It sounded like short sale , REO are not a good sale should I wait for a year or so until the real estates

Asked by Bunnyin, Oakland, CA Mon Jun 30, 2008

crisis is over?? My realtor took us to 10 homes and 9 of them are short sales. only one of them is nice and the rest sold "as-is" and it is not nice and need extra cash to fix up the place. I read many of the answer from Trulia and I got the impressions that "short sales" "REO" are not really a good deal at all. I wonder if I am wasting time on house hunting. should I wait until the "real estates crisis" is over and then start looking in a year or so. My son is only 2-yr-old. I plan to buy a sfr in a good school district.

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17
Slewfoot, Home Buyer, Sacramento, CA
Tue Jul 8, 2008
Contrary to what the real estate agents would like you to believe, it's NOT different here. People still bought more house than they can afford, people still used ridiculous loan products that are resetting to higher payments every month, and now people have to swallow $4/gallon gas on their commutes. Do you honestly think that if every major metro area in the region is falling, and quite substantially at that, that somehow "it's different here" in the East Bay?
5 votes
Slewfoot, Home Buyer, Sacramento, CA
Tue Jul 8, 2008
http://realestate.msn.com/rentals/Article2.aspx?cp-documenti…

Unless you want to be $250K in the red in 4 years, keep on renting and dont listen to the real estate agents.
Bay area is still the most overpriced market in the country.
5 votes
Darin, , No. Cal
Sun Jul 13, 2008
House valuations are still overvalued. Ms. Catherine seems a little bitter; most likely because she didn't take Econ 101.

The Bay area is an absolute joke IMO. Banks are lost in La La land, and the "worst" of it is yet to come.

If some greed-driven Bay Area folks want to ignore the basics in our Economic fundamentals and begin to get into bidding wars for overvalued properties, then fine...they will be the next wave of suckers....don't join them.

Trulia has some great charts for your local area. Click on "Stats and Trends" and search the numbers in your area. Be aware that this is the summer season and numbers usually bounce upwards in the summer (even in a down cycle).

Foreclosure velocity is still pretty strong and median income/home values have not come back in line yet.

Be patient and do your homework.
3 votes
Lisa Cartola…, Agent, Oakland, CA
Mon Jun 30, 2008
Hello Bunnyin,

Whenever you are looking to buy a home, in any market, you need to evaluate why you are buying. If you are tired of renting and want to buy a home for you family to live in, any market is the right market for you.

Everyone has a different opinion about the current market and whether or not it is a good time to buy. We can all speculate when the market will hit "bottom" but the only real way we can know is after it happens. One good thing in this market if you are looking to buy, there is inventory and many other buyers are waiting on the fence. Why wait for more buyers to enter the market and potentially increase the competition for the homes on the market?

Personally I think REO and Short Sales can be a good deal. Yes, there is typically some work to do. And yes they do require more patience on the part of the buyer and the Realtor representing the buyer. As already mentioned, many of the REO listings are seeing multiple offers.

If you are concerned about work that needs to be done to the home, there currently is the option of a rehab loan that will allow the financing of certain types of work that need to be completed such as pest work, a new roof. I can recommend a lender who is extremely knowledgeable about this program, or you can ask your Realtor if they know someone.

Sitting down and really evaluating what you want in a home, what you absolutely need in a home and what kind of mortgage you are willing to pay will help in determining location and condition of the homes that you are looking for. Often times expanding your search to locations you may not have considered opens up more potential possibilities.

Buying a home is a huge deal. Usually this will be the biggest purchase you will make in your life. Definitely evaluating why you are buying and what you are looking for will help determine if now is the right time for you.

Good luck!

Lisa Cartolano

Lisa Cartoalno.com
Web Reference:  http://www.LisaCartolano.com
3 votes
Artur Urbans…, Agent, Burlingame, CA
Mon Jun 30, 2008
Hi Bunnyin,

These are good questions. Let's start with waiting. Considering that we have not seen the pick of the crisis yet (a lot of ARM loans will be increasing their payments over next 2 to 3 years what will lead to many more defaults and foreclosures) waiting might be a long order. At least it is my personal opinion. Regarding short sales - they are frustrating. At the same time - they offer great opportunities. There are so many of them that it is becoming much easier to pick those that are managed by agents experienced with short sales and more and more becomes pre-approved by lenders (how it is possible and why it is happening is a separate topic). So, spend time looking for right agents and right opportunities. Nice thing about REA sales is that they offer quick and easy sales, however prices are not necessarily as good, as REO agent need to "spruce them up", what costs money. Following that, obviously they want to recover it by raising prices to a market value. This, however is proving increasingly difficult as prices are still having downward tendencies (not everywhere of course). So, it might make sense to find a qualified "real estate consultant" and use his/her guidance in doing the search. Hope it helps.
Web Reference:  http://www.cimpler.com
3 votes
Tara Steinke, Agent, San Diego, CA
Mon Jun 30, 2008
Dear Oakland Buyer,

