Posts Tagged ‘Foreclosure’

5 Foreclosure Myths of 2012

March 16, 2012

 

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By Carl Medford

Beginning in 2007, foreclosures rocked the real estate world. Like an out-of-control freight train, they began decimating the market, peaking in 2009. Myths and rumors began propagating like mushrooms as consumers struggled to understand the new reality. Although many misconceptions have come and gone, we still encounter five myths on a regular basis.

 

1. There is going to be a flood of new foreclosures to the market.

This rumor has appeared every year since 2008 and has been routinely debunked. However, recent announcements that the Feds reached a settlement over the robo-signing scandal have reignited speculation. The idea is simple: Since the cork is now out of the foreclosure bottle, we’ll soon see another flood of REOs inundating the marketplace.

My personal opinion: don’t hold your breath.

Banks have learned that if they control inventory, they can affect local prices. By releasing homes in measured amounts, they realize higher prices than if they released a glut of homes. In addition, they’ve learned that if they can mitigate their losses by agreeing to a short sale, everyone wins.

2. You can go directly to a bank to buy a foreclosure.

Every few weeks I’m asked how to buy foreclosures direct from a bank. Someone knows a friend being foreclosed on and they want to step in and grab the house before it hits the market. Don’t we all? In reality, banks have a simple system – they first offer properties on the courthouse steps. The rest they assign to asset mangers who then hire local real estate agents to put them on the market along with all the other homes. Want an REO? Pay cash at the courthouse steps or get in line witheveryone else when they hit the local MLS (Multiple Listing Service).

3. You can get a killer deal by submitting lowball offers on foreclosures.

You would think this myth would be dead by now. Unfortunately, like Elvis sightings, it just won’t go away. Here’s the truth: Banks want REOs sold in 30 days or less, so they typically appear on the market priced slightly under comparable properties. If the property doesn’t sell quickly, the bank will lower the price after about 30 days. Lowball offers are ignored and are, quite frankly, a waste of everyone’s time and effort. You might get a deal by offering a lower price on a foreclosure that’s been sitting on the market for more than 90 days, but remember that there are good reasons it’s gone unsold for so long. And even if you have cash, your lowball offer won’t be accepted —seriously.

4. You can’t use foreclosures when doing an appraisal.

Or short sales, for that matter. That is no longer true. In fact, in many neighborhoods, that’s all that’s there. Therefore, foreclosed or distressed sales represent the actual value of homes in the area and HAVE to be used to appraise other properties. Don’t like it? Get over it. Times have changed and the ways neighborhoods are valued have changed as well.

5. Foreclosures are only affecting the bottom end of the market.

This used to be true. However, while foreclosure rates on the lower end of the market have actually decreased,they’re actually increasing on the upper end. According to Daren Blomquist, vice president of RealtyTrac, the market share of foreclosed homes under $1 million is shrinking, but those among properties valued over $1 million are rising – up 115% since 2007. And foreclosures on properties valued upwards of $2 million have increased by 273%. While some well-known jet-setters have melted down and lost everything, others are choosing to strategically default. They see it like liquidating a poorly performing portfolio – they have enough resources to cut their losses and move on. Historically, banks have been reticent to foreclose high-end homes and absorb a large loss, but defaulters are now forcing their hands and mansion foreclosure rates are moving on up.

Myths control behavior, and this has never been truer than in the housing market. Savvy agents will work hard to educate their clients, debunk myths, explain market trends, educate with solid facts – and actually close transactions.

 

Original article can be found…

http://pro.truliablog.com/news/5-foreclosure-myths-for-2012/?ecampaign=tnews&eurl=pro.truliablog.com%2Fnews%2F5-foreclosure-myths-for-2012

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What is Really Happening in the Foreclosure / REO Real Estate Process / Market? One Agent’s Point of View

June 23, 2011

Is it possible there is a corrupted process at the very top (wall street executives, wall street investors, bank executives, hedge funds, etc.) Here is a thought: We know banks are not willing to reduce the principle loan amount for owners under water. That can easily be measured by the number of completed loan modification that include a principal reduction. Very (very) few: About 49,000 of all the proprietary modifications completed reduced both
the loan principal and monthly interest payments. Out of how many foreclosures again? About 1.2 mil? The ones that are done are merely to keep the politicians at bay so the banks can say they are following their guidelines.

