Changes to the Santa Cruz MLS
June 05, 2008
It’s 6:30 AM, which means I must be hard at work. Coffee’s done brewing, time to pour a cup. Right out of the gate, I’m researching properties today. One thing I notice is that MLS numbers have gone from six digits to eight - woooah! MLS numbers have been recycled for some time now - there can be several MLS entries with the same MLS number. I think they expanded the digit count because the MLS is growing, it won’t just be the five counties around here (Santa Cruz, Santa Clara, San Mateo, Monterey, and San Benito) but will expand to include the Greater San Francisco Bay Area.
Another thing that’s happened release with “Release 3.8″ of MLSListings.com is that you can now search for bank-owned REO properties. There’s a new attribute on each listing that says if it’s bank-owned. The thing is, of course, that the agent has to manually set that flag, and agents are not the most detail-oriented people in the world - especially busy REO agents, who often put no comments or pictures on their REO listings. We’ll see how well that works out - but no matter, because I have my own weekly Santa Cruz REO and Short Sale list that I send out, which I find by manually reviewing all the listings that come on the market each week and send the list out to subscribers.
Posted by SantaCruzBroker at 6:48am
No Comments »
The Crazy, Mixed Up Market
May 18, 2008
I know that you know it’s a buyer’s market out there, right? I’ve said it a bunch of times. It’s also a declining market - that is, property prices are, broadly and generally speaking, declining. In a market like this, you’d think it’d be pretty easy to buy a house, right?
Think again. While C.A.R. puts out its advertisements saying that the selection of homes is great right now, you have to take that with a grain of salt. First off, the selection really isn’t that great. It terms of “days of inventory” there may be an historically average selection of properties. But the problem here is that most of those properties aren’t really in the market.
They may be on the market - that is, listed for sale and available for purchase, but their asking prices are way too high for the current state of the market. Or, if their asking prices are reasonable, more often than not, it’s a short sale, which means that the contract and price are subject to approval of the one or more lenders which have loans outstanding against the property. Given that these “short sales” often take a very very long time to gain the approval of the lender’s loss mitigation department, it’s difficult to say that these properties are really “in the market.”
So what does that leave? That leaves bank-owned “REO” foreclosure properties (not all of which are actually priced to sell) and those few not-overly-encumbered homes with enlightened sellers who realize where their homes need to be priced in order to actually be in the market and have a decent chance of selling.
So when you look at homes that are actually in the market and priced right, there really is not a good selection of these kinds of homes. For these kinds of homes, though, there is tremendous demand. I put an offer in on a property last week, for example - we didn’t get it, even though our offer was pretty decent. There were ten offers on the property, and someone came in there and hit it out of the park and got the property.
Sigh. It’s like 2004-2005, all over again - because, really, the right-priced properties sell very quickly still, often with multiple offers. If you’re in the market to buy today, the same rules apply for making an offer as applied back in the good ol’ days - weak offers get batted aside and only the strong survive.
Now, here’s a tale of two sellers. I have one seller who got an offer on their place. The buyers had the effrontery to ask that the seller pay for Section 1 termite repairs. The gall, I thought. This is Santa Cruz. We don’t do that here. But in a market like this, if ever there was a time to try and get the seller to pay for Section 1 termite work, this is it. This tactic only works when there are no other offers on the table and demand for a particular property has shown to be only warm instead of piping hot. As it happens, this is the only offer we’re working with right now, so we’re going to take a long hard look at them section 1 repairs.
Now I’ve got another seller. It’s “the bank” - an REO property. Three offers on it in a week. Before one of the buyers was chosen, I went over the terms of the counter offer the bank was thinking about making. “Now, let’s be clear,” I said. “This property is being sold as-is. Under no circumstances will any credits be given or repairs made. Is your client aware of that and accepts this?” The buyer’s agent replied: “Yes, my client knows that, and that’s fine.” And then today, I got the phone call, “Well, the buyers are going to ask for some credits to repair some of the stuff that came up on the home inspection…”
That’s fine. That’s a complete waste of time, but it’s fine. Why is it a waste? Beyond the fact that the seller, a bank, already said it was an as-is sale and no repairs would be made or credits issued for same, there’s another salient point: there were three offers on the table. We got them in a week’s time. What does that tell you, in a market like this? Two things: the price was low, and demand is high for this property at this price. The bank doesn’t need that particular offer. It accepted the offer, with the understanding that the buyer wouldn’t turn around and try to nickel-and-dime them over repair items. But in a multiple-offer situation like this, any one buyer really is holding the weaker hand.
But go ahead and ask for your credits, if you’ve got the time to waste. Otherwise, suck it up and complete the transaction, or move right along. For right-priced properties, another ready willing and able buyer will be along shortly - and you need to know this when you’re negotiating.
Posted by SantaCruzBroker at 8:57pm
No Comments »
Santa Cruz Real Estate - What’s In, What’s Out
April 22, 2008
This morning I was frantically running off a few flyers for one of my listings in Watsonville (a great mobile home in an awesome park - check it out). I needed to do a few errands down in Watsonville before my weekly office meeting, and loading up the flyer box at this listing was one important thing on my list. As I was standing by the printer waiting for the job to complete, the managing broker of Thunderbird comes up to me and asks if I’d like to participate on a panel.
“Panel?” I said, “Sure! What panel?” You know me, I never look a gift horse in the mouth - if the boss is going to give me an opportunity to be in front of a bunch of potential real estate buyers, I’m there! She explained: “We’re putting on a discussion about what’s in, what’s out in today’s Santa Cruz real estate market. We’re getting a few lenders together and some of the agents in the office to do a public event. I’d like to invite you to come along and talk about foreclosures in Santa Cruz, because that’s what everybody is probably going to want to know about.”