It is a great time to buy right now... HOWEVER, I tell all my buyer clients that you need to have patience and tenacity in this market. We are experiencing the same overload on short sales down here in San Diego. If you consider short sales, make an offer and let it ride while you are still pursuing other possibilities. Many short sales get multiple offers and take forever to get an answer from the bank. And sometimes the bank decides to foreclose rather than short sale.

It is my experience (now remember I am in San Diego) that property is going most often at current market value in this market. But the current market value is much lower, sometimes 30% or more lower, than the peak of the market in mid to late 2005. My suggestion is to keep looking and stay informed. Be ready to jump on the property that will fit your needs and make a reasonable offer. If you make an offer on a short sale, be very engaged in the process. Have your agent be in constant contact with the listing agent and find out if there is one loan or two, which banks they are with, how many offers have been received (and if possible, how strong they are) and where they are at in the short sale process.

If you are looking at REOs, be ready to move quickly. Banks have much more aggressive requirements for buyers than the industry standards.

Good luck!
Tara
2 votes
Barbara Wils…, Agent, Danville, CA
Mon Jun 30, 2008
Now really is a great time to buy because prices haven't been this low in years. I have stopped showing most short sales, unless there is only one bank invovled, and several other criteria, because they seldom actually sell. REOs can be a great deal, just do your due diligence and have the property well inspected, and talk to neighbors. That said, prices in most areas haven't dropeed 50%, so if you are having trouble finding properties in your price range, you may need to consider smaller places, ones maybe that need some work (would your church consider helping fix it with volunteer labor?) or perhaps a duet or townhome instead of single family,or, unfortunately, maybe places in an area farther out and therefore less expensive.
2 votes
Bunnyin, Home Buyer, Oakland, CA
Mon Jul 14, 2008
Every single home we visited need $20K -$40K to fix up the place. The kitchen was trashed , dishwasher, A/C was removed and so is the bathroom. Yes, I have money on the side for few buckets on print and 6 months mortgage payments. otherwise we really don't have the additional cash $20K-40K for renovation! And What 's up with all those marble tile floor "ALL OVER" the living room, kitchen, family room?? We visited the Racher style -Tile floor, Mid Century Eichler home -all marble tile floor including the artium!!! What are those people thinking??? This is part of the reason why I think I felt like "wasting time" .....
1 vote
Barbara Wils…, Agent, Danville, CA
Sun Jul 13, 2008
To address your basic question - if you wait until the crisis is "over" then you will most likely be in a stable or ascending market - you will have missed the boat. Go back to basics. There are many good deals out there. Some communities (like Dublin) have a less than 3-month supply of home - officially a seller's market, but no one is treating it like that, and so there are still deals to be had. What it tells you is that Dublin has probably found its bottom. Brentwood too has found the bottom, with a 2-3 month supply. "All Real Estate is Local" is the old phrase, and it is totally true. Some other areas haven't found the bottom yet - so you offer, and if they don't accept, and you move on.

There are benefits that a tax advisor can help you with about making home payments rather than rent payments. You will have found a home you want and negotiated it to the lowest possible price, at which you are willing to buy. and you have a home, rather than a house or rental, something in which you can have pride in, and decorate as you want. There is an emotional component. If finding this place happens this month, or in 4 months, or 6 months, it is a way to diverisify your savings, enable your tax incentives, and help be an anchor for your son. Darin can wait, and either gain more in equity over time, or miss the boat. You need to do what is right for you and your family.

