Shadow Sales ?

[Effective Demand]

[quote=Rich Toscano]

I don’t think it’s a non-issue. Maybe they are going to resell it, or maybe not, or maybe they will just trickle it out, etc. Regardless, if there are shadow sales offsetting shadow inventory I think that’s significant.[/quote]

“Shadow sales” would only matter if the inventory isn’t coming back on market. If they are selling the homes off the MLS they are still taking out buyers. If you find a bulk sale where they are renting them out that would be news but that is a very inefficient (per unit cost of maintenance, insurance, filling vacancies, etc are all much higher for SFH) way of being in the rental market and I haven’t heard of any institutional desire for doing that outside of the GSEs talking about renting their REOs back to the owners in some states.

[quote=Rich Toscano]
So it seems like the consensus here is that bulk buyers wouldn’t have to record the sale, and there may indeed be shadow sales taking place? [/quote]

The consensus? I see it mentioned once and I disagree completely. It isn’t legally required you record your deed (though anyone financing your purchase can require you to do so) you would do so for your legal protection. Since the bulk acquirer isn’t living in the property (which, like recording, provides construtive notice) then they are subject to losing the property through fraud or mistakes.

For example, lets say Bulk seller sells a property to Buyer A and buyer A doesn’t take possession and doesn’t record the deed. Then due to a clerical error Bulk seller sells the property again to Buyer B.. buyer B records the deed. Buyer B owns that property now (yes, bulk seller would owe buyer A the money but owing and getting money are two different things).

It would be a stupid risk to take with no reward for the buyer. You record your deed for your legal protection.

[quote=Rich Toscano]
It would be cool if we could get some data on this but I don’t have the first idea how…

rich[/quote]

I agree the data would be hard to find, because it doesn’t exist. These sales either exists and they aren’t recording it.. and that is happening in sufficient volume to matter to the marketplace. Not very likely at all. Or these sales exist and they are recording the deeds in which case Dataquick picks them up in their numbers. Watching the difference between these two charts:
http://www.dqnews.com/Charts/Monthly-Charts/CA-City-Charts/ZIPCAR.aspx

And:
http://www.dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx

Would give you the difference between MLS and non-MLS sales (the 2nd chart should always be higher). There is a timing issue between those two charts since the first goes off when the MLS says a property is sold and the second goes off when the deed is recorded..

I really think its a non-issue though and have yet to hear any compelling reasons to the contrary. In my humble market watching opinion the only “shadow sales” lost by current metrics are those 3rd party sales at the courthouse steps in which the investor plans on renting it out or the house was bought by a person planning on living in the home. In this scenario a trustee deed would be recorded and it wouldn’t be marked as a sale by DQ (it wasnt on the MLS so obviously the CAR wouldnt pick up the sale eitehr).

[Rich Toscano]

What you say about the deeds makes sense. If this is the case, then it is indeed a non-issue because we just aren’t seeing that many sales.

However I think you are too quick to dismiss the importance of a property passing from weak hands (banks) to strong hands (investors who may keep them off the market for a while). This may or may not be happening, but if it were, it would not be a “non-issue.”

As to whether it is happening… I agree that there doesn’t seem to be evidence of it, but I don’t really know enough about the procedural aspects of bulk buying to have an opinion of my own.

Rich

[Rich Toscano]

What you say about the deeds makes sense. If this is the case, then it is indeed a non-issue because we just aren’t seeing that many sales.

However I think you are too quick to dismiss the importance of a property passing from weak hands (banks) to strong hands (investors who may keep them off the market for a while). This may or may not be happening, but if it were, it would not be a “non-issue.”

As to whether it is happening… I agree that there doesn’t seem to be evidence of it, but I don’t really know enough about the procedural aspects of bulk buying to have an opinion of my own.

Rich

[Rich Toscano]

What you say about the deeds makes sense. If this is the case, then it is indeed a non-issue because we just aren’t seeing that many sales.

However I think you are too quick to dismiss the importance of a property passing from weak hands (banks) to strong hands (investors who may keep them off the market for a while). This may or may not be happening, but if it were, it would not be a “non-issue.”

As to whether it is happening… I agree that there doesn’t seem to be evidence of it, but I don’t really know enough about the procedural aspects of bulk buying to have an opinion of my own.

Rich

[Rich Toscano]

What you say about the deeds makes sense. If this is the case, then it is indeed a non-issue because we just aren’t seeing that many sales.

However I think you are too quick to dismiss the importance of a property passing from weak hands (banks) to strong hands (investors who may keep them off the market for a while). This may or may not be happening, but if it were, it would not be a “non-issue.”

As to whether it is happening… I agree that there doesn’t seem to be evidence of it, but I don’t really know enough about the procedural aspects of bulk buying to have an opinion of my own.

Rich

[Rich Toscano]

What you say about the deeds makes sense. If this is the case, then it is indeed a non-issue because we just aren’t seeing that many sales.

However I think you are too quick to dismiss the importance of a property passing from weak hands (banks) to strong hands (investors who may keep them off the market for a while). This may or may not be happening, but if it were, it would not be a “non-issue.”

As to whether it is happening… I agree that there doesn’t seem to be evidence of it, but I don’t really know enough about the procedural aspects of bulk buying to have an opinion of my own.

Rich

[CA renter]

I believe these “shadow sales” are indeed taking place in fairly large numbers, and that some investigative work needs to be done.

