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May 21, 2007 at 11:36 AM in reply to: Question for sdr, jim, rustico, bugs or other realtors and appraisers #54106May 21, 2007 at 11:36 AM in reply to: Question for sdr, jim, rustico, bugs or other realtors and appraisers #54118
SD Realtor
ParticipantHi Rustico –
As an electrical engineer I am anal about data and numbers. So the link to the foreclosure website was cool but man, the NODs and REOs varied by like 40% compared to the info I was getting from my title officer. So I need to raust my title officer and see why they are not getting me all of the recording information. I was curious to see if others who have connections with title companies are getting correlated data.
I guess somehow I have given the posters an impression that I am not bearish on the market. I am most likely as bearish as you it is just that in some cases I guess I am more… forgiving.. (for lack of a better term) to some people considering making a purchase as long as some of the basic caviots for which I have repeated ad nauseum are adhered to.
What you said is really true, average first time buyers REALLY REALLY need serious counseling and all you can do is give them guidance but you cannot watch them 24 hours a day. I told this story many months ago on Piggington… First time buyers down in Eastlake of all places. I worked with them for about 3 months, showed them a zillion properties, begged them not to buy, went to the credit union with them many times to work with the loan officer, set a limit on the prices they should offer, did an entire financial spread sheet of their monthly budget, the whole 9 yards.. made 5 or 6 lowball offers on places, offered them a smoking rebate… Did everything I absolutely could to counsel them to not buy, or at least if they were gonna buy to drive a hard bargain. In the end they got tired of all the lowball offers being rejected, went out one day and put a full price offer on a home that had PREVIOUSLY expired and was back on the market 1 day. The worked directly with the listing agent who held the open house…
What can ya do… I expect to see the house getting foreclosed on in another year or two…
As you have seen people will buy. I don’t get it, I don’t agree with them, and it confounds me. However they are out there. Shoot I will be one of them as I will end up buying before I want to… Of the clients I have had recently that have sold, many of them have been smart enough to sell and then rent…A few of them though, did end up buying. I told them my thoughts, ran through some projections of depreciating scenarios (up to 10% a year for 4 years from now) and they still moved forward.
SD Realtor
ParticipantTemek your strategy is quite sound. Couldn’t agree more.
SD Realtor
ParticipantTemek your strategy is quite sound. Couldn’t agree more.
SD Realtor
ParticipantSorry didn’t notice this was an old post…
ParticipantSorry didn’t notice this was an old post…
ParticipantTemekuT – In the event of any default, there really is no such thing as an irrevocable deposit. That is not to say I haven’t seen cases where sellers didn’t keep deposit money that exceeded the actual damages they incurred due to the default. I agree with you, and frequently do (as I did with the escrow described above) demand that the earnest money be conveyed to the seller upon release of contingencies and that it be non-refundable.
Now the reality of the situation is that if there is a default and the seller keeps earnest money, the seller is really entitled to only keep money to cover real damages incurred. So as a seller you need to be able to prove that the monies kept are for realized loss or expense incurred. Again, most buyers don’t know it or have the wherewithall to fight it in court. This is the case even if in the contract you specified that the deposit is not refundable and even if it has already been conveyed to the seller. Again, most buyers don’t know or understand this.
Rustico – True there has been no failure to perform. My advice was to insulate the seller against additional expense incurred in the case of a late closing. If closing day comes and the buyer cannot perform it is well to late to try to push an ammendment through at that time to get compensated. If you wait until then you will not get anything. Also if the contingency period has already passed there is no risk at all to try to establish this ammendment. There is not any way for the seller or the listing agent to get any insight into the progress at the lender. Lenders will not even talk to anyone except the mortgage broker. So, if you 100% trust the mortgage broker then okay, don’t do anything, yet I don’t trust most mortgage brokers so I would advise to do whatever possible I can to insulate yourself from their behavior.
SD Realtor
ParticipantTemekuT – In the event of any default, there really is no such thing as an irrevocable deposit. That is not to say I haven’t seen cases where sellers didn’t keep deposit money that exceeded the actual damages they incurred due to the default. I agree with you, and frequently do (as I did with the escrow described above) demand that the earnest money be conveyed to the seller upon release of contingencies and that it be non-refundable.