But…….banks are very willing to foreclose on any property, and sell the properties in REO bulk at 55-60% of current market value. This allows rich “investors” to buy these properties, and then turn around and sell them back to the consumers market at 85% of value and make 20-25% of the investment in about 4 months. We are talking about $60 – 100 million REO investment per deal (read “tape”) . You and I cannot take advantage of these incredible returns, as we have no “insider” at the bank who will give us that opportunity. These opportunities go to “connections” so they can make a ton of money on foreclosed properties. Pretty easy money, no? Then here is this question: If banks are willing to write down the REO to 60% of value, then why  can they not do a principal forgiveness for say 25% to the home owner? The write off to the bank is the same “loss” no? The big difference is that in the first scenario, the profit goes to the big investors at wall street. In the second scenario  the “advantage” goes to the home owners.

So what would be the difference in the real estate market today (read values and prices), if we had used the second scenario? Well for sure there would be a lot less “distressed” properties. The home values would not have declined as much, which also means there would have been much less of a “recession” in real estate, and home owners would have felt very good about staying in their homes, so no strategic defaults, and thus a much “happier” consumer who might have been able to spend money on the economy.

When will we learn to do the right thing for all Americans?

Antoine E. Pirson, MBA, CCRM
Broker and Investment Consultant
Caldecott Properties
5251 Broadway, Oakland, CA 94618
Office: (510) 594 2400 x 234
www.investmentpropertyfirst.com
Fax: (510) 594 2424
Lic Nr: 01372814

Which Oakland Condominium Buildings (Condos) Qualify for FHA Loans?

June 7, 2011

Close to half of all condo sales in Oakland in 2010 utilized FHA backed loans.  Though FHA guidelines have gotten a bit more conservative, most borrowers that meet FHA guidelines with credit scores above 680 qualify. 

The loan limit for single family homes (including condominiums) in Alameda County, as of 6/7/2011, remains $729,750.  In 2010, condominiums sold for an average of less than $300,000, so most condominiums qualify for FHA financing, right?  Wrong.

It has become a bigger challenge for a condominium building to qualify for FHA financing than for the borrower to qualify due to the condo building approval process implemented by the FHA.

As of 5/23/2011, there were 42 condominium buildings in Oakland that are approved by the FHA.  Here is a list of those buildings:

