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John Woodall, broker, has been a friend of the blog over the last couple of years.  Over lunch one day he laid out his vision and plan of being a short-sale specialist, and to his credit he has helped pioneer the practice here in SD County.

I asked him for an update on how it’s been going – here’s his response:

Jim,

Today I am sad.  My negotiator for the past 12 months just quit.  He was tenacious and had a world-class success rate of nearly 70% with me.  He got burnt out.  The lenders were so dysfunctional that he found himself yelling on occasion and his fiance wasn’t so sure she wanted to marry him after seeing this worst-side of him.  I am not excited about negotiating my own short sales because it may cut my dollar per hour earnings nearly in half, and I’m not sure there’s enough hours in the week to support my lifestyle.
 
I’m bracing myself for dysfunctional lenders and very difficult short sale negotiations for the next year or possibly two.  I do not think the lenders will fix their systems for a long, long time because of the volume and the demanding loan owner/investors.  It saddens me to report this. 
 
100% of the short sales that have been rejected have sold or are listed for less than the short sale offer I brought the lender.
 
On a La Jolla condo, the offer was $468,000.  WaMu countered at $580,000, and then a month later allowed us to close at $468,000.
 
I have 3 clients who have not made a payment in over a year.  One still lives happily in his home.
 
My escrow company fired me.  They have much more profitable REO business and just didn’t have time for the NET sheet after NET sheet after NET sheet after NET sheet which a short sale requires.  Plus I got mad that they overpaid a lender and shorted me as a result.
 
When I have a vacant short sale, I’ve started moving the buyer in immediately during the long escrow wait for two reasons: 1) New CA law requires 60 days to evict tenant after Trustee Sale, so that gives the short sale that much more financial benefit.  2) The buyer pays significantly below market rent eliminating any anxiousness to close soon.

Who do you know with an unaffordable house payment?  Put us in touch because we can save their credit from foreclosure!
 
Sincerely,
John Woodall Owner/Broker/Realtor
www.HomeAuctionAdv.com
PH: 760-631-8046
FX: 760-542-1959

Keith brought to my attention a blog that is discussing the accuracy of real estate websites – which ones have the most listings, and are most accurate?

http://www.techcrunch.com/2008/08/22/how-accurate-are-listings-on-real-estate-sites/

it’s an interesting comparison, plus there are 70 comments, some from industry leaders.

Redfin looks like the best, but in spite of their $20 million overall investment, they are still trying to crack the San Diego market.  Their first agent who was trying to pioneer the market, Erik Van Joosten left to join a local independent brokerage, and the six other agents on their roster haven’t made much of an impact yet.  If you don’t mind me saying, I’ve out-sold SD Redfin this year by myself.

The best comment about the real estate websites was left by Damon, “The bigger question is why all these companies are trying to emulate the MLS. The real opportunity lies in breaking it.” 

It’s that time of year – the little frenzy is starting to wear off, now that summer is winding down. 

I had two REO escrows fall out yesterday.  One was the fixer on Arthur that had nine offers submitted on it, listed for $169,900.  The winner offered $225,000 with a $10,000 credit.  Yesterday, on the afternoon of the last day of the contingency period, a fax comes over from the agent saying the buyer was denied for financing.

You can feel these coming too – phone calls not returned, paperwork not being returned, etc.  The buyer probably didn’t get denied, he just changed his mind and now wants his agent and lender to protect him and his $5,000 deposit.

This is why Countrywide requires that one of their reps pre-quals anyone who makes an offer.  Now we go back to the Countrywide rep to figure why the buyer can’t get a loan, because if they can get one, either they buy or lose $5,000.  

When trying to weasel out of an REO deal with Countrywide, the buyer is required to submit a copy of the loan application, proof of application date, and a copy of the denial letter if the buyer wants a shot at getting their deposit back, but you know the C-wide loan rep will be getting called too.

It’s a real battle on these multiple-offer situations.  The seller is always going to want to take the highest net offer, but if you pick someone that blows out, it is very hard to re-energize the enthusiasm for the property 2-3 weeks later.  Buyers wear out easily and move on, and chances are we’ll end up selling it for less the second time around.

Here’s the letter on the other blow-out, using the alternative reason – the property needs work:

After careful review of the attached Home inspection, and consultation with client, my client has decided to not proceed with this purchase, and hereby cancels the contract per section 6 of Real Estate Purchase Addendum, REO # 071328862.  The cost of repairs, the extensive repair needed, and risk of repairs not entirely preventing re-occurrence of mold and water damage, are too great for my client to accept.  Please convey this to your Seller ASAP as time is of the essence.   If there is any further paperwork I need provide, please let me know. 