Hey, sounds good. I know about all kinds of real estate aside from foreclosures, but I imagine they’ll let me chime in if I have something I feel needs to be said on another topic. Here are the topics slated for discussion:
- What is the current state of the mortgage industry?
- What loan programs work best in the current market?
- What strategies can buyers use to best position themselves to buy?
- What is the prognosis for interest rates in 2008?
- What do home prices look like now?
- What is a short sale and how do I buy a home through a short sale?
- Why is now a good time to buy?
- What are some ideas to help me sell my house now?
- How can I use the Internet to help me buy or sell a home?
You, dear reader, may have noticed that there’s no topic about buying foreclosure real real estate. Presumably that topic will be added to the next version of the flyer they are handing out.
The panel discussion will be held on Thursday, May 8th at 6:00 PM at Santa Cruz Title Company in Capitola - 1955 41st Avenue, just three doors down from Starbucks (behind the Burger King, Citibank, and various other corporate logos).
If you are interested in going, please call my office to sign up: (831) 475-8400. Or, just contact me and I’ll put you on the list. They say “Space is Limited, Call now to Reserve a Seat” - but I don’t imagine the fire marshall will be on-hand to shut us down if we should exceed the rated capacity from the room. But if you do register ahead of time, we’ll probably make sure there are enough cookies for everyone (no promises).
Posted by SantaCruzBroker at 8:50pm
No Comments »
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 SantaCruzBroker at 7:54am
No Comments »
Short Sales - Salvation or Scam?
February 29, 2008
Unless you’ve been living under a rock, or unless you pay no attention whatsoever to the local Santa Cruz Real Estate market, you have heard the term Short Sale. If you’d like to familiarize yourself with short sales a bit, I suggest you get my Santa Cruz Foreclosure Report. In a nutshell, though, a short sale is when a homeowner needs to sell their property, but the property is now worth less than the amount that is owed on it.
Short Sales have kind of been marketed as a panacea to Realtors to bolster their flagging businesses. There are short sale gurus out there all over the place selling seminars and CDs and books to Realtors on how to do short sales - I spent a weekend in one, and actually it was pretty interesting. Also, short sales are being marketed to home owners in distress as a way to avoid foreclosure, which can be absolutely disastrous on one’s credit report.
But there is a growing chorus of voices saying that Short Sales are not all they are cracked up to be. Realtors are getting burned out by loss mitigation departments who are uncooperative, buyers are turned off by the uncertainty and delay that is involved with a short sale, and of course, sellers are often totally burned when they cannot complete their short sale and get foreclosed on, which is happening a couple of times per week at least in Watsonville right now.
Here’s an interesting bit I read on short sales on about.com:
[Short Sales Are No Bargain for Buyers - 11 Reasons For Not Buying a Short Sale]
It’s an interesting read, and talks about why you, as a buyer, might want to avoid short sales. One of the touted benefits of short sales is that the buyer can get the property at below-market prices. This article claims that is not true - the lenders will let the property go for less than is owed, but not below market price. From the article:
Lenders aren’t naive or unaware of the value of a home. Lenders will insist on a comparative market analysis, known as a CMA, or broker price opinion, known as a BPO. If a lender believes a better price can be obtained by taking the property back in foreclosure over a short-sale offer, the lender may hold out for a higher price. That price will be close to market value. Lenders accept short sales when the home is worth the short-sale price, which means market value.
From the Realtors that I have talked to who have actually done short sales, there is a difference of opinion on this. Everyone agrees that a lender will get at least one, or perhaps two, BPOs on a short sale property. However, some Realtors say that lenders will discount the BPO amount by a certain percentage - somewhere between 10 and 20%. Other Realtors say that lenders don’t do this, that they always want the full BPO price for the property.
I suspect the discrepancy lies in the lenders that are being dealt with - each is different. What’s more, I suspect that even within a lending organization, the loss mitigators are different, and some may be more hard-ass than others, or more experienced, or less experienced.
The fact is, there really are not that many Realtors around Santa Cruz who have a lot of short sale expertise. How do I know? Well, I look at how many short sales have actually been completed, and it’s not a whole heck of a lot of them. The buyer’s agent basically has little to do in this process - it’s the seller’s agent that has the most to do, by far. The buyer just has to sit there and be patient. I’m in a short sale purchase right now, and we were told it’d be about a month until we got a decision from the bank. We’ve just been sent an addendum asking for an additional month.
I got this addendum a couple of days after I read an interesting blog entry over on ActiveRain:
[From Real Estate Blog - Virginia Short Sales are FAKE. Only 5% Close.]
Most Short Sales are what I call “FAKE listings.” Only 1 in 20 sells. In Arlington only 3 have sold out of 65 attempts….The Theory Behind Short Sales: Banks would be better off to accept a loss now, versus going through the legal expense of a foreclosure, just to end up selling it for less later. Win win, right? Wrong.
Read the blog article. Interesting, right? Well, you might say, that’s Virginia! This is Santa Cruz! Well, that’s true, except that Countrywide, US Bank, HSBC, Deustche Bank, Wells Fargo, Citibank - I think these companies do loans in both Santa Cruz and Virginia.
Anyway, if you ask my opinion, I think it’s OK to try and buy through a short sale process if the property in question is one that you really want to buy. It helps if the seller has already had an offer that maybe didn’t come together, and that they are in contact with the lender’s loss mitigation department and have perhaps worked out an agreement with them already, and you can just walk in, furnish the missing contract, cash, and loan, and be on your way. Other than that, you’re probably much better off finding a nice bank-owned REO property, or (suspend your disbelief here, just for a second) buy a house from a buyer who isn’t totally distressed and facing foreclosure.
Posted by SantaCruzBroker at 12:24am
No Comments »
Blog Entries
