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 »
Santa Cruz Real Estate Investment Club
February 19, 2008
Today I had the honor and privilege of making a presentation at the Santa Cruz Real Estate and Investment Club. They hold weekly meetings, every Tuesday at 6:30 PM at the 41st Avenue office of Santa Cruz Title Company. They also have a Santa Cruz Real Estate Investment Yahoo Group on-line.
I cobbled together a PowerPoint presentation, about 20 slides or so, about some market statistics and the opportunities that are there for investors in Watsonville who want to buy short sale or REO real estate. I had 30 minutes to talk, it actually ended up being closer to an hour because there were a lot of questions from the people who were there.
It’s kind of amazing how much opportunity there is for investors down in Watsonville, but there’s so few people right here in Santa Cruz who know what’s going on down there. I think it kind of speaks volumes about the schism in our beautiful little county here.
Anyway, I had fun doing the presentation, and I’m going to try to do some more such presentations at other investment clubs in the area. I’ll keep you posted.
Posted by SantaCruzBroker at 10:57pm
No Comments »
Blog Entries
