A problem with foreclosures is that you don't get to go inside of them before you buy, and you buy them As Is, Where Is. So you can't determine ahead of time if the floor plan works for you, if the systems are operable, a lot of things that would be useful to know about beforehand.
While you wind up not enjoying your life in that home, you can look upon the amount you saved as compensation for that discomfort. Whether it's satisfactory is, of course, up to you.
There was nothing in any of my comments for you to "report." I responded to your generalized maligning of my honest and hardworking profession, to wit ". . . it looks like banks, Realtors, and speculators are the only ones gaining anything here." The only thing Realtors are gaining is compensation for their work. Banks are losing money, and "speculators" - I guess you mean real estate investors but I'm not sure - are risking their capital on their market knowledge and/or rehab savvy.
I further responded to your assertion that ". . . a foreclosure sale should be a heavily discounted home" with a question regarding why and how a bank is going to sell it for less than market price. Ain't gonna happen, and shouldn't.
WHY should a bank, or anyone else, sell something at a hefty discount off its market price - because YOU want a smokin' hot deal? If you can buy a home - not just a foreclosure - for 20-40% less than you would have had to pay 2-3 years ago, is that a good deal? Apparently not, for you.
Now, a foreclosure - which is these days usually a maltreated, sometimes vandalized property, and certainly has not been maintained - should not sell for the same price as its pristine, remodeled, well-kept and attractive but otherwise identical neighbor down the street. But there's no ADDITIONAL discount just "because." If that was the case, there would be people lined up screaming, "Where's MINE!" How are the banks, in this unlikely scenario, supposed to decide who gets the "special discount houses?" Huh?
Please don't speak of price-fixing as some sort of crime because that seems to be exactly what you want.
"On March 16, 2009, FASB proposed allowing companies to use more leeway in valuing their assets under "mark-to-market" accounting, a move that could ease balance-sheet pressures many companies say they are feeling during the economic crisis. On April 2, 2009, after a 15-day public comment period, FASB eased the mark-to-market rules. Financial institutions are still required by the rules to mark transactions to market prices but more so in a steady market and less so when the market is inactive. To proponents of the rules, this removes the unnecessary "positive feedback loop" that can result in a deeply weakened economy.
"On April 9, 2009, FASB issued the official update to FAS 157 that eases the mark-to-market rules when the market is unsteady or inactive. Early adopters were allowed to apply the ruling as of March 15, 2009, and the rest as of June 15, 2009.
"Companies can use the new guidance when issuing their first-quarter financial statements. Such changes could significantly boost banks' statements of earnings and losses. The FASB changes, however, are for acceptable accounting standards applicable to a broad range of derivatives, not just banks holding mortgage-backed securities."
So the banks don't HAVE to rush out and sell their REOs because they can count them as assets at a higher value than they might have before the rule was modified. The loans underneath them are no longer performing, but now they have an asset at a closer replacement value. They also don't have the staff to just throw them on the market. Some of them MIGHT also be bright enough to not flood the market which would lower the value of the assets, but not many.
The market price for each and every home is different. A beat-up foreclosure might appear to be a great deal, if you want to put in the sweat equity or bucks to fix it up. Even if you pay full price for everything you do to it, you may have a home worth more when you are done, principally because it's market price at purchase was partially determined by the potential buyers who see it. Most buyers can't visualize potential, so they don't bid or really lowball it. That only leaves buyers who understand basic value (sometimes we call it "good bones") and are willing to pay for it. Still, the fewer potential buyers, the lower the market price for the home.
That is why foreclosures can be a bargain. But you are right - they are not for everyone.
Use Due Diligence and consider options...It all depends on your goals (What is the purpose of buying for you?)
Why does a property go into the name of Trustee Clark County Treasurer?
Per NRS 361.585 & 361.590, property which is delinquent three consecutive fiscal years is deeded into the name of Clark County Treasurer as trustee for the state and county. Once property is placed in the name of the County Treasurer as Trustee, the property is subject to be auctioned for non-payment of taxes.