There are many powerful interests who want to see the banks made solvent. It’s obvious that the massive interventions we’ve seen so far were intended to buy some extra time, not solve the problem. It would be perfectly logical if the govt/banks were working to off-load much of this inventory at a higher price — currently caused by the massive supply/demand distortions of the credits, low rates, withholding of inventory, etc.

[CA renter]

I believe these “shadow sales” are indeed taking place in fairly large numbers, and that some investigative work needs to be done.

There are many powerful interests who want to see the banks made solvent. It’s obvious that the massive interventions we’ve seen so far were intended to buy some extra time, not solve the problem. It would be perfectly logical if the govt/banks were working to off-load much of this inventory at a higher price — currently caused by the massive supply/demand distortions of the credits, low rates, withholding of inventory, etc.

[CA renter]

I believe these “shadow sales” are indeed taking place in fairly large numbers, and that some investigative work needs to be done.

There are many powerful interests who want to see the banks made solvent. It’s obvious that the massive interventions we’ve seen so far were intended to buy some extra time, not solve the problem. It would be perfectly logical if the govt/banks were working to off-load much of this inventory at a higher price — currently caused by the massive supply/demand distortions of the credits, low rates, withholding of inventory, etc.

[CA renter]

I believe these “shadow sales” are indeed taking place in fairly large numbers, and that some investigative work needs to be done.

There are many powerful interests who want to see the banks made solvent. It’s obvious that the massive interventions we’ve seen so far were intended to buy some extra time, not solve the problem. It would be perfectly logical if the govt/banks were working to off-load much of this inventory at a higher price — currently caused by the massive supply/demand distortions of the credits, low rates, withholding of inventory, etc.

[CA renter]

I believe these “shadow sales” are indeed taking place in fairly large numbers, and that some investigative work needs to be done.

There are many powerful interests who want to see the banks made solvent. It’s obvious that the massive interventions we’ve seen so far were intended to buy some extra time, not solve the problem. It would be perfectly logical if the govt/banks were working to off-load much of this inventory at a higher price — currently caused by the massive supply/demand distortions of the credits, low rates, withholding of inventory, etc.

[sdrealtor]

So here’s one I know about. The infamous Bressi Ranch models purchased by Model Home Partners LLC (a bunch of LA Lawyers) bought a bunch of them all specutively putting 20% and walked away when they were severely underwater. A friend of mine was about to rent one (he already had given a prop mgmnt company a deposit) when he told me and I said you’re nuts, donnt you know there is an auction next week on them. Turns out they were financed by La Jolla Bank. They were going to negotiate with him and sell it to him directly. They wanted 600K and I told him a great deal would be 550K. He was negotiating directly with the bank when they said forget it, we are selling them all to one investor. They are starting to come on the market now. The one he was looking at was listed at 650 to 699K and sold immendaitely.

Granted this is a small local bank but its a real example of a bulk sale (I think there were about 10 of them). My guess is they make $150K to $200K a piece on them.

[sdrealtor]

So here’s one I know about. The infamous Bressi Ranch models purchased by Model Home Partners LLC (a bunch of LA Lawyers) bought a bunch of them all specutively putting 20% and walked away when they were severely underwater. A friend of mine was about to rent one (he already had given a prop mgmnt company a deposit) when he told me and I said you’re nuts, donnt you know there is an auction next week on them. Turns out they were financed by La Jolla Bank. They were going to negotiate with him and sell it to him directly. They wanted 600K and I told him a great deal would be 550K. He was negotiating directly with the bank when they said forget it, we are selling them all to one investor. They are starting to come on the market now. The one he was looking at was listed at 650 to 699K and sold immendaitely.

Granted this is a small local bank but its a real example of a bulk sale (I think there were about 10 of them). My guess is they make $150K to $200K a piece on them.

[sdrealtor]

So here’s one I know about. The infamous Bressi Ranch models purchased by Model Home Partners LLC (a bunch of LA Lawyers) bought a bunch of them all specutively putting 20% and walked away when they were severely underwater. A friend of mine was about to rent one (he already had given a prop mgmnt company a deposit) when he told me and I said you’re nuts, donnt you know there is an auction next week on them. Turns out they were financed by La Jolla Bank. They were going to negotiate with him and sell it to him directly. They wanted 600K and I told him a great deal would be 550K. He was negotiating directly with the bank when they said forget it, we are selling them all to one investor. They are starting to come on the market now. The one he was looking at was listed at 650 to 699K and sold immendaitely.

Granted this is a small local bank but its a real example of a bulk sale (I think there were about 10 of them). My guess is they make $150K to $200K a piece on them.

[sdrealtor]

So here’s one I know about. The infamous Bressi Ranch models purchased by Model Home Partners LLC (a bunch of LA Lawyers) bought a bunch of them all specutively putting 20% and walked away when they were severely underwater. A friend of mine was about to rent one (he already had given a prop mgmnt company a deposit) when he told me and I said you’re nuts, donnt you know there is an auction next week on them. Turns out they were financed by La Jolla Bank. They were going to negotiate with him and sell it to him directly. They wanted 600K and I told him a great deal would be 550K. He was negotiating directly with the bank when they said forget it, we are selling them all to one investor. They are starting to come on the market now. The one he was looking at was listed at 650 to 699K and sold immendaitely.

Granted this is a small local bank but its a real example of a bulk sale (I think there were about 10 of them). My guess is they make $150K to $200K a piece on them.

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