OT: Shadow inventory research

[Username]

Hey all,

I am wondering if anyone knows where to investigate shadow inventory (Homes which are bank owned but not on the market for sale yet). Websites, periodicals, anywhere you can think of to find a list of shadow inventory or how to research and discover homes which are part of the shadow inventory.

Thank you in advance,

Please don’t tell me to see a Realtor.

[sdduuuude]

Check the shadows ?

[sdrealtor]

Guys like this typically think they are smarter than everyone else. The beleive they can just walk onto a very competitive landscape and take what they want. He/she has quite a bit to learn about the way things really operate out there.

[lpjohnso]

http://www.realtytrac.com ?

[bearishgurl]

Username, if you think you will be able to purchase “equity” from a “distressed” home-debtor (whether in foreclosure or not), think again. Even if the home-debtor DOES have equity, there are many pitfalls to this type of transaction, namely a few pesky “legalities,” including the ability of the home-debtor to claim YOU took advantage of him/her and legally recover title to their property.

You would do well to study these types of transactions carefully before “knocking on doors” and attempting to “jump in with both feet.”

Since you are asking these questions here in the manner you are asking them in, it is apparent that you have a lot of “studying” to do. Instead of listening to fast-talkers on infomercials selling books and CDs, I would suggest you begin your “studies” by taking RE Principles and then RE Law at your local community college.

[Coronita]

Ask Robert Kiyosaki, or read his book. Rich Dad/Poor Dad.

[bearishgurl]

[quote=flu]Ask Robert Kiyosaki, or read his book. Rich Dad/Poor Dad.[/quote]

LOL 🙂

[briansd1]

I’m with OP. It doesn’t hurt to do research. Information is power and I find it intersting to lookup things.

I research the condo buildings where I want to buy. Sometimes I spend hours at the county recorder’s office to figure out who owes how much (Realtors have that info in Realist but they are reluctant to give you info. Title companies have that info, but you’d better have a buddy who will do research for you).

For example, you can spend about 1 hour at the County Recorder’s office to find out which of your neighbors, on your street, are underwater. You might think of them differently when you see them driving up in their new SUVs.

In my mind, anything that is underwater is shadow inventory.

43% in 2009
http://www.voiceofsandiego.org/survival/article_e943ebfa-8585-575c-a1d5-cc3e1e1fd905.html

Let’s say about 1/3 today.
http://www.utsandiego.com/news/2011/dec/02/numbers-underwater-homes-calif/

The question is when those underwater houses hit the market. Depending on the economy, it may be soon or a trickle over a period of years and years.

Redfin has a feature that will show you foreclosed but not listed houses.

[Coronita]

http://piggington.com/looks_like_pigglords_will_have_competition_from_bank_of_americas

[Jazzman]

Username, you have asked the million dollar question. There is no clear definition of the shadow inventory, which might partly explain why it has been labeled a myth. I think your best bet would be to research current listings, and go back over several years. Estimates of the shadow inventory are wildly different …anything from 3-10 million, and it really will depend on what you include in that number. I like to think of it as any home that would ordinarily be on the market, but is not due to the housing bubble and the ensuing economic downturn. If you just include those homes which lenders are said to be hording, you are on a hiding to nothing. While their number may be large, the important thing is how many appear as listings at any given moment. Any home that has received a Notice of Default can potentially add to the number, and you can check that at http://www.foreclosureradar.com/ However, how many sellers have decided to forestall putting their homes on the market is unknown. One thing that is certain, is that inventory levels are low which a source of frustration for everyone. Some argue this will affect prices upwardly, but I think that is wishful thinking on behalf of the industry. Just as likely, is a flat to declining market due to buyers disgruntled with lack of quality homes to choose from.

[sdrealtor]

FWIW, the quantity of bank owned homes not one the market is very insiginificant in SD County. Give me a ZIP code and I’d be happy to tell you how many there are.

[bearishgurl]

[quote=Jazzman]Username, you have asked the million dollar question. There is no clear definition of the shadow inventory, which might partly explain why it has been labeled a myth. I think your best bet would be to research current listings, and go back over several years. Estimates of the shadow inventory are wildly different …anything from 3-10 million, and it really will depend on what you include in that number. I like to think of it as any home that would ordinarily be on the market, but is not due to the housing bubble and the ensuing economic downturn. If you just include those homes which lenders are said to be hording, you are on a hiding to nothing. While their number may be large, the important thing is how many appear as listings at any given moment. Any home that has received a Notice of Default can potentially add to the number, and you can check that at http://www.foreclosureradar.com/ However, how many sellers have decided to forestall putting their homes on the market is unknown. One thing that is certain, is that inventory levels are low which a source of frustration for everyone. Some argue this will affect prices upwardly, but I think that is wishful thinking on behalf of the industry. Just as likely, is a flat to declining market due to buyers disgruntled with lack of quality homes to choose from.[/quote]

Jazzman, my understanding of “shadow inventory” is that is it comprised of those properties which have been defaulted upon (the “trustors” stopped making mortgage payments [1st TD, 2nd TD, 3rd TD or HELOC].) These properties do NOT necessarily have a Notice of Default filed against them.

This is why, in the absence of an NOD and a recent active or expired RE listing, one cannot really tell if a property is “distressed” and thus is potential “shadow inventory” just by looking at the amt and terms of its mtg at the recorder’s office.

Just because a home-debtor might be “underwater” does NOT mean they have defaulted or would default (whether by choice or necessity).

