level best to mitigate losses by moving first and fast.

The other key difference between banks and homeowners trying to sell is that at some point, the bank will take the hit because they have to – no matter how painful in the short-term. Homeowners are more driven by emotion and thus will try to hold off and sell dear.

Just my $.02.

[SD Realtor]

It will be interesting to see what happens but what I have seen is that REO properties in certain areas have gone and gone fast. However I think other areas have very substantial REO inventory sitting at the bank. I think central San Diego is one of them.

Personally I like University Heights north of Adams but in that entire area that would be about it for me…

Anyways getting back to the main issue… I have tracked REO sales here in Scripps…Properties that went to auction and then went REO were put back on the market )MLS) and sold (at discounts) pretty darn quickly. I have also seen some REOs in 92009 (believe it or not) fairly high end as well and those suckers went very quickly.

However I would be willing to bet that there is alot of REO in less desireable and lower middle class homes. So it will be quite interesting to see how that unwinds.

SD Realtor

[SD Realtor]

It will be interesting to see what happens but what I have seen is that REO properties in certain areas have gone and gone fast. However I think other areas have very substantial REO inventory sitting at the bank. I think central San Diego is one of them.

Personally I like University Heights north of Adams but in that entire area that would be about it for me…

Anyways getting back to the main issue… I have tracked REO sales here in Scripps…Properties that went to auction and then went REO were put back on the market )MLS) and sold (at discounts) pretty darn quickly. I have also seen some REOs in 92009 (believe it or not) fairly high end as well and those suckers went very quickly.

However I would be willing to bet that there is alot of REO in less desireable and lower middle class homes. So it will be quite interesting to see how that unwinds.

SD Realtor

[temeculaguy]

I think Rustico and Allan have an excellent point and the latest wall street meltdown and the NOD charts have me looking for a spot in their camp. Sure SD there has been interest for prime properties where there are few REO’s but that doesn’t mean it will stay like that, at some point when houses are half the price for the same thing a few miles away it will affect your target areas. But back to the Big Chunks, I think we may be entering those times and since it has happened in the past to a lesser degree the never before seen storm we have brewing may have some never before seen effects. The builders have had to drop in chunks and they have the luxury of slowing down construction, the banks don’t have that luxury and they are taking a beating right now from investors. One look at the NOD charts and it is obvious that it’s going to get silly real soon. Looking back in five years i think the story will be told that the massive REO’s and the banks trying to clear them before the next batch will be credited with what drove the prices down.

[Author]

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