Now the reality of the situation is that if there is a default and the seller keeps earnest money, the seller is really entitled to only keep money to cover real damages incurred. So as a seller you need to be able to prove that the monies kept are for realized loss or expense incurred. Again, most buyers don’t know it or have the wherewithall to fight it in court. This is the case even if in the contract you specified that the deposit is not refundable and even if it has already been conveyed to the seller. Again, most buyers don’t know or understand this.
Rustico – True there has been no failure to perform. My advice was to insulate the seller against additional expense incurred in the case of a late closing. If closing day comes and the buyer cannot perform it is well to late to try to push an ammendment through at that time to get compensated. If you wait until then you will not get anything. Also if the contingency period has already passed there is no risk at all to try to establish this ammendment. There is not any way for the seller or the listing agent to get any insight into the progress at the lender. Lenders will not even talk to anyone except the mortgage broker. So, if you 100% trust the mortgage broker then okay, don’t do anything, yet I don’t trust most mortgage brokers so I would advise to do whatever possible I can to insulate yourself from their behavior.
SD Realtor
ParticipantJWM what I consistently say is that if the decision is purely one of economics then it is 100% of a no brainer to not purchase the house. However to not say that there are other factors to consider when purchasing a home is a fallacy. I am not arguing the fact that the market will not depreciate. As I said, I do believe some areas/types of homes will get hit harder then others. What is clearly evident is that there are some people who are going to buy knowing full well of what is happening. No matter how much it grates against most people who post here, there are people who want to buy now and will buy now knowing that the market will depreciate. Evidently you don’t like that but you don’t deal with these people, I do as do other Realtors. I just got back from an appt in Escondido. This guy is selling his home and just inherited enough money to buy a home for cash in RB as he wants to get in the Poway school district. He is an engineer, and he fully understands the market dynamics. He is not postponing his purchase even though he knows what is happening. It is what he wants, and what his wife wants and it is contrary to economic wisdom. He is doing it regardless.
So if you want to call it talking out both side of my mouth, which is EXACTLY what you did call it, then fine. Talk to my buyers who just bought a home in Sabre Springs, or some other buyers of mine who bought a place up in sdr’s neighborhood off of Olivenhain. In all those cases I pointed out to them that the market is depreciating and they would get better deals in the next few years. They didn’t WANT to wait. They can afford the homes, they are buying them long term, and they don’t plan to move soon. They aren’t doing what you would do or what alot of other people who would post here do. They know I rent, they know I have advised them to hold off.
I absolutely agree with you about this bubble, the causes of it, and the declines. My postings about why it may be okay to buy are always based on the same thing, if you can afford it, if you will be owning it for a long time, and if you really love it. I don’t use the tired argument about tax breaks, I always acknowledge there will be a decline.
SD Realtor
ParticipantJWM what I consistently say is that if the decision is purely one of economics then it is 100% of a no brainer to not purchase the house. However to not say that there are other factors to consider when purchasing a home is a fallacy. I am not arguing the fact that the market will not depreciate. As I said, I do believe some areas/types of homes will get hit harder then others. What is clearly evident is that there are some people who are going to buy knowing full well of what is happening. No matter how much it grates against most people who post here, there are people who want to buy now and will buy now knowing that the market will depreciate. Evidently you don’t like that but you don’t deal with these people, I do as do other Realtors. I just got back from an appt in Escondido. This guy is selling his home and just inherited enough money to buy a home for cash in RB as he wants to get in the Poway school district. He is an engineer, and he fully understands the market dynamics. He is not postponing his purchase even though he knows what is happening. It is what he wants, and what his wife wants and it is contrary to economic wisdom. He is doing it regardless.
So if you want to call it talking out both side of my mouth, which is EXACTLY what you did call it, then fine. Talk to my buyers who just bought a home in Sabre Springs, or some other buyers of mine who bought a place up in sdr’s neighborhood off of Olivenhain. In all those cases I pointed out to them that the market is depreciating and they would get better deals in the next few years. They didn’t WANT to wait. They can afford the homes, they are buying them long term, and they don’t plan to move soon. They aren’t doing what you would do or what alot of other people who would post here do. They know I rent, they know I have advised them to hold off.
I absolutely agree with you about this bubble, the causes of it, and the declines. My postings about why it may be okay to buy are always based on the same thing, if you can afford it, if you will be owning it for a long time, and if you really love it. I don’t use the tired argument about tax breaks, I always acknowledge there will be a decline.