Delinquent Real Property Tax Auction
Date of last Auction - April 16th & 17th 2009
Auction Results .... http://trweb.co.clark.nv.us/county/treas/Auctionlist_after%2
If it is in the hands of the trustee at the steps - it is bank owned. If it is in the hands of a broker selling a "REO" it is also bank owned. The only difference in Clark County Nevada is that generally it is cheaper to by direct from the Trustee but more risky - Meaning you get a clear title from a broker - if you buy from Trustee you have to get your own Title Insurance and pay off 6 months of back HOA's and property taxes.
Where new construction has been heavy, the floor plans, for some of the newer houses, are available from the builder.
Here is my two cents. In Fort Worth, TX it is hard to actually purchase a forclosure. Most of them are apparently receiving multiple offers and the Lenders are making the most of the situation. Immediately after submitting an offer we receive notice of multiple offers with a request to submit your best an final offer. Funny thing is that even if you get the best and final offer you frequently get another notice with in a week or so saying the samething. The Lenders take their time in actually accepting your offer on the chance that they may get another better offer.
Your Realtor should have provided a market analysis so that you know what the house should sell for and so that you do not get carried away and over bid.
If you are lucky and get the bid and have performed your due dilligance on value then it is worth your effort and you will probably save a significant amout of money.
I have not heard of any Lender or Agent restricting access to the house until after you buy it but in different parts of the country that could be the practice. In that case I would not touch one of them.
Yes you are also correct in your observation about alot of insider deals going down which does not help the consumer but that is your TARP and tax dollars hard at work. The headlines are correct with the great wealth transfer going on right now but it is not with who you might think.
I wish you all the best in your search for a great deal.
Dunes, good advise ...explore all angles.
Joy, if I may, the last thing many buyers want to hear is "...prices are firming up, buy now." This actually deters, rather than spurs many fence-sitter like me. I'm not going to go into a lengthy diatribe of the why's and wherefore's, and would prefer to leave it at that.
Kimo, I am in the fortunate position of being an all cash buyer so price, not rates is king (above applies).
Gretchen, short sales sound good. What is the lag time averaging at now. Do all normal sales processes apply? To what extent can you haggle with banks on price?
First prize has to go to Mac for pointing out the major flaw. It is completely incomprehensible that anyone would spend a huge sum of money without at the very least an inspection of the goods.
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I think the answer is fairly simple...Yes and No
A Buyer is looking to find the best deal so looking at all the possibilities is always the best approach. That means if you are just looking at Foreclosures then you are not looking at all the possibilities just as not looking at Foreclosures is limiting your choices.......Look at all the Properties available that fit your criteria so you can avoid the day you find yourself saying "I should have....".
If you have all cash you can possibly buy a foreclosed home from the trustee sale. You just have to do your homework and see what liens the property has besides the property taxes and second mortgage.
There aren't that many bank owned homes out there. Investors are snatching them up with all cash offers.
Or, potencial buyers are driving up the listing price from 5k to 30k plus over the listing price.
Wish you the best of luck in your home purchase next year.
Jes Sierra, B.Sc.
Century 21 Beachside RealtorsÂ®
Chino Hills, CA
A good value on the right fit does not require a foreclosure or other distress sale. Distressed properties usually carry baggage, some you can quantify, some that may remain invisible.
Enjoying life in a home you chose is an attainable goal. Chasing the pot of gold at the end of the rainbow is a different story. Pick your path (and guide) carefully. Good luck!
Foreclosures are typically 10% under market and can be a great deal. In the last 4 months there have been quite a few less because the market has picked up. Unlike short sales, the bank owned property response time to an offer is much faster.
If you wish to explore the SB market on your own I have a web site with the MLS search engine on it, http://www.sboceanside.com. Check out the "Bank Owned" button. I also SPLIT my commission with my clients and in this town that can be 1000's of dollars. Call me if you need any help.
To work paper plays is a masters degree where as working real estate investments is to an associates at a community college. In order to broker paper a series 7 securities licence is most often required in most states as well as a series 63, 65 & 66 licensure. Here it is a Series 7 & Series 66. Anyone can buy but not broker.
So, If it takes a real estate broker 64 hours of classroom time in a community college - go fiqure on the licensure required to broker paper.