  1. 1755 Broadway, Oakland, CA 94612
  2. 360 Vernon Street, Oakland, CA 94610
  3. 3738-3740 Laguna Avenue, Oakland, CA 94602
  4. 407 Orange Street, Oakland, CA 94610
  5. 525 Mandana Boulevard, Oakland, CA 94610
  6. 532 30th Street, Oakland, CA 94609
  7. 55 Fairmount Avenue, Oakland, CA 94611
  8. 590 El Dorado Avenue, Oakland, CA 94611
  9. 666 Oakland Avenue, Oakland, CA 94611
  10. 77 Fairmount Avenue, Oakland, CA 94611
  11. 423 7th Street (8 Orchids), Oakland, CA 94607
  12. 926 Chester Street (Chester Street Lofts), Oakland, CA 94607
  13. 127 Bayo Vista Avenue, Oakland, CA 94611
  14. 1411 Center Street (Cigar Factory Lofts), Oakland, CA 94607
  15. 455 Crescent Street, Oakland, CA 94610
  16. 460-468 Crescent Street, Oakland, CA 94610
  17. 3721 Fruitvale Avenue (Diamond Park Townhouses), Oakland, CA 94602
  18. 424 Orange Street, Oakland, CA 94610
  19. 330 13th Street (Golden Bridge Lofts), Oakland, CA 94612
  20. 388 Santa Clara Avenue, Oakland, CA 94610
  21. 322 Hanover Avenue, Oakland, CA 94608
  22. 3403-3409 Haven Street (Haven Street Lofts), Oakland, CA 94608
  23. 2316-2324 Lakeshore Avenue, Oakland, CA 94606
  24. 10 Moss Avenue (Manor Park), Oakland, CA 94610
  25. 585 9th Street (Market Square), Oakland, CA 94607
  26. 7100 Mountain Boulevard (Monte Vista Villas), Oakland, CA 94605
  27. 4504-4508 Montgomery Street, Oakland, CA 94611
  28. 425 East 11th Street (Mutual Creamery Lofts), Oakland, CA 94606
  29. 567 Oakland Avenue, Oakland, CA 94611
  30. 1201 Pine Street (Pacific Cannery Lofts), Oakland, CA 94607
  31. 989 Webster Street (Pacific Renaissance Plaza II), Oakland, CA 94607
  32. 565 Bellevue Avenue (Park Bellevue Towers), Oakland, CA 94610
  33. 180-320 Caldecott Lane (Parkwoods Condos), Oakland, CA 94618
  34. 740 Canyon Oaks Drive, Oakland, CA 94605
  35. 288 Whitmore Street (Rockridge Manor), Oakland, CA 94611
  36. 388 Santa Clara Avenue (Santa Clara Commons), Oakland, CA 94611
  37. 401 41st Street (Temescal Station), Oakland, CA 94609
  38. 222 Broadway (The Ellington), Oakland, CA 94607
  39. 320 Lee Street, Oakland, CA 94610
  40. 3825 High Street (Villa Del Lago), Oakland, CA 94619
  41. 1695 15th Street (Willow Court Lofts), Oakland, CA 94607
  42. 1219 Wood Street (Zephyr Gate), Oakland, CA 94607

 If you are interested in obtaining an FHA loan for a condo project that is not on th list, it is possible to get a condo building approved.  I am happy to assist with this process.  It requires, among other things, the approval of the home owner’s association.

If you are interested in purchasing a condo in the East Bay with an FHA loan or getting your building approved for FHA financing, please feel free to contact me to discuss.

We also have a good place for you to see what listings are available in most of these buildings:  http://www.caldecott.com/?page=building_directory&buildings.  If you don’t see a building here, drop me a line and I can assist you with more information.

Andy Read
Broker
Caldecott Properties
aread@caldecott.com
510.594.2400 x 222

Are Banks Hurting Real Estate Values? One Agent’s Opinion is “YES”

May 10, 2011

I am sure we all have experience in selling or buying short sales and REO’s. Maybe in your neck of the woods, it is different, but here in California’s Bay Area, it seems that banks are not making the right decisions and are not capable of communicating between departments and are indeed preventing real estate values from stabilizing or appreciating. Here are two examples:

1. I was representing a buyer in short sale, and had an accepted offer from the seller and bank approval.  Two  before close of escrow, the bank foreclosed, and the property was bought at the county court house steps for $50,000 less than the accepted short sale offer (this is a loss even with the costs of the sale). This is an example of a lender’s inability to communicate between departments.  Not only does this not make sense from a business / financial perspective, it also lowers the area prices by $50,000 on equivalent homes.  

2. I was representing a buyer in a REO condo purchase.  I had an accepted offer from the bank, and was going through the mortgage underwriting. The lender (for the buyer) decides NOT to do the loan, even after appraising the property at value, because the building does not meet a Fannie Mae guideline that was not designed for new construction.  The original developer  (whose name is on the Final Public Report issued by the California Department of Real Estate) still owns 40% of the total number of units.  This resulted in the buyer walking away after spending $400 for appraisal and $400 for inspections. The condo unit sold for $75,000 less than the short sale offer. All the condo owners in this complex  were negatively impacted by this sale which may result in these owners “strategically walking away” furthering the challenges faced in the current real estate environment.

