Wednesday, August 20th, 2008 at 12:47 PM
Flippin’ Banks
I hope that this is just cherry-picking, and not the start of a trend.
Here are a few examples of recently-foreclosed homes that the banks are trying to sell for more than they have into them – in some cases A LOT more than they have into them.
There are a number of people to point the finger at – there are private mortgage insurance companies behind the scenes begging for mercy, upper management hoping to save their own hides, and appraisers who are out of their normal market area doing bulk work and rushing through the process. There might even be some listing agents who are buried and figure what the heck, there are some comps so maybe they’ll get lucky.
But if the powers that be think they are going to make up lost ground on the backs of today’s buyers, they’re in for a rude awakening. The opening bids, (the price that no bidder at the trustee sale would bite on) now become the sales price on the county records, available for all to see. Buyers are very resistant to making a flipper rich – bank or otherwise.
10556 Hollingsworth, San Diego 92127
4 br/2.5 ba, 1,957 sf YB: 2005
$643,000 SP 12/05
$514,300 purchase loan (+$128K 2nd that washed out)
$397,500 Opening Bid 8/08
$525,000 List Price 8/08
Dear US Bank – you were willing to take $397,500 two weeks ago, what happened?
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1270 Birch, Escondido 92027
3 br/3 ba, 3,546 sf YB:1987
$645,000 SP 8/03
$516,000 purchase loan 8/03
$462,000 Opening Bid 6/08
$609,900 List Price 8/08
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3464 Corte Selva, Carlsbad 92009
3 br/3.5 ba 3,487 sf YB: 2005
$908,000 SP 9/05
$720,000 refi 12/06
$731,000 Opening Bid 7/08
$869,000 List Price 8/08
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2575 Arundel, Carlsbad 92009
5 br/4.5 ba 4,608 sf YB: 2005
$1,151,000 SP 12/05
$1,000,000 refi loan 9/06
$1,073,432 Opening Bid 4/08
$1,127,000 List Price 7/7/08
Sorry, this is Bressi Ranch – you have to pay the Jenae tax now. LP should be under $1M
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14790 Encendido, Santaluz 92127
4 br/4 ba 5,137sf YB: 2006
$2,150,000 SP 12/06
$1,720,000 refi loan 1/07 (plus $322K 2nd)
$1,860,000 Opening Bid 8/08
$1,990,000 List Price 8/08
You’re reading that right, the homeowner refinanced a month after buying it – he was a mortgage broker. Then business died, and so did the income. They moved out, and had an agent give a galant effort trying to short-sell. She told me she had multiple offers in the $1,600,000-$1,700,000 range. But instead of taking what they could get in the heat of the spring buying season, the lender forecloses and takes a chance on fall/winter. Their appraisal may have included a recent purchase by Jake Peavy in Santaluz – but come on, there is only one Jake Peavy. You can’t count on more Padres players being able to pay the big bucks to help you turn a profit!
Hopefully these are exceptions!
Posted on Wednesday, August 20th, 2008 at 12:47 PM in REO Inventory | 13 Comments » | 
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I would seriously consider purchasing 10556 Hollingsworth, San Diego 92127 at 350k.
Sigh…
Good luck getting 525k for house WITH A HOA and that DOESN’T EVEN HAVE A YARD!
It’ll just sit there and people like me are going to continue waiting.
shadash | August 20th, 2008 at 2:11 pmThis bank nonsense and the low-end properties Jim has been posting videos of may help explain why people are still paying more for houses in some of the "better" neighborhoods. After walking through a few of those disaster area properties and learning the details of how short sales, REO listings and auctions work, the prospect of trying to persuade one or two private party, non-NOD’d or foreclosed would-be sellers whose asking price is out of line with the market to accept reality seems like the easier challenge.
GeneK | August 20th, 2008 at 2:22 pm10556 Hollingsworth Way (4S ranch)
Last year I almost closed escrow on the carbon copy of that one (the show home), just the next street over. Last summer this time I agreed to buy at $640k. I walked a month before closing… lost my $5k deposit. A week later they dropped the price $40k for quick resale. Some sucker came along and thought they were getting a deal. At the time it was a lot of money considering you could see the foreclosure Tsunami on the horrizon.
