North County Price Reductions – 2

[sdrealtor]

balasr,
You were not the offending party that Bugs response was directed at and your cooments never identified any of the sellers personally to my knowledge.

Regarding Shadowridge, I know the area well and speak regularly with one of the market leaders there. The market is very slow there and he/she is sitting on many listings that arent going anywhere. But you probably know this already.

[powayseller]

SDAppraiser, I understand your frustration with posting the foreclosure information. You see the daily suffering being brought by this, whereas for us it is just one more data point. However, I can’t help but wonder if you feel some personal responsibility for perpetuating this real estate bubble. The appraisers validated the unrealistic prices, and led buyers to believe the price they were offering was credible. No appraiser warning, such as “These bubblicious prices are sure to drop” was issued, right? An ignorant public was preyed upon by realtors, appraisers, and lenders. I am watching it unfold. And I am the bad guy?

[Carlsbadliving]

I don’t think anybody is the bad guy. It’s the buyers decision to pay the market price. It’s no different than any other retail transaction. If the buyer is willing to pay for something then that’s the market rate. I don’t think you blame any one sector (lender, realtor, appraiser), you just had a large group of frenzied buyers outbidding each other.

[PD]

I would not say that realtors and appraisers preyed on people. As for the the appraisers, they are just reporting the current market value of the house. Listing realtors are trying to get the most for their client and buyer’s agents are (hopefully) trying to get the best deal. The market is set by the buyers. It is the buyers, as a group of sheeple, who are responsible. Everyone else is along for the ride. Don’t get me wrong, there are plenty of shady realtors who spout all kinds of rosy nonsense to stupid buyers who believe it. To say that realtors and appraisers preyed on people suggests that they KNEW prices were not supportable. I would say most of them thought that prices would actually go up forever as they are no smarter than the average buyer (plus, they actually believe NAR).

I do think that lenders have failed in their responsibility to the buyers in the last few years. Most people do not really understand the complexities of their loans. They simply do not understand the financial ramifications of their loan outside of how much it will cost each month (and sometimes even that they don’t understand because of ARMs and IO). Fees are often hard to determine, even for people who understand finance. So you end up with too many people in dangerous loans and who do not even understand the perilousness of their position.

[Bugs]

Here’s a little tidbit you might find interesting. Fully 30% of all appraisals I complete return a lower value opinion than as envisioned by the borrowers. Would you care to guess how often it prevents them from completing their transaction? I’ll give you a hint, it’s nowhere close to 30%. Many people will do whatever they have to do in order to close their sales, even in the face of a preponderance of information to the contrary. They’ll come up with extra cash to bridge the gap, they’ll shop lenders for more permissive financing terms, they’ll shop for appraisers until they find one who will rubber stamp the deal, and in general they’ll go to whatever lengths they deem necessary to achieve their goals regardless of how many times they hear the word “no”.

If you’re saying the people should be better informed before they make these decisions, I agree. If you’re saying people should heed the advice provided to them by the professionals, I agree. The question here is whether it is incumbent on the government or the different professions to embark on such an educational endeavor, and if they did would any of the information atually sink in. Heck – people play the lottery even though they know their chances of winning are small, what makes you think they’d allow professional counsel to override their own hunches and the advice of their buddies? It just wouldn’t happen, and no amount of “it SHOULD be” is going to change that.

[powayseller]

Thanks, Bugs, for that response.

If I have to blame someone, it would be Greenspan, who
1) lowered i to 1%
2) increased liquidity so much that the risk premium almost vanished. Investors bought MBS at 100% LTV.

Greenspan’s legacy will be the creation of asset bubbles. Everyone loved him while the party was going strong, but when you have a hangover you question whether all that partying was really worth it. At my age, I’ve figured out it isn’t. Maybe the government will someday be that wise too. (Not being conceited, actually I’m just too old for hangovers)

[powayseller]

Here’s a foreclosure in Poway I’ve been following, on Country Creek Road. It is bank-owned, and would have sold last fall for around $780K. Perhaps one of the appraisers can verify that. My friend, who is a neighbor of said house, said it was in original condition, and in need of updates. The new owners did a big makeover the day after it closed.

What will the 15% price drop do to the neighborhood? Will this be considered an anomaly, or will buyers of future houses in that neighborhood make offers based on the $660K sales price?