Their inspection report doesn’t reveal any drastic concerns, and the way the message was delivered says it all.  These wussy agents don’t have the courtesy to call, they just fax over their letter and duck for cover.  Yes, in this case he’ll probably get his deposit back, but if you ask me, the agents in both cases are the problem.  They rush their buyers into a deal and hope they can figure out the rest later.  In this market, they aren’t doing anyone a favor.

If they at least had the courtesy to communicate along the way, it would help – there are things I can do to assist them with their concerns.  But instead you get the silent treatment for a few days to a week, then they drop the bomb by fax.

Here’s a third one that fell out a few days ago.

We have a contest running on the sales price of 392 Compass, but it has fallen out of escrow twice now, with the same M.O.

Compass originally listed for $359,900, and the bidding war ended up at $378,000.  But that guy’s excuse was the appraisal came in low, even though the 1,600sf house (600sf smaller) a block down just sold for $369,500. 

The second buyer said his reason for blowing out was the roof, but do you remember this one?  It’s the one with the original wood-shake roof, I think he knew it needed replacement the first day just by looking at it.

Countrywide lowered the price to $349,900, after the second fall-out, knowing it would be tough to get back in the game.  We’ve now had 12 offers on it, and haven’t been able to make a deal stick yet.

And it’s only going to get tougher the next few months.

Mayor Bud Lewis’ pet project got approved, according to this SD Daily Transcript article.  Bud’s dad had worked on the original water transfer from the Colorado River, and as a kid Bud used to tag along.  The family history made him want to pursue this deal, and he pushed it through, just like the golf course.

According to sources, the City of Carlsbad used to have $100 million in the bank, but now it’s dwindled down to close to nothing.  The next election should be exciting, there is even an 18-year old running for City Council.

The article:

The proposed Poseidon Resources desalination plant in Carlsbad received approval from the California State Lands Commission, giving it the final permit needed on Friday.  Poseidon hopes to break ground for what will be the largest desalination plant in the Western Hemisphere during the first half of 2009.

The plant is expected to produce 50 million gallons of fresh water per day to 300,000 people in North County.

Poseidon has set up a miniature desalination plant that produces 40,000 gallons of drinkable water every day to demonstrate the process. The mini-plant is on the site where the full-scale plant will be built.

Though some have raised concerns about the environmental impacts of the project, the environmental impact report said effects on the surrounding ecosystem are “negligible.”

The plant will be the first of its kind in California, but another Poseidon desalination facility is planned for Huntington Beach. According to a Poseidon representative, the Huntington Beach plant is several months behind the Carlsbad plant in its planning stages.

I didn’t write this, and it may have been all around the internet, but who cares – it’s good:

10 SIMPLE RULES FOR DATING MY DAUGHTER

Rule One:
If you pull into my driveway and honk you’d better be delivering a package, because you’re sure not picking anything up.

Rule Two:
You do not touch my daughter in front of me. You may glance at her, so long as you do not peer at anything below her neck. If you cannot keep your eyes or hands off of my daughter’s body, I will remove them.

Rule Three:
I am aware that it is considered fashionable for boys of your age to wear their trousers so loosely that they appear to be falling off their hips. Please don’t take this as an insult, but you and all of your friends are complete idiots. Still, I want to be fair and open minded about this issue, so I propose this compromise: You may come to the door with your underwear showing and your pants ten sizes too big, and I will not object. However, in order to ensure that your clothes do not, in fact, come off during the course of your date with my daughter, I will take my electric nail gun and fasten your trousers securely in place to your waist.

Rule Four:
I’m sure you’ve been told that in today’s world, sex without utilizing a “barrier method” of some kind can kill you. Let me elaborate, when it comes to sex, I am the barrier, and I will kill you.

Rule Five:
It is usually understood that in order for us to get to know each other, we should talk about sports, politics, and other issues of the day. Please do not do this. The only information I require from you is an indication of when you expect to have my daughter safely back at my house, and the only word I need from you on this subject is “early.”

Rule Six:
I have no doubt you are a popular fellow, with many opportunities to date other girls. This is fine with me as long as it is okay with my daughter. Otherwise, once you have gone out with my little girl, you will continue to date no one but her until she is finished with you. If you make her cry, I will make you cry.

Rule Seven:
As you stand in my front hallway, waiting for my daughter to appear, and more than an hour goes by, do not sigh and fidget. If you want to be on time for the movie, you should not be dating. My daughter is putting on her makeup, a process that can take longer than painting the Golden Gate Bridge. Instead of just standing there, why don’t you do something useful, like changing the oil in my car?

