Santa Cruz Foreclosure Presentation Video
April 24, 2008
It’s getting pretty late and I still have tons of work to do, but for some reason, I couldn’t help myself. I just had to put up the video of the presentation that I did the weekend before last at the Santa Cruz County 2008 Housing Expo.
The presentation was scheduled to last 30 minutes – about 20 minutes of me yakking to some PowerPoint slides, and about 5-10 minutes of follow-up questions. As luck would have it, my presentation lasted closer to 25 minutes, and the Question and Answer session which followed lasted about the same. Even after the session ended, I stayed and answered questions on a one-on-one basis for another half hour after that.
The room was pretty full – granted, it was not a big room, but there were 40-50 people in there, I’d say. It was a lot of fun and many people told me they really got a lot out of it.
I wrote e-mails to a bunch of people telling them about the presentation, and more than one person replied (OK, two people) and said that they were sorry they couldn’t make it, but would a video be posted on-line?
Fabulous idea, I thought. So I hired a videographer to come and do the video. I was going to cut the video myself using iMovie from Apple, using up some of the copious amounts of spare time that I have (ha ha, did I mention it’s nigh on 1 AM and I’m still slaving away?). However, after thinking it over for about 20 seconds, I realized that there was no way I was going to be able to cut the video and do a halfway decent job and get it posted on-line while this foreclosure wave is still upon us. So, I shelled out the big bucks and had it professionally edited by your friends and mine at Visual Poetry.
I hope you enjoy my video presentation! Please pass around the link to my Opportunities in the Santa Cruz Foreclosure Market video presentation.
Posted by Administrator at 1:07am
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Foreclsure News – from Santa Cruz and Beyond
April 15, 2008
I drive my wife crazy with my singing – and not in a Marvin Gaye kind of way. One thing I like to sing to her to wake her from slumber is Good Morning – my rendition is especially horrible and all I really know is the chorus part. But hey, I still think it’s better than a nasty alarm buzzer. And it is also better than getting woken up by the morning news, especially in these dark days.
You may have heard this one on the drive in to work, or perhaps they were bantering about it on NBC’s Today Show or something:
[From Bloomberg.com: Worldwide]
U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners gave up their homes to lenders.
Yeah, good stuff. That’s what you want to hear as you write out your next mortgage payment check!
Of course, you know the famous saying – all real estate is local. What’s happening in Peoria isn’t really all that germane to what’s happening in bucolic Santa Cruz. So what is going on in Bucolic Santa Cruz? Read on:
[From Median home price drops to $650,000 – Santa Cruz Sentinel]
The switch pushed the median price of a single-family home down in March to $650,000 from $682,500 in February — but not as low as $599,000 in January, when 33 percent of homes sold for less than $500,000. The median is the mid-spending point of what sold during the month.
Only 75 homes sold in March, the fewest number of sales for a month in 11 years, an indication of buyer reluctance despite lower list prices. The previous low — 143 sales — was set last March.
That’s an interesting article, and it has more sales data from the aforementioned Gary Ganges, who I talked about briefly in my blog entry from yesterday. According to the article:
Ganges doesn’t specifically track REOs but he found 12 of the 28 homes sold in Watsonville in January, February and March were bank-owned.
Only 12 of 28? Hmm, that seems a little low to me. I do specifically track REOs, all the time, because that’s where the best bargains are to be had, and I’m always looking to find my clients the best deal possible. I just did a search, and I looked at all closed sales since the beginning of the year (up til now, mid April). I included Watsonville and the outlying areas (but not north Monterey county), and counted houses, condos, and multi-residential properties (actually, I don’t think any multi-res sold in that time period). My findings?
There were 35 sales of such properties since the beginning of the year. Of those, two were short sales, and twenty-two (22!) were bank-owned REO real estate. Actually, I’m surprised the number isn’t a bit higher. It should be noted that a few of the others that sold were in the city of Watsonville’s affordable housing program, and there was one Measure J property.
Sigh. Welp, I’m off to my office meeting. Keep up the good work everyone!
Posted by Administrator at 7:54am
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Special Feature at Santa Cruz County Housing Expo: Me
April 08, 2008
Last week or so I posted a blog entry about the Santa Cruz County Housing Expo 2008. I listed all the different tracks they were going to have, and one of those sessions was “Invest for Success.” One of the sessions in that track (I didn’t break out the sessions) is “Opportunities in the Foreclosure Market.”
So yesterday, I’m sitting at my computer sippin’ on a Rock Star (that sounded bad!) and the phone rings. On the other line is a Realtor who is organizing the housing expo. It seems that the guy who was supposed to do the “Opportunities in the Foreclosure Market” presentation backed out. He wanted to know, would I be available to do this presentation at the Housing Expo?
As luck would have it, I would be available. Also, I have the presentation I did for the Santa Cruz Real Estate Investment Club a few weeks back. Not only that, I have plenty of content I can add to that, by digging through my exclusive Santa Cruz Foreclosure Report.
It turns out, the gentleman I was speaking to had a copy of my Foreclosure Report. It seems that someone in his office requested a copy and I sent it to him, not knowing it was going out to another Realtor – i.e., the competition. But that’s OK, because the truth of the matter is, most Realtors are woefully uninformed about the local foreclosure scene. In a way, it’s kind of like my civic duty to get this report into many of my colleagues’ hands.
Not just my colleagues – also, the real-estate-buying public needs to get it as well. The current real estate market is presently being shaped to a large extent by the foreclosures that are going on. I can actually see the end of this market cycle – or I think I can – but it’s a ways yet off in the distance. This is going to be with us for a while, and there is a lot of opportunity out there, such as we haven’t had in a great many years. I do plan to hand out copies of my report at end of my presentation, but anyone can request a copy any time through my web site.