Price history (Country Creek Rd, Poway, foreclosed home)
06/07/2006: $659,885 (realtor sale week of Auction)
04/06/2004: $725,000
09/27/2000: $395,000

[Bugs]

If memory serves, I remember seeing this property a few months back while reviewing an appraisal of another house in that neighborhood. It was an active listing at the time, and I used it to impeach an appraisal of another tract home nearby that had been overappraised for $900k. Small world.

I see no indication in the public records of any sale between 2004 and the recent foreclosure. The bank currently owns the property. There was a listing prior to the foreclosure that said the owners were RE agents and the price might be subject to lender approval of a short sale. Obviously that didn’t work out for them.

There was a slightly larger model on that same street that just sold in 04/2006 for $730,000, so I imagine that would be one of the operative sales in that neighborhood right now, and I’m pretty sure there are others. So far, this foreclosure hasn’t yet been resold, or at least there’s no indication of that in the public records or the MLS. this latest trasnactions wasn’t a market sale so I highly doubt it will have any affect on pricing there. The expired listing only demonstrates that the market didn’t accept it as a short sale at $749k. For all I know it might be a mover at $725k. Or not. I imagine the bank will relist it pretty soon, so I guess we’ll see.

[rankandfile]

SDAppraiser, forgive me, but you come across as a pompous @ss. How’s that for a matter-of-fact analysis? IMHO you are like some others on this site that are fortunate enough to have so much information related to housing; yet you take every opporunity to shove it other’s faces when they dare make a statement based on (gasp) less than stellar info or (gasp) a hunch. And if I read another post where you tell us that you get paid for appraisals I am going to vomit.

You have the unmitigated gaul to criticize a poster for being nosy when you yourself snooped around about an acquaintance. You then proceeded to out her on this forum by discussing her excessive nipple hair! (Which I can’t believe is not a joke, by the way.) What’s your motivation in doing that? Can’t you express your point by any other means? That’s why analogies were invented.

You are right in a way – many people like us don’t have the info that you do. However, does that mean we have to sit tight-lipped or perform some lengthy analysis before we are allowed to make a point of our own? Flaws can be found in nearly all arguments or statements, even those made by you “experts” who have access to all the information.

PS: I don’t mind large rear bumpers or black nipple hair. Just not both at the same time 🙂

[powayseller]

Bugs – One of the Country Creek neighbors and I planned to attend the April auction. I spoke with the listing agent a few days before the auction, and he told me he had just found a buyer and was sure the bank would accept the sale.

Yet it is still listed on foreclosure.com as bank owned, so the sale didn’t go through? The house on the next block, Poway Valley Road, was probably the one you examined, and that is the house that had the makeover before the people moved in. I got them mixed up.

What happens now to the Country Creek house? Why did foreclosure.com list the $660K sale price if it didn’t sell? I checked zillow, and here is the sales history of the house
06/07/2006: $659,885
04/06/2004: $725,000
09/27/2000: $395,000

There’s another preforeclosure on Twin Peaks Road, just a couple blocks away, and I noticed the owner finally listed it for sale.

Most of the Poway NODs are in the lower-priced neighborhoods off Garden Road and Pomerado Rd, although I have seen them in Bridlewood, Lomas Verdes, and other areas.

rankandfile – I was joking about my rear bumper. I wear a size 0, so there isn’t much room for a sticker.

[Bugs]

I don’t know why the bank would foreclose if they had a short sale in the works. The short sale anywhere near the original sale price would seem to me to have been the better alternative for the bank unless they actually thought it was worth a lot more. Now they have holding costs and a timeline to get rid of this property.

The assignment I did during which I saw this then-active listing was 3 months ago and I haven’t been back there since. I don’t know anything about the other properties you’re talking about. It was just a coincidence I happened to have analyzed this listing. Sorry.

[powayseller]

This is becoming interesting as an example of how a lender handles an REO. The data shows the property is bank owned (Wells Fargo), seller contact is Wilshire Credit Corp, alternate contact is Quality Loan Service Corp.

Going back through the history, the NOD filing shows the lender is Wilshire Credit, trustee is Quality Loan Service. No mention of Wells Fargo. Why does Wells Fargo suddenly show up?

What does this tell us? The realtor told me within 5 days of the planned auction, that he had an offer and was getting ready to call the lender to discuss it. Perhaps the offer fell through?

The For Sale sign is no longer up. Isn’t the bank better off putting the house back up for sale, or will they go to auction?

[Bugs]

I would think they would just re-list it. I’m not sure there are any advantages to an auction, but then again marketing foreclosures is way outside my narrow field of understanding.

[Author]

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