“Shadow inventory” does NOT include those “potential sellers” with equity who can wait for a better day to sell. Why? Because selling, for them, is NOT mandatory. It is a future wish, pipe dream or future need. They only become a serious seller when they put their property on the market and price it at or near what it would fetch today and reduce its price, if necessary, in order to get it sold. If they list it at a particular price to “test the market” and don’t get any offers they would accept and subsequently withdraw their listing, that property is STILL not “shadow inventory.”

And even if a homedebtor DOES default, they may live in “their” property “free” for MANY months (24+) before a NOD is even filed on them! During this time, someone looking at their trust deed(s) in the recorders office would have NO IDEA they were behind in their payments and how much they were behind.

Just because you see terms on a TD at the recorder’s office that YOU wouldn’t sign up for doesn’t mean that those terms are not agreeable to the parties that signed the TD. In the absence of an NOD and “distressed” listing, you would have no way of knowing if that “trustor” was making partial payments or had made a lump sum payment and was catching up with their lender or was in the middle of qualifying for a modification. There is no requirement in CA for mortgage modifications to be recorded.

For example, even after a NOD is filed, the trustors in question could be paying $1800 PI month by agreement with their lender when their TD on file with the public that they should be paying $2700 PI per month and you would have no way of knowing that by viewing the terms of their TD. These trustors may be on a trial or permanent mod program.

I would venture that, in recent years, more than half the NOD’s filed are never acted upon by their beneficiaries. That is, the “redemption period” never ends and there is never a posted trustee’s sale date.

And checking the recorder’s office does NOT reveal whether a property owner has been paying their property taxes on time. Even if they are making their PI pymnts, if their homeowner’s insurance premium is not impounded, they may not be paying that either. They could also be behind on homeowner’s dues and a potential buyer would not know this unless there is a lien filed by the HOA on that property. Even if there IS a lien filed, it doesn’t mean that arrears have not accrued SINCE a lien was filed or that the dues are in the process of being caught up or paid and the lien has not yet been released.

IMO, the only REAL “shadow inventory” that can be tracked is that which has an NOD filed. However, these properties could get very likely get stuck at this stage and never go to sale.

So, in sum, absent a HUD-1 for a closed “distressed” property or an official opening bid amount posted (for a TS to take place within 3 weeks), a buyer or potential buyer would have no way of knowing exactly how much behind (PI and fees) a delinquent trustor really is/was on their principle and interest payments. Further research would have to be conducted as to the status of unpaid taxes, HOA dues and insurance premiums. You, as a “shadow inventory researcher” from the public are not entitled to receive information as to the status of HOA dues and insurance premiums.

I would think the most efficient way to track it today is to follow the trustee’s sale notices, NOD’s that become SS listings or SS listings that become NOD’s. However, that is only a fraction of the true “shadow inventory.”

The $64M questions are “how MUCH behind in PI” and “how MUCH will defaulted-upon lender(s) settle for” (in relation to the property’s actual mkt value). The answers to these questions are unknown by everyone, including listing agents, until a NOS is filed or a SS is finally “approved.”

[SD Realtor]

I think it is an incorrect presumption to think that all underwater property will eventually hit the market.

Lessons learned from the past several years indicate that it is folly to think some tsunami of property will come your way. Programs today are designed for institutions and/or large groups of investors to take advantage of the situation.

Joe consumer is left with the scraps that fall off the table. Quite honestly your best bet is to try to take advantage of trustee sales but you need cash to do that. Paying for a service is a waste of money. Going to the recorders is not a bad idea but for every home you find out information about you have no clue if they are also doing a loan mod or if there is some other workout going on.

So you can spin your wheels for hours, days, or weeks. I am not saying it is not interesting or useful. I am just saying that you need to ask yourself how much is your time worth?

[bearishgurl]

[quote=SD Realtor]…So you can spin your wheels for hours, days, or weeks. I am not saying it is not interesting or useful. I am just saying that you need to ask yourself how much is your time worth?[/quote]

Good post in its entirety, SDR.

[briansd1]

[quote=SD Realtor]I think it is an incorrect presumption to think that all underwater property will eventually hit the market.
[/quote]

Timing is everything… hit the market when?

If we think of shadow inventory as what’s coming in the next 6 months, then no, underwater properties are not all shadow inventory.

[quote=SD Realtor]
Lessons learned from the past several years indicate that it is folly to think some tsunami of property will come your way. Programs today are designed for institutions and/or large groups of investors to take advantage of the situation.
[/quote]

That’s the trickle, trickle that I’m talking about.

Those programs you’re talking about are designed to artificially stabilize the market, hold values, and with the passage of time, increase values so that underwater houses are no longer underwater

Bottom line is that homeowners who have equity will stay and underwater homeowners have incentives to walk.

[quote=SD Realtor]
Joe consumer is left with the scraps that fall off the table. Quite honestly your best bet is to try to take advantage of trustee sales but you need cash to do that.
[/quote]

I’d also suggest placing offers on short sales. If you get lucky the bank may approve your short sale. The bank may like your offer if it’s an owner-occupied offer (theoretically owner occupied houses stabilize values).

[quote=SD Realtor]
Paying for a service is a waste of money. Going to the recorders is not a bad idea but for every home you find out information about you have no clue if they are also doing a loan mod or if there is some other workout going on.

So you can spin your wheels for hours, days, or weeks. I am not saying it is not interesting or useful. I am just saying that you need to ask yourself how much is your time worth?[/quote]

Very true.

It depends on how much research and time you spend doing it. But I suggest going to the County Recorder’s office at least once or twice. Most people don’t even know how the recording process works… It would be educational for 99% of the buyers.

I’m just a leisure walk’s away from the Recorder’s office… so, to me, it’s a walk in the park. 😉

[Author]

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