Bottom line - If you are planning on staying in the home for more than 5 years, providing a constant address, friends, and base for your family, do it now and negotiate for the lowest possible price on the home you want. If you are trying to flip the house, wait, and hope you time it well.
1 vote
Catherine My…, Agent, Walnut Creek, CA
Tue Jul 8, 2008
I will just say to the answer below about MSN is that there is a HUGE difference between San Francisco and San Jose, and a bigger difference between those and the East Bay. Then the East Bay has pockets and micro climates of real estate. There is NO WAY MSN or anyone can make such a blanket statement. You need to know the areas you're interested in . Look at the trends, look at the pricing year over year. Maybe Gene from Bullhead City doesn't realize the nuances of our area here. You really have to trust your agent, do your own research and if you want to wait til the sky falls... that's certainly just fine, its your decision to make, and only you know your situation and your tolerance for waiting and watching rather than jumping in.
1 vote
Dot Chance, Agent, Burbank, CA
Mon Jun 30, 2008
There are a lot of great homes available right now. Who knows when the "crisis" will be over? Why don't you ask your agent to show you some homes that are not REO or short sales?

Most REOs and short sales are going to need SOME work - some more than others. If it is only cosmetic then you may get a really great deal. If you are looking for something turnkey then a home being sold by a homeowner rather than short sale or REO may be the way to go.

Interest rates have already been creeping up - so NOW may be the best time for you to buy
1 vote
Homa Moaddel, Agent, Foothill Ranch, CA
Mon Jun 30, 2008
Hi Bunnyin,

I would not wait until real estates crisis is over. But be patient and keep looking. It is better to buy when inventory is high and the market is buyers market. It is true that some homes in shortsale and bankown are not keep in a good condition but I have seen some that have nice upgrades and in a good shape.

Sincerely,

Homa
Broker Associate
Prudential
1 vote
Dallas Texas, Agent, Dallas, TN
Mon Jun 30, 2008
Never wait there is always GREAT deals out here matter for having a good agent assisting you. short sales are for investors who might want to pull the plug at times there is drama caused by the bank
http://www.lynn911.com ...however you can obtain some great deals on short sales.
1 vote
Catherine My…, Agent, Walnut Creek, CA
Mon Jun 30, 2008
If you wait you may end up in a market with higher prices and even more competition. Fact is, many REO's (bank owned) homes are getting multiple offers, so you have to be ready to be aggressive in some cases. In some cases, short sales can be a good deal. Not as many people want to compete for those, but truthfully, most of those (priced right) have multiple offers too. I think many buyers (in my opinion) already have waited too long. Yes prices have gone down even more than 6 months ago, but now you're competing with multiple offers and investors. Investors jumped in months ago.. that's when other buyers should've jumped in.. but many buyers still felt it hadn't "hit bottom" yet. I think if you can buy now, you should. Real estate is a long term investment.. you don't make money when you buy it, only when you sell, so plan to stay for a while, buy in a good elementary school area, have fun, get great tax break and just enjoy your new home :)
Web Reference:  http://www.diablovalley.net
1 vote
Barbara Wils…, Agent, Danville, CA
Mon Jul 14, 2008
If the kitchen is missing, or there are significant problems (like you said, $20,000?) have your agent check out the possibility of a renovation loan. Wells Fargo offers them, and some other banks do too. Basically, they lend you money based on the fixed up price, and but you pay the seller the original agree-upon sale price. The difference is paid to your contractor as the renovation work is completed. Good Luck!
0 votes
Barbara Wils…, Agent, Danville, CA
Mon Jul 14, 2008
If the kitchen is missing, or there are significant problems (like you said, $20,000?) have your agent check out the possibility of a renovation loan. Wells Fargo offers them, and some other banks do too. Basically, they lend you money based on the fixed up price, and but you pay the seller the original agree-upon sale price. The difference is paid to your contractor as the renovation work is completed. Good Luck!
0 votes
Catherine My…, Agent, Walnut Creek, CA
Sun Jul 13, 2008
Slewfoot, I was not at all addressing whether or not our area has been hit by the housing crunch, foreclosures, lending problems and short sales. Of course our area has been hit hard. What I'm saying is that anyone who listens to the " news" about further price declines without knowing the nuances of THEIR area, and the area in which they wish to live - its a big mistake. We have some areas that have been hit harder than others. You simply have to know your individual market. If you read my answer you'd see that I said that there is a huge difference between say San Jose and Marin. Or San Francisco and the East Bay. You can't make a sweeping generalization of our area. If one wants to wait til prices go down, great. Will interest rates go up? Maybe. Will an increased interest rate negate a lower price? Maybe. Only the buyer knows his threshold and reasons for waiting. One thing for sure is that the buyers waiting for the "deals" are now competing against sometimes 4, 5 or 6 (or more) investors and other buyers on the same property. That is not in all areas, but in some areas... that is why it is important to know your area. In some areas its already too late to get a 'good deal' on a foreclosure without a lot of competition.
Web Reference:  http://www.diablovalley.net
0 votes
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