Rule Eight:
The following places are not appropriate for a date with my daughter: Places where there are beds, sofas, or anything softer than a wooden stool. Places where there are no parents, policemen, or nuns within eyesight. Places where there is darkness. Places where there is dancing, holding hands, or happiness. Places where the ambient temperature is warm enough to induce my daughter to wear shorts, tank tops, midriff T-shirts, or anything other than overalls, a sweater, and a goose down parka — zipped up to her throat. Movies with a strong romantic or sexual theme are to be avoided; movies which features chain saws are okay. Hockey games are okay. Old folks homes are better.

Rule Nine:
Do not lie to me. I may appear to be a potbellied, balding, middle-aged, dim-witted has-been. But on issues relating to my daughter, I am the all-knowing, merciless God of your universe. If I ask you where you are going and with whom, you have one chance to tell me the truth, the whole truth and nothing but the truth. I have a shotgun, a shovel, and five acres behind the house. Do not trifle with me.

Rule Ten:
Be afraid. Be very afraid. It takes very little for me to mistake the sound of your car in the driveway for a chopper coming in over a rice paddy near Hanoi. When my Agent Orange starts acting up, the voices in my head frequently tell me to clean the guns as I wait for you to bring my daughter home. As soon as you pull into the driveway you should exit your car with both hands in plain sight. Speak the perimeter password, announce in a clear voice that you have brought my daughter home safely and early, then return to your car — there is no need for you to come inside. The camouflaged face at the window is mine.
__________________

The REO Trail takes us high into the hills of Oceanside today. Thankfully, they aren’t all junkers, this house was sold brand new in April, 2007 for $662,500.

Today’s price? $479,900!

P.S. This isn’t the steep-slope-meets-meth-lab house, that one got pushed back.

The mortgage market is getting tighter. 

First the DAPs bit the dust, and now the ‘Anti-Buy-and-Bail’ program is kicking in. 

In order to get a Fannie/Freddie mortgage, homebuyers who already own a house have to have at least 30% equity in it to qualify.  If not, full PITI payments on BOTH houses get held against you when qualifying, and you have to have in the bank at closing at least six-month’s worth of payments on BOTH houses.  No credit for renting the previous house, even if you have a rental agreement, which was the usual solution previously.

Countrywide now includes FHA loans in the same category.

A mortgage banker, and FHA expert, told me yesterday that they think that once the new housing bill gets implemented in October that all lenders will eventually incorporate the ‘Anti-Buy-and-Bail’ guidelines into both Fannie/Freddie and FHA underwriting.

Mortgages are being eliminated for these buyers:

1. Those who can’t/won’t document their income.

2. Those who document their income, but have too many write-offs to qualify.

3. Those with little or no money down.

4. Those who own the house they live in, but have low equity and not enough money left over once they make their bigger down payment on the house they want to buy.

How many more buyers are left?

This came over today from the Wells Fargo foreclosure division:

President Bush recently signed into law the Housing and Economic Recovery Act of 2008 which eliminates seller-funded down payment assistance programs (DAPs) as an acceptable source of funds for FHA loans for all lenders, including Wells Fargo Home Mortgage. 

Officially, the Act eliminates seller-funded DAP’s on FHA loans with final credit approval issued to the borrower on or after October 1, 2008. However, our Senior Leadership Team determined there is too much risk associated with exactly following the Act’s requirements.

Rather than risk a poor customer experience or create unsaleable loans, Senior Leadership decided that FHA loans with seller-funded DAP’s must be signed, closed and funded on or before September 30, 2008. 

It is with that decision that Premiere Asset Services will immediately no longer accept offers with FHA loans with seller-funded DAP’s.

Offers that have already been accepted with FHA seller-funded DAP’s with closing dates beyond September 30, 2008  will need to be renegotiated.

From the SD Daily Transcript:

A Default Research report finds pre-foreclosure filings have jumped by 120 percent in Southern California in July 2008 compared with 2007, and in San Diego County, the total reached nearly 50,000 during the past year.

San Diego County posted some 48,889 default or trustees sales notices during the 12-month period ended July 2008. That figure was more than five times the 8,834 such filings recorded during the like 12-month period ending in July 2007.  The research firm said in July, the hardest hit cities here were San Diego with 1,504 foreclosure filings, Chula Vista with 626, Oceanside with 390, Escondido with 379 and Vista with 213.

Default Research tallied 4,539 such filings in San Diego County in July alone. This figure was more than double that of the July 2007 number of 2,187.  The report said San Diego County had a household foreclosure-filing rate of 4.39 percent in July.  While that was a drop of 20.31 percent from June, it was a whopping 260.45 percent increase year over year.

How many of the 4,539 will end up losing their home? 4,000?

