bubbleinfo.com

We’re going to enjoy this report, coming out today on the Friends of Angelo program.  Here’s an excerpt from the latimes.com:

Most recipients of VIP loans have said in news accounts that they had no idea they were receiving a special deal. But the report states that Countrywide clearly indicated to borrowers they were getting special deals, usually by including business cards indicating the loan came from a VIP unit.

Robert Feinberg, a 12-year Countrywide employee who processed VIP loans, told investigators that it was standard practice to tell borrowers, “Your loan was specially priced by Angelo.”

Chris Dudd is likely to be taking some more heat on this one.  Did you see him deny on CNN that he re-structured the legislation to protect the AIG bonuses, and then admitted that he did it 24 hours later? 

This was his quote on his Countrywide loans last month:

“No. I don’t think so at all,” Dodd told The Associated Press, when asked if the mortgages he received would affect his high-profile role in seeking to stem the nation’s housing foreclosure crisis.

Here’s the link to today’s latimes.com article:

http://www.latimes.com/business/la-fi-countrywide19-2009mar19,0,4389863.story

When I was discussing with the private-party owner of this 4 br/2.5 ba, 1,999sf house on Baroque in Oceanside, we thought $399,900 was an attractive price – she had paid $565,000 in August 2006. 

There’s a 2,300sf house across the street that backs up to the slope instead of having a view.  It listed last month on the range $375,000 to $425,000, and went pending after nine days. 

My listing is at the very end of the culdesac, and has this view:

But we’re not taking it for granted, the seller also had new paint and carpet installed, and it’s vacant/easy to show too.

As the carpet installers were wrapping up on Monday, an agent called who was listing a home down the street.  She said it was a 3 br/2.5 ba, 1,739sf house, and her manager told her to consider all the comps (she had 23) and then knock off 5% because it’s a short sale.  She thought she’d be listing it around $320,000 to $330,000.

Instead, on Tuesday it hit the market at $306,750.

We had thought our $399,900 would look pretty attractive, but now we have our hands full.

There’s also another sign in front of a foreclosed property on the street that isn’t on the open market yet. 

What we thought to be a manageable sale has now turned uncertain.  If you are thinking of selling, one of your biggest concerns is the other potential sellers nearby mucking up your chances - get it done!

Back in the day, we used to love trying to steal the signs of the other baseball team’s third base coach.  Other sportsmen have taken it too far, but I think if the other team is willing to tip you off, then you might as well see what you can learn.

As we know, the banks are overwhelmed – most of the asset managers have hundreds of active files, far too many to handle effectively.  As a result, their pricing is less than effective, and scattershot all over the map – some way too high.

It is futile to lowball an REO early in the listing – it’s too easy for them to blow you off, and work on the files whose offers are closer to the list price.

But it seems like they have all adopted their own price-reduction strategy.  Because the MLS has conveniently included the listing-history button, your agent can chart the progressions of price reductions.  Usually it’s about a 5% drop every 3-4 weeks.

Once you think they are getting close to the right price, anticipate the next price reduction, and make your offer a day or two prior – hopefully you’ll be in the right place, at the right time!

As predicted, the spin on recent sales activity is fast and furious.  This morning on sports-talk radio even Scott and BR were saying it’s a great time to buy a house!

Here’s an excerpt from today’s U-T’s story:

University of San Diego real estate economist Norm Miller estimated that top-end homes may have lost 10 percent to 15 percent in value in 2008 – enough to represent about half the drop-off in sales count as those homes sank below the million-dollar mark.

Miller said costly homes likely will hold more of their value this year than lower-priced homes because fewer owners are subject to default and foreclosure and thus are not forced to sell.   For other high-end owners, there is no urgency to sell, especially when bargain hunters offer far below the asking price.

“I think homeowners in these more stable neighborhoods are basically sitting on the sidelines – that’s the smartest thing to do,” Miller said.  

As a result, the supply of expensive homes remains low and helps maintain price levels.

Supply of expensive homes remains low?