I’ll be presenting this coming Saturday, April 12th at 1:30 PM, at Twin Lakes Church. I hope to see you there!
Posted by Administrator at 7:17am
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Another Massive Real Estate Auction
March 27, 2008
If you’ve been reading my blog recently, you may recall that a month ago I went up to San Mateo to check out the big Home Auction put on by REDC. It was a good time had by all, even if I didn’t manage to stick around until they actually auctioned off the Santa Cruz properties.
If you missed it last time, fear not – it’s baaack! Check out the properties that are being auctioned off this time:
Santa Cruz County Properties at the REDC Auction
There are a couple of cabins up in the San Lorenzo Valley (one of which is a complete wreck), and the rest of them are in Watsonville. They rope you in with the starting bid, but in reality, most of these (especially the desirable ones) will go for a much higher price – closer to market price (whatever that is).
Posted by Administrator at 7:30am
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There’s No Such Thing as Market Price
March 22, 2008
There. I’ve said it. I’ve blown the lid off one of Real Estate’s greatest secrets. The “Market Value” or “Market Price” of a home is purely fantasy. Let me explain.
There are many values attached to any piece of property. If it’s on the market for sale, there is the List Price. But, that’s just the asking price. When people are looking to buy property and searching on the internet, I encourage them to search a bit, maybe a good bit, over the their budgeted price, because the list price is not necessarily what the home is going to sell for – often, homes sell for far less than list price.
After the list price, there’s the assessed value. People are always telling me, “Well, the assessed value of the home is only $X, so I don’t want to pay anything more than that.” The assessed value is almost meaningless, thanks to California’s Proposition 13. That’s the figure the government uses to calculate property taxes. It’s no more of an indicator of a home’s value than Zillow is.
Next, let’s say that you’re going to buy a piece of property, and your bank, naturally, requires that you get an appraisal done on it. So the licensed appraiser comes out to the proeprty, does his (or her) thing, and comes up with a value – the appraisal value. Now, you’d think this would be a pretty good indication of value. I’d say it is, at most, a fair indication of value, because if you have two, three, or four appraisers come out, you can easily have two, three, or four different appraised values. That, and there’s this strange thing that happens – the home almost always appraises for just a little tiny teeny bit over the contract price. Miraculous. Now, why is that? It’s because if an appraiser consistently brings in values that are lower than the contract price, who is going to hire that appraiser? Nobody.
Having said that, I’m in escrow on a property where the appraiser just valued it about 9% more than the contract price. That’s pretty wild. And that’s cool. I’m not saying that the house is actually worth 9% more than we’re paying for it – my feeling is it’s worth about 2-3% more than we’re paying for it, but it’s nifty to have a high appraised value, it makes for good talk when drinkin’ beers with your buddies, you can tell them what a steal you got on the place.
After appraised value, there’s the sale price. That’s what the house sells for. Actually, this is a very good indication of market value. The best comparable sale for any property is…itself, because that shows what a ready, willing, and able buyer was willing to pay for a property. In fact, that’s one of those truism-cliches that we bat about in the ol’ real estate office. The buyer sets the price of the property, not the seller. Once the buyer buys that house, he establishes market value for that property.
Now I’m coming to the crux of the matter. These days, there’s such a fever for buying property below market price. After all, why would anyone want to pay market price is a buyer’s market, one in which property prices are declining? Surely you’d want to buy under market price, to provide yourself some protection against declining values? Of course you would! But how can you know what is the market price? There’s the rub.
I’d like to point out what happened a little while ago at 208 Elk Street in Santa Cruz. It was a foreclosure home. It was listed by an out-of-town agent for $539,000. Somehow, someway, someone was able to con the bank into selling it for $500,000. The dirt is probably worth $400,000. It’s a 1500 square foot house. The improvements had to be worth $225,000 – which to me, gives it a value of around $625,000. But the banks, they like to sell the property quick, sometimes to the point where they are practically giving it away. Anyway, some dumb asset manager somewhere let that house go for $500,000.
Was that market price? Well, if you listened to the Realtors ’round the market cooler and all their banter about the buyer setting the price and being the best indicator of market value, blah blah, then you’d be led to believe that’s all the house is worth. Don’t believe it. That house is now back on the market, just right after it closed escrow for $500,000 – only now it’s $599,000. That’s much closer to the $625,000 that I figure it’s worth. So, it’s still selling for below market price – only now, this time, when it sells for $599,000 (or whatever) – will it now set the correct market price?
Yep. It’s a tricky business. When you’re listening to the Real Estate Gurus and buying books about buying 40% under market price, be wary. In my experience, it’s impossible to buy here in Santa Cruz for 40% under market price, whatever that is. That’s because there just aren’t that many stupid people around, unfortunately. Maybe we could get the Bush administration to move to Santa Cruz in January and then we’d all be able to scoop up some deals, I don’t know. But 40% under market value? That would mean 208 Elk Street could have been bought for $375K. Nobody’s that stupid. Well, almost nobody (they’ll greet us with flowers and candy, remember?).
Now, you may, once in a while, be able to buy a property for 40% below it’s highest and best value. That’s another thing. That’s where you buy a property where, in its present condition, it is worth 40% less than it could be, if you poured tons of time, money, and/or sweat equity into the property. That’s possible. But that’s another thing entirely. That’s buying a property, adding value such that it becomes more than the sum of its parts, and selling the profit you’ve just created. That’s a neat trick, too, and if you can do it, well, we all should be reading your blog.
OK, that’s it for now. I gotta go. I’m taking the day off today, after working a grueling 100 hours last week. Have a good weekend y’all!
Posted by Administrator at 8:34am
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