We’ve been following the same four agents who specilize in REO sales, and after this latest reading, I decided to investigate further – there must be more to these numbers:

Jun 11 – 328 Actives/98 Pendings = 3.35

Aug 21 – 382 Actives/111 Pendings = 3.44

Sep 20 – 425 Actives/97 Pendings = 4.38

Nov 9 -  486 Actives/128 Pendings = 3.80

Nov 25 – 484 Actives/138 Pendings = 3.51

Dec 14 – 446 Actives/147 Pendings = 3.03

Jan 15 – 474 Actives/149 Pendings = 3.18

Feb 7 -   482 Actives/187 Pendings = 2.57

Mar 13 – 477 Actives/205 Pendings = 2.33

Apr 18 – 467 Actives/247 Pendings = 1.89

May 13 – 418 Actives/298 Pendings = 1.40

June 10 – 344 Actives/288 Pendings = 1.19

June 27 – 261 Actives/261 Pendings = 1.00

July 30 – 169 Actives/195 Pendings = 0.87

August 21 – 121 Actives/147 Pendings = 0.82

Below is my worksheet used to find more facts.  These are the 60 Deutsche REOs in Oceanside currently (out of 61, the last one didn’t fit the page).  The summary:

26 of the 60 aren’t listed on the MLS yet (43%).

The 34 that are listed are spread around between 21 listing agents.  Good idea.

Here is the breakdown:

15 are active listings (price in dark blue)

17 are pending (price in red)

2 have closed (price in light blue)

The average difference between purchase price and list price is -43% (written in left column)

You can also get an idea of the ownership – even though Deutsche Bank is the owner of record, it’s really a bunch of different Deutsche Bank MBS/CDOs. 

The sale price column also shows you the price paid by the previous owner, and the date of sale.  There are only 10 of the 60 that were purchased prior to 2004, and who hit the housing ATM to get in trouble.  Fifty of the 60 were purchased since 2004, and did some version of the walk-away. 

Thanks to my lousy blog host, the best I could do was to make my worksheet an enclosure – click below:

From the Union-Tribune yesterday:

After years of living in apartments, Linda Smith finally thought she had found a place she could call home for a while. It had a two-car garage, a fenced backyard for the dog she imagined – a Maltese or a French bulldog? – was in a good Carlsbad neighborhood and, at $2,150 a month, was surprisingly affordable.

With four bedrooms and 1,900 square feet, there was plenty of space for her and her boyfriend, and for her teenage son while he finished high school.

When Smith saw the half a dozen other people she was competing with to rent the place, she raced to the bank, withdrew most of her savings and paid $4,500 for a deposit and first and last month’s rent.

“It’s not easy to find an affordable house in this area,” Smith said. “We were really excited.”

There was only one problem. Authorities say the two men who rented out the house on Adams Street didn’t own it. It was in foreclosure.

In what may be yet another wrinkle in the collapse of the housing market, prosecutors allege that Alexander Braslavsky, 34, and Anthony Patrick Marshall, 38, posted ads on Craigslist for five foreclosed homes in Carlsbad, Corona and Stanton and rented them to people like Smith.

The two Orange County men pleaded not guilty Monday in Vista Superior Court to four counts of felony grand theft, one count of felony conspiracy, and one count of felony attempted grand theft. Prosecutors say the pair took in about $16,500.

The men were convincing, Smith said. One explained the lease to her “really methodically” and they gave her three keys that worked.

But there were red flags she ignored in her eagerness. The men never asked to check her credit, didn’t know where the valves for the sprinklers or gas were and didn’t give her a copy of the lease.

Smith, 44, said she discovered she had been swindled when she tried to turn on the utilities and was told someone had just bought the house at auction.

The news “steamrolled” her.

“It’s just like being smacked really, really hard,” she said. “It’s an awful feeling to be ripped off for that much money.”

Carlsbad police weren’t optimistic about recovering Smith’s money. All Smith had was a cell phone number and a handwritten receipt.

But Smith fought back anyway. She went on Craigslist and posted a notice identical to the one she had clicked on for the same Carlsbad house, explaining how she had been ripped off. A man from Huntington Beach, who was planning to meet two men about a rental house on Sierra Morena Avenue in Carlsbad, became suspicious and contacted her. Smith called police, who showed up at the meeting instead.

Deputy District Attorney Anna Winn said Braslavsky and Marshall, who has a real estate license, face up to six years and eight months in prison if convicted. A preliminary hearing has been set for Sept. 24.

A deal is being discussed. “We think that we’ll be able to work something out on the 24th,” said James Dicks, Braslavsky’s attorney. “We’re working on paying restitution to the victims.”

Neither Winn nor Lori Staehling, president of the San Diego Association of Realtors, was aware of other recent cases in the county of people trying to rent foreclosed homes. “This is brazen,” Staehling said.

Smith described it as “taking advantage of a situation that’s already been taken advantage of.”

Staehling said there are things people can do to protect themselves, such as verifying ownership through a title insurance company or the county recorder’s office. Prospective tenants also can find out whether the property is in default.