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May 31, 2007 at 5:40 AM in reply to: 4S ranch Silhouette starts to sell model homes! will it stop selling future houses?? #55675April 1, 2007 at 8:32 PM in reply to: Almost back from vacation and wondering about something #48872
robyns_song
ParticipantI haven’t come across any instances yet where any of the banks have sued for the net loss after the short sale, BUT they do have to approve the short sale amount. If the bank does incur a loss (which they nearly always do), they can write it off, but the borrower has to pay taxes on that amount come April (the amount of the total debt at the time less the selling price, not just the difference in the prirncipal balance)!
ParticipantWe just drove out there today and I can’t believe people are actually buying those up! $1.1 Million for 3700 sqft. That’s insane! We did note a few For Sale signs up already. I can’t believe someone would blow a million dollars on a house that size…actually, I can’t believe someone would spend a million dollars on a house to begin with.
ParticipantThe problem with selling now is that all of the new houses are larger, nicer, and selling for less. The builders are undercutting the used market so that they can get out quickly at this point.
You’re going to take a hit right now but a lot less of a hit than selling later.
Remember the ugly crash in Austin, TX with the Saving & Loans? That’s what we’re looking at…
ParticipantWe like plan 3, The Dreamer (named appropriately). Another $100K+ drop by the end of the year would be nice! I know they have a total of 8 phases and they’re working on building phase 2 right now…do you know when they have to finish? They are going SO slow compared to all other builders…do you know if there’s a reason why they aren’t selling?
ParticipantActually outtamojo, they built Amante at 1825 for $550K…but those weren’t very high quality, in my opinion. Amante is sold out of all phases, but it won’t be too much longer before you’ll find you 2100 for $550K. There’s that one house that’s in foreclosure listed on craigslist (and everywhere else)…it’s 1862sqft wanting to do a short sale for $549K. If you atleast wait until after the summer, you shouldn’t have a hard time finding a 2100 sqft home for less $.
ParticipantThings aren’t always what they seem…
Part of the reason why real estate went for so little, though, is that the lenders weren’t bidding and the foreclosure sale. The problem with Detroit property is that nearly every property (even in good areas) gets stripped and filled with vagrants as soon as it becomes vagrant. It costs more for the lenders to maintain the property and they always suffer severe theft/vandalism losses. As such, the lenders don’t usually competitvely bid at the sale…they’d rather the property sell to a third party and take the financial loss than take back a property that will soon be destroyed by vagrants and become a liability.
This is something that would not likley happen in San Diego. Don’t get your hopes up about properties selling for little-to-nothing. Lenders have too much invested to let them go for a few thousand.
Don’t forget that the lender still has to approve the bid at Detroit’s sale AND there’s a six month period of redemption in Michigan. So, the person who purchased the property for next-to-nothing might not actually keep the property if the lender doesn’t agree that the bid was high enough or if the borrower is able to redeem the loan in the next six months. Even if the lender approves the loan, the high bidder cannot legally take possession of the property until the 6 month redemption expires. ALSO, a lot of the properties would have sold occupied since an eviction cannot begin until after the foreclosure sale and the redemption expires. This means that in Michigan, you can essentially get a mortgage and live free for at least a year.
ParticipantSdcellar, thanks for the info on when the foundations were poured. We were walking around on them trying to find a date, but weren’t able to locate one. At what points last year did they reduce their prices?
We actually live off of Alva Rd, less than a mile from where Silhouette is building, so we’ve been tracking them lately…there’s a whole lot of nothing going on.
ParticipantEveryone wants such precise details!
I think it was two weeks ago (definately no more than three). We’d looked at the John Laing homes before and the office in the previous weeks had been full but it was a Sunday afternoon and they were pretty slow. They had only one other couple there who was asking a lot of questions about prices of the upgrades (which they declined to show us a copy of the price list…they apparently won’t provide that until after you sign the papers). Anyway we were talking with an older lady there for probably 20-30 minutes about the area and let her know we were very skeptical about the market…yada yada yada. We pointed out that the house they had availble just fell out of escrow. In the end, she asked if we were interested and we let her know that we liked it, but didn’t think it was worth more than $650K so she said that she could work it out. Were it not for the high mello-roos and property taxes we would have been tempted.
We have a friend who is an agent who thought we were insane for not trying to get them to throw in the mello roos and take the offer (she said that the builders will sometimes pay the mello roos if you ask them to–I’m not sure how common that is). Like I said, we’ve never delt with builders before and weren’t aware that it was unusual for them to negotiate.
ParticipantIt was John Laing. I was actually suprised that they had the lowest price/sq ft as well. They Laing homes appeared to be of the highest quality and best laid-out, in my opinion. At the time we were there, one of the last of phase 2 fell out of escrow…so maybe they just wanted to finish out the phase, I’m not really sure. I really don’t know much about purchasing new homes since all that I deal with are pre-forclosures and REOs…so we’ve taken an interest in watching the builders.
We’ve driven by the home sites and it doesn’t look like they’ve made any progress in the past two weeks even though they are supposed to be sold out of phase 2. I would think that the builder would want to hurry and finish so that they can start putting $$ in the bank.
ParticipantA few things…
The seller would have some rights to negotiate. Of course, the borrower would want to recoup some of his/her loss. They can get authorization from their bank to accept an offer for less than the principal balance (what they owe), but not all lenders will do this.
In the event that they owe more than the property is worth, they can *sometimes* (depending how deep they are) sell the house for a lower price and eat the rest to try (take out a loan for the remainder) and save their credit.
In either circumstance, the benefit for the seller would be that they could salvage some sort of dignity out of their credit…however much is left. Having delinquent payments is better than having a foreclosure.
You would be suprised, though…sometimes a loan is delinquent because the borrower has passed on. In these circumstances the property sometimes goes to a trust or probate…though there are times that you would be able to negotiate a price with the next-of-kin who would want to just get the property off his/her back.
Participant“You mentioned that you didnt think the property was worth more than 650K ?….Just how did you arrive at that number ?”
We just picked an arbitrary number to see how hungry they were. Since they jumped on it pretty quickly, they obviously weren’t doing too well in the sells department.
ParticipantFor some reason, all of these articles talking about people going through foreclosure say that the borrowers “didn’t understand” the terms of the mortgage. What didn’t they understand…that they had to pay the money back? They didn’t think that creative financing had a price? Why is it that everyone seems to take the side of the dumb borrower and paint the lender as evil?
ParticipantEven if the winning bid sells third party (to someone other than the borrower and the bank), the bid still has to be approved by the bank in the end. So, there is always a chance that even though you walk away from the auction the highest bidder, the bank could still reject your bid. This happens in instances where the bank may not have placed a full credit bid (a bid less than the amount owed). Also, keep in mind that you need cash in hand at these auctions. In a few instances (usually advertised before hand) you can pay within 30 days of the sale as long as a certain percentage is put down as a nonrefundable deposit, but in general, you need to show up with a cashier’s check. There’s also always the chance that the foreclosure sale could be recinded and you could no longer own the home as well…this sometimes happens if the borrower files bankruptsy the day (or a few days) before the sale and the bank is unaware.
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