SD Realtor
ParticipantRustico, Tone –
My recommendation would be to move forward as you are doing. Make an immediate ammendment to escrow stating that in the event of a late closing that you will be compensated for all of the damages incurred including your PITI, as well as any additional costs for the arrangements you are making. It may be in your best interest to attempt to ask for additional deposit money as well. This doesn’t protect you in the event of a full on default but it does help cover your expenses in the event of a late closing.
Fortunately we smelled a rat and did this and were covered financially. That is about all you can do.
SDA no the broker did not have those initials. Both the agent and the mortgage broker operated in the south part of the county.
ParticipantRustico, Tone –
My recommendation would be to move forward as you are doing. Make an immediate ammendment to escrow stating that in the event of a late closing that you will be compensated for all of the damages incurred including your PITI, as well as any additional costs for the arrangements you are making. It may be in your best interest to attempt to ask for additional deposit money as well. This doesn’t protect you in the event of a full on default but it does help cover your expenses in the event of a late closing.
Fortunately we smelled a rat and did this and were covered financially. That is about all you can do.
SDA no the broker did not have those initials. Both the agent and the mortgage broker operated in the south part of the county.
ParticipantTone, I am “hopefully” closing an escrow in Lemon Grove Monday that has been a nightmare. 100% financing and a FICO score in the high 600’s. I did not know the mortgage broker at all nor did I know the agent on the other side. Contingencies were removed on time. When it came time to get loan docs delivered we got a few different stories from the mortgage broker. We never found out what happened but it appears that the original lender punted on the loan. My gut feel was that the mortgage broker was a sheister and was overstating the buyers assets or the broker did not note that the lender may have had stricter standards then in the past. Somehow, someway he got the loan pushed through another lender. So here we are 2 weeks past the original COE and the loan docs were signed Friday and hopefully we will fund Tuesday. The buyers agent had to pay my sellers damages (PITI and furniture rental) because the buyer herself had no funds to pay them.
So yes while it is a high probability that once contingencies are released that things will close accordingly, it is not a slam dunk. In this case the buyer was hispanic and did not know english, the buyers agent was hispanic as was the mortgage broker. I am 100% sure that the two of them took heavy advantage of the unknowing buyer.
SD Realtor
ParticipantTone, I am “hopefully” closing an escrow in Lemon Grove Monday that has been a nightmare. 100% financing and a FICO score in the high 600’s. I did not know the mortgage broker at all nor did I know the agent on the other side. Contingencies were removed on time. When it came time to get loan docs delivered we got a few different stories from the mortgage broker. We never found out what happened but it appears that the original lender punted on the loan. My gut feel was that the mortgage broker was a sheister and was overstating the buyers assets or the broker did not note that the lender may have had stricter standards then in the past. Somehow, someway he got the loan pushed through another lender. So here we are 2 weeks past the original COE and the loan docs were signed Friday and hopefully we will fund Tuesday. The buyers agent had to pay my sellers damages (PITI and furniture rental) because the buyer herself had no funds to pay them.
So yes while it is a high probability that once contingencies are released that things will close accordingly, it is not a slam dunk. In this case the buyer was hispanic and did not know english, the buyers agent was hispanic as was the mortgage broker. I am 100% sure that the two of them took heavy advantage of the unknowing buyer.
SD Realtor
ParticipantThis is sdr’s backyard so he has more insights then me. The MLS states that this home went through to cycles of attempted sales. Both listings expired. First time through was back in 5/06. He started at 1.179M and by the time the listing expired he was at 899k to 949k. Then he tried again in 11/06 and tried at 949k to 1.199M. The home was listed by Chris Lin.
Now when I looked at the tax roll, there is some definite peculiarities. Note that the tax roll we view on the MLS is woefully incomplete.
On 5/18/06 there is a quit claim deed signed where the sellers were noted as Russell Clark and Chris L and the buyer is noted as Russell Clark. Then another quit claim deed on 6/9/06 where both the buyer and seller are noted as Chris Lin. Then on 4/20/07 the date of the sale there is a grant deed where the seller is the Meishia Trust and the buyer is Russell Clark. Then that same day there is another quit claim deed where the seller is Russell Clark and the buyer is Russell and Sharon Clark.
Oh and on 4/20/07 there is a mortgage recorded for the amount of 702k from Shea Mtg.
So what can we deduce? That this was definitely not a “sale” in terms of what we all consider a property changing hands. This was most likely some partners that owned the house together and one bought the other out or something of that nature.
That is at least my guess which could be very wrong.
sdr do you know Chris Lin?
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