I’m happy I didn’t buy in that neighborhood. A lot of money to be on top of your neighbor and doesn’t have a drive way and has small back yard only. They are condo homes. A lot of rules to follow. You’re not allowed to park your car in front of the garage (you must park on the street) and you’re not allowed to have your garage door up for any length of time beyond that which is necessary. You also have to drag your garbage 200 feet out the lane to the street (where all garbage bins pile up from the houses in the area). The least attractive thing of this neighborhood is the high Mello Rouse and HOA. Top of my head I believe both together were around $600/mo. Not good for resale. Not good for the bank account either.
bearing01 | August 20th, 2008 at 2:24 pmSantaluz has got to be costing $4-$5k per month in upkeep, gardeners, etc. And never forget all of them are paying 1.2%-2% taxes while priced to sit.
My theory, which I just made up wholecloth right now, is that the banks are doing triage. They can take a 50% loss on 10 properties for a $1m total or they can expensively market a poster child high profile FC and get rid of one and still take a $1m hit. Let thee sit until the bank can get around to them. I have a neighbor getting on in years who has his nice $1.3m on the MLS for $5m. Might as well leave it there until it is really going to be for sale.
Rob Dawg | August 20th, 2008 at 2:55 pmrob,
How did that Avocado REO near your house finally end up?
Jim the Realtor | August 20th, 2008 at 4:16 pmThe boost in the list price for 1270 Birch is probably for the green pool (and spa) water. Cool coloring like that must cost a pretty penny.
Smithers | August 20th, 2008 at 4:17 pmSeems to me I recall that, at one point in time, banks were required to sell a property for fair market value and, if that price was more than was owed, to return the excess to the former homeowner.
Is that no longer true?
If it is true, that might explain the pricing…they may be trying to head off a class action lawsuit by showing they at least attempted to get more than the payoff…that would give them great CYA should a class action come to fruition.
jb | August 20th, 2008 at 4:29 pmI completely understand the banks’ position. The easiest way to avoid seeing a problem is to close your eyes.
greenlander | August 20th, 2008 at 6:44 pmI’m seeing this in my area also (Riverside) but usually an amount to cover the Realtor commissions +/- a few $’s. This is on almost all of the forclosures coming on the market right now.
Angela | August 20th, 2008 at 7:37 pmrob,
How did that Avocado REO near your house finally end up?
Getting close.
http://www.zillow.com/homedetails/410-Avocado-Pl/16360346_zpid
$755k to a flipper/contractor. Full rehab. Yard flattened except the pool itself. Every floor, much drywall, every window. Has to be at least $125k in (heck windows were at least $50k). And therein lies the problem. Since sale I’d guess the $755k part went to $625,000. Comp:
Rob Dawg | August 20th, 2008 at 8:39 pmhttp://www.zillow.com/homedetails/16360242_zpid
Too many months in rehab, gonna be a second round of NOD/NOTS in my opinion.
That Santaluz property is wicked cool and I toyed with exploring it as an option a few months ago. I would have offered 1.6 for it but then I read about its Mella Roos and HOAs. Came to $1415 a month; yes each and every month! That’s 17,000 friggin dollars a year extra; above and beyond the $8500 a month mortgage (I assumed 20% down and 7.0% loan with no teaser rates).
Keith Rettig | August 20th, 2008 at 10:10 pmGlad I’m not the only one questioning the banks trying to off-load for more than they are owed.
Perhaps it’s because they are trying to pay off the second lien-holders? Maybe they are trying to prime the seconds so they will allow the firsts to get the new FHA loans which require the seconds to approve the refis? Or they are trying to prop up prices and establish a "new" trend — REOs will be priced higher than they should be, to heck with what the market thinks.
CA renter | August 20th, 2008 at 10:18 pmI posted my comment too soon.
Keith Rettig | August 20th, 2008 at 10:26 pmLet’s assume someone buys it at 1.9. That makes a $10,100 mortgage.
And I forgot the greater than $25,000 a year property tax…plus insurance.
A bit too steep to show off to your friends.