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Those on tsunami watch are having trouble staying awake, but after all the dripping it’s no surprise that the weekly totals of new REO listings coming onto the MLS in SD County are only slightly higher:

While NAR has taken a lead role in supporting the tax credit extension, you have to believe the banking lobby is pushing it hard too. Don’t they have to be thinking that the next six months is a prime opportunity to dump a load of REOs?

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!

The fourth of the REOs assigned to me hit the open market, and it should be a good test of the 92057 zip code.  We’ve seen the lower-end properties take a bath recently in this zip, with most suffering 40% to 60% declines.  What happens once you move up the price ladder? 

This house is in the Jeffries Ranch area in rural east Oceanside, where house trails run right through your front yard!  It sold just 15 months ago for $700,000, and the same floor plan across the street with a big pool is in escrow currently, listed for $669,000.

Our price?  $549,000.

1488 Serene, Oceanside, CA 92057

4 br + office/ 3 bath

2,963 sf

3-car garage + RV pkg

10,500 sf lot

YB: 2000  HOA = 0, MR = 0

Hope everyone has been enjoying the U.S. Open, looking for a big finish today! 

This condo is the third property in my REO group to hit the market:

428 Parkside Dr., Oceanside, CA 92054

2 br/1 ba  1,017 sf

YB: 1972

HOA = $250/month

It has a storied sales history too:

4/01 – $123,000

11/03 – $215,000

10/05 – $310,000  (foreclosed)

1/07 -   $250,000 (foreclosed)

6/08 -  $153,900 list price

Any resemblance to a Bell curve is purely coincidental…..

We’re in the ‘pre-listing’ stage of nine Countrywide REOs, which includes evicting occupants, removing trash, making repairs, and getting a price. 

For those wondering if listing REOs will become a full-time obsession, rest easy.  I have hired three agents and two staff people in the last 30 days, growing Klinge Realty to ten agents and three staff people.  We have excess capacity, and I think we could handle a hundred of these REOs – bring ‘em on!

Having adequate staffing enables me to continue my Carlsbad-to-Carmel Valley commitment, and keep the blog running!

But folks here are probably interested in the workings behind the scene on these Countrywide REOs, so here’s a peek. 

1.  The properties sent are so fresh off their trustee sale that eight out of nine don’t reflect the bank’s ownership on the tax rolls yet.

2.  The properties are assigned to different asset managers, but they all seem to be on it.  I’ve had over 50 messages through the system already, and by 1pm yesterday, five of the seven occupied properties already had their eviction notices processed with the attorney.

3.  The processing is automated on the website www.REOTrans.com which also gives the public a glimpse of the properties once they are officially on the market.

I don’t like advertising properties that don’t have a price on them – who cares about a property unless you know what they want for it? 

But to give you a taste of what’s coming, here’s the one that will probably be the first to hit the open market:

392 Compass, Oceanside

4 br/2.5 ba, 2,209 sf

$469,000  SP 3/04

$431,000 loan amount foreclosed

YB: 1979

HOA & MR = $0

Compass Road is up on the hill in Sea Mesa, a typical tract built in the late-1970s in Oceanside.  It’s a decent neighborhood too – I sold one of the 2,021sf models down the street to a postman in 1997, and they still live there (cops and postmen know where the better neighborhoods are).  This one has a 10,000 sf lot, but the flat part isn’t that big, and well, um, I guess you can say the house needs some work.  It still has the original wood shake roof, and the interior needs a good carpet-and-paint job, at a minimum. 

I don’t anticipate any repairs being done by the bank, so figure this one "as-is".  The opening bid at the trustee sale didn’t show up on the tax rolls, so I’m not sure what that was.

What will the list price be?  I don’t have their opinion on price yet, and I’m not sure how much influence I will have.

They know about the blog, maybe they’ll listen to you?  A set of Padre tickets to the person who guesses the closest to the eventual list price!  The last two sales in Sea Mesa were both the 2,021 sf plan; $450,000 in December, and $399,000 in March.

There’s been a slow down in the velocity of REO inventory growth the last few weeks, though it’s probably just due to the banks having more success in unloading what they have, rather than a decline of foreclosures. Here is the current inventory of REOs, by bank:

SD County Houses and Condos Owned by Individual Banks

How are these banks doing with their REO sales? In checking their sales, they’ve done a little better in March – add the last day of the month in there and sales are probably up about 8% to 10% over February – but they have to be at, or near, peak capacity in being able to handle these. Here are the monthly counts of houses and condos sold by each bank:

With these major banks only selling about a fourth of the REOs sold in these months, it shows how the lenders (prime and subprime) were able to lay off their paper on many investment trusts/individual buyers on Wall Street.

P.S. There is still one more day left in March to account for – the tax rolls are updated through the 28th.