This is the brokering aspect. However the complexities of the transactions are also equal by comparison.
It's only within the last 12 months that many high end places seem to be showing cracks, and the other problem is inventory. So many potential sellers are just refusing to put their properties on the market, because they believe prices will recover soon. I personally think that is doubtful, so the stand off continues. I am in the fortunate position that if 'value' does not return, neither will I. I'm glad to say that in the case of SB relative value has made some inroads. Another 5% to the summer of 2010 and I'd be happier.
Yes they are worth pursuing if you find the right one. Housing prices in here are down to half of what they were in the heat of things back in 2006/2007. For the most part prices have bottomed out here and may start rising ever so slightly next summer.
I'm not sure what your price range is but a home in Santa Barbara can run you anywhere from 200k for a small 2 bed 1 bath in a not so nice part of town up into the millions for a nice home in Montecito.
Another area to consider is the Lompoc/Orcutt/Santa Maria area only an hour north of Santa Barbara but your dollar to value ratio will go much further. (People in Santa Barbara have big heads and think everything they own is worth more than it actually is)
Consider Vandenberg Village in Lompoc or parts of Santa Mara/Orcutt.
Overall now is the time to buy in this area. Prices are very affordable and it won't stay that way for too much longer
The business model works for all involved. I hate to cut myself short as a broker, but it oliminates us and our fees, property preservations fees - the fee list is long and the time frame in its longevity to foreclose is averaging 18 months, if all goes well.
Paper can be picked up NOW and for cheap because the banks are buried in non performing notes and sub performing notes yet to be addressed by note holders now ( there are piles of files not addressed), foreclosures recently begun in the pipes on these NPNs & SPNs now, and plenty of defaults on the paper to come in the future.
Ultimatly the owner of the first trust deed sets the bid price on the collateral at foreclosure..
For banks to dump at discount now is to thier advantage - it is also to the investors advantage if one is sophisticated enough to follow through the process.
Even in a BK - the investor owns the note and gets paid through the trustee.
There is no question that there will be a REO drip through 2013.
The financial institutions will sell their paper for discount to oliminate the headaches of the steady stream of defaults. However, the REO's come without risk to the banks - they have title insurance and the banks have spent time & dough on the foreclosure process.
To fast track getting the debt off of the balance sheets, I see them already discounting heavily thier notes - in portfolio style.
This is the new era of real estate investing for the upcoming few years ...
By sitting on idle - the best opportunities have already come and gone.
Paper plays are the wave for 2010 - Mark it in your calendar and look back one year from now and see that my forecast is accurate!
If your looking to get lists of foreclosures my husband is a mortgage loan officer. He works for a banker/broker that gets reo's hey can set you up, or agent for that matter if you are looking for that type of info. I have to be carefull for spam and that type of info.
But as long as you get a good deal and it is a home you can live in for at least 5 - 7 years I say take a plunge. Just dont buy beyond your means.
A couple things to think about.
1) it is impossible to know when the market has bottomed out. Actually you will know when prices are going up. Then you will be buying on the up swing.
2) You need to also be concerned about interest rates. When interest rates are also low you can buy more.
3) What you really need to be concerned with it value. Can you afford what you are buying. If you like the home, like the area and can afford the home, even if prices drop a little further which they may, they will go back up. But if prices drop as long as you can comfortably afford the home you will be ok.
The people who regret their purchase bought a home they couldnt afford, with a neg am loan. Then when the values dropped they were not just in a little trouble they were in a lot of trouble.
Make sure you have savings etc, etc, etc. Your mortgage payment should only be 35 % of your income.
Best of luck.
Realtor Legal Assistant
Chuck Miller, Centuyry 21 Diana Realty, Bel Air, MD 410-979-0178, 410-893-1200 Ext 45
Depending on the skill level of the listing agent AND which investors hold the notes, the short sales can be picked up for less, in some cases, for less than the REO's.
Our short sale dept is flooded and we are closing excellent deals for prudent and patient buyers. There are really some smokin' "shorts" in the market if the stars are in alignment with the banks and working w a talented short sale listing agent.