You tell me the banks are NOT preventing real estate to rebound?

Antoine E. Pirson, MBA, CCRM, CCIM (candidate)
R.E. Broker and Investment Advisor
Caldecott Properties
5251 Broadway, Oakland, CA 94618
Office: (510) 594 2400 x 234
www.investmentpropertyfirst.com
Fax: (510) 594 2424
Lic Nr: 01372814

Save Your Home From Foreclosure

March 24, 2011

If you are close to losing your home or know someone who is, California has 4 NEW Housing Finance programs that can provide direct assistance to help prevent foreclosure.

Unemployment Mortgage Assistance Program (UMA) – Provides up to 6 months free mortgage payments for unemployed homeowners.

Mortgage Reinstatement Assistance Program (MRAP) – Provides up to $15,000 in mortgage payments for homeowners that have experienced a change in household circumstance which has led to default.

Principal Reduction Program (PRP) – Provides funding to homeowners whose homes are now worth less than their mortgage.

Transition Assistance Program (TAP) – Provides money for relocation costs in the event of a short sale or deed in lieu of foreclosure.

To find out if you or someone you know is eligible for one of these federally funded programs click here.



Are there any foreclosed, bank-owned, REO or potential short sale properties in the East Bay cities Lafayette, Moraga or Orinda (Lamorinda)? If so, what type of discount are they selling for?

May 12, 2010

Yes, there are distressed properties in Lafayette, Moraga and Orinda, just not many compared to other cities in Alameda and Contra Costa that were hit significantly harder by the market downturn.

From January 1, 2010 to May 7, 2010, there were 28 distressed sales in Lamorinda accounting for 17.7% of total sales in these cities.  In addition, there were another 26 sales pending as of May 7, 2010.  Of these 28 sales, 10 were short sales, and 18 were REO’s.  These properties were listed for an average of $669,949 ($306/square foot) and sold for an average of $642,402 ($295/square foot) – a 4.1% average discount on the list price.

During the same period of January 1, 2010 to May 7, 2010, there were 130 non-distressed sales (re-sales and new construction) that were listed for an average of $1,017,907 ($427/square foot) and sold for an average of $966,636 ($409/square foot) – a 5.0% discount on the list price. 

Based on this data, distressed properties are selling for an average discount of 30.7% versus non-distressed real estate sales.

For more information about this market, or to sign up for a free-list of distressed sales in Lafayette, Moraga, Orinda or other Contra Costa or Alameda County cities, please contact Andy Read, Broker, at 510.594.2400 x 222 or aread@Caldecott.com.

WHAT BANK OWNED (REO) PROPERTIES ARE AVAILABLE IN AREAS LIKE ROCKRIDGE, ORINDA, LAFAYETTE, MORAGA, ALBANY, KENSINGTON, ELMWOOD, PIEDMONT & EMERYVILLE?

January 6, 2010

The multiple listing service (MLS) now has a designated field for a property to indicate if it is bank owned. It is possible to receive automated emails with these properties by city, zip code, Thomas Brothers’ map coordinates, etc. Please email Andy Read at aread@caldecott.com if you would like to receive these automated updates. Data for all cities in Contra Costa and Alameda County are available.

Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed-in-Lieu of Foreclosure

December 11, 2009
This Supplemental Directive provides guidance to servicers for adoption and implementation of the Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is part of HAMP and provides financial incentives to servicers and borrowers who utilize a short sale or a deed-in-lieu to avoid a foreclosure on an eligible loan under HAMP. Both of these foreclosure alternatives reduce the need for potentially lengthy and expensive foreclosure proceedings. The options help preserve the condition and value of the property by minimizing the time a property is vacant and subject to vandalism and deterioration. In addition, these options generally provide a substantially better outcome than a foreclosure sale for borrowers, investors and communities.

Click here for the Supplemental Directive in its entirety.