There are 1,913 detached homes for sale in San Diego County over $1,000,000.

There were 39 that closed escrow last month (a 49-month supply), and 169 are pending.

I think we have plenty of supply, in fact, million-dollar homes for everyone!

There are a couple of other quotes, here’s the link:

http://www3.signonsandiego.com/stories/2009/feb/04/1b4million21147-million-dollar-homes-selling-weak-/?zIndex=47546

From nctimes.com:

ENCINITAS —- People who have long wondered whether the city’s beloved “boat” houses look as nautical on the inside as they do on the outside will have a chance to find out Saturday.

For one day only, and for perhaps for the first time in the city’s history, one of the two “boats” is open for public tours.

“This is a one-time opportunity,” said Peder Norby, who is helping organize Saturday’s open house event for the Encinitas Preservation Association. “This is something that probably won’t happen again for many, many years.”

Tours, which will occur from 10 a.m. to 4 p.m., cost $10 per person or $20 for a family.

Link to full article:

http://www.nctimes.com/articles/2009/03/16/news/coastal/encinitas/zd5de92e60266d1a68825757b00615a41.txt

Are you thinking about buying real estate for investment?

Here are a couple of ways to build a real estate portfolio:

1. Buy a house, live in it for a year (or two), then buy a more-expensive house and rent out the first one.

Any owner-occupied mortgage you get will require you to sign an affidavit stating that you intend to occupy the home for just one year – after that, you’re free to rent it out.

It means you have to move again and again, but at least you can get in with as little as a 3.5% down payment (or if you can get a VA loan, no money down on the first house).

2. Another way to invest is to buy, and hold, the cheapies.

LGS has mentioned his acquiring of condos in down markets, and then selling when the market tops out. Holding long-term works too, and let the tenants pay off the mortgage. You can purchase non-owner occupied homes with a full-doc loan package and a 20% down payment.

Make sure you’re comfortable handling minor repairs, or have a good handyman, because if you buy older homes, there will be plenty of maintenance

But last month there were 233 detached houses that sold under $200,000 in San Diego County, so hopefully you can find properties that rent for enough to cover your maintenance expense too. With rents being fairly strong on the lower-end, you should be able to generate a positive cash flow from day one – just look for those that are in decent shape, or whose price leaves you some room for improvements.

Here’s an example of one that’s currently on the market in Vista – for just $104,900 – your PITI monthly payment should be around $650 per month! This just listed Friday and there are already two offers in, so I’ll just point it out for demonstration purposes, but once it’s in shape, it should rent for $1,000 to $1,200 per month.

The statistics on February sales are due to come out, and the talking heads will be touting some dramatic changes.  In Cardiff the median sales price dropped from $1,145,000 to $409,000, and in Encinitas it dropped from $1,100,000 to $606,000.

The way they talk is disturbing though, because they’ll say that “last month homes prices went down 62% in Cardiff”.  But did they? There were only two sales, and they happened to both be very low.

Take it all with a grain of salt.  The measuring sticks we use to gauge the real estate market all have their faults, but these three below can give you a sense of what’s really happening. We determined a while back that dividing the median sales price by the average $-per-sf helps account for the size of the homes – the middle column below compares that measurement year-over-year:

San Diego Detached Home Sales – February

Some general observations:

There is only a hint of relative stability when you see sales increase year-over-year, for a number of months in a row. Areas where sales are in decline still have problems, and any area that is big enough that they warrant their own zip code should have at least ten sales per month.

Areas where the active listings out-number the pendings by more then 4:1 have excess supply, and pressure on sellers to lower their price.

There is always some quirky statistic – the # of sales in both parts of RB were identical.

Areas that are under $200/sf are hot.

Last month there were nine houses in Carmel Valley that sold under $700,000, in 2005 there were only 18 sold all year under $700,000.

In Vista’s 92083 there were 12 houses that closed under $200,000, including this buy of the month:

608 Ocotillo

3br/1ba 1,081sf

6,300sf lot

SP: $467,000  9/05

SP: $119,000  2/09  (75% off)

It was an REO, and the list price at time of sale was $189,900!

For those of you who have been enjoying the NOT and REO lists in the right column, we’ve hit a snag, thanks to the insurance commissioner. 

We’ve been receiving the default data from a title company - here is their latest internal memo regarding SB 133, the new regulation that clamps down on what title companies have traditionally provided for realtors:

“Specifically prohibited for distribution to anyone are lists of loans, Mortgage Leads, Rate Riders, notices of default or trustee sales and lists of foreclosed properties. If any of this information is being provided, whether in written form or on a website, it must cease. Failure to do so will result in an enforcement action against the individual sales representative as well as the Company.”

Hang with me, I’ll get the lists back on there.

Why?  For a couple of reasons:

1.  You may see a property you might be interested in purchasing, or

2.  If you’ve already found a property to buy, you can search for others in trouble around it.

Econman left this comment a few days ago about buying a trustee-sale property:

“The channel of business that has the ‘least of all evils’ IMHO are the trustee sales. (for the very experienced only or hiring JTR for assistance).  Yes you contend with the ’40 thieves’, you have no title insurance policy, and you have risk of getting sued, but with prices currently 35-60% off retail you have some margin for error. I have paid agents like Jim 3-5% just to help with tracking the good deals and assist with evictions, lock changes, etc , so good agents are also involved in this area of business also. You do not need your own cash, (a popular misconception) as investors will “front” the cash if you are a qualified owner-occupied buyer.”

I am willing to help you purchase a trustee sale!

Here are the things I can do:

1. Determine occupancy.  The experienced buyers prefer homes that are vacant, because you can get started right away.  If you want to buy an occupied home, the eviction can take months, and more damage can be done in the interim.  Make sure to price that into your bidding.

2.  Determine value.

3.  Get a read on the overall condition of the property.

4.  Give you the liens of record up to the date of trustee sale. 

5.  Help generate the cash needed to purchase.

I have not completed one of these yet, but I’ve been in the hunt.  I think I can give you reasonable assurance that’ll make you feel more comfortable, but it’ll take work on both our parts to succeed.

Let’s start by identifying properties of interest to you. 

The category in this blog’s right column called ’San Diego County REOs’ has every defaulted property over the last six months, listed by zip code.  You can also check the website www.fidelityasap.com to follow the scheduling, and the results of the trustee sales. 

See if any pique your interest, and email me the address(es) and I can give you a preliminary review to see if they’re worth pursuing.  jim@jimklinge.com

What will it cost you? 

It’ll depend on how much money you need, how much you can contribute yourself, and how soon you think you can refinance to pay back the investor.  Figure 5-10 points on the money, and 2.5% to JtR.

I’m happy to take them case-by-case, so we can talk.  There’s no charge if you don’t buy one.

But if you can get the 35% to 60% discount that econman suggests, they’re worth considering.  But it’ll still mean finding the right property, at the right price.

Remember the mortgage fraud story about Robert Decker?

http://www.voiceofsandiego.org/articles/2008/09/16/survival/458plea091608.txt

He was the agent who conspired to steal the IDs of patients of an Orange County chiropactor to obtain mortgages fraudulently.  They purchased homes in Oceanside, making big commissions and then rented them out – but didn’t make the mortgage payments, resulting in numerous foreclosures. 

Decker plead guilty, was sentenced to six years in jail (and he’ll probably be out in 3-4 years).  The others involved, including the chiropractor, pled guilty, and received sentences of 1-2 years.

Yesterday I spoke with the tenant mentioned in the article who has been following the case.  He said that Decker was evetually found to have been involved in other frauds throughout Southern California.  The prosecutor told him that Decker’s take was around $30 million.

Another example of what is undermining the market, and the reputation of realtors in general. 

This guy doesn’t even have this listing, he is just advertising bank-owned properties before they get on the market.  I called him, and he defended the practice, because his broker authorized it – though I know it is not allowed.  

His list price is at least $100,000 under what the eventual list price will be (click on it twice):

(hat tip to CG!)