bubbleinfo.com

I don't get 1467 Heritage. If two people were willing to pay 1.15 - why didn't they buy it from the bank for 1.1?
Do REOs have such a stigma? Or did the flipper actually do something nice to it?

I'm seeing multiple buyers on houses in the better areas. Houses in the worse areas are going down fast. It's annoying...

I look at it this way...

The people that could only buy condos are now looking at houses and the people that could only buy worse area house are now looking in the better areas. The people that can afford a better house are looking for "deals" in the better areas as well.

The banks need to clamp down on lending. Then I wouldn't have to compete with the low fico score buyers.

Regarding the property at 7071 Cordgrass, Carlsbad:

My understanding is that it's typical in auctions to have a low starting bid and a reverse price set by the lender, where the reserve is close to the amount owed and the starting bid is very much under that. Is that what was happening in this case?

I know several people who are actively avoiding getting involved in foreclosure auctions and sales at the moment, due to the perceptions that the market has further to drop, and that there's a lot of dishonesty and greed from the lenders with REO's (bogus auctions with high reserve prices, for example). Any feeling for how widespread the lender dishonesty with REO's really is, and how much is perception based on isolated cases?

I kinda feel like there's a reasonable number of potential buyers who are being scared out of the market by all the shady tactics being employed by the lenders to squeeze the maximum amount out of their REO's, even as they are not selling. Shill bidders, hidden reserve prices, fake interest, bogus value information, lack of transparency; there's no way I would try to buy now, even if I thought the market was turning around. Any guesses as to if/when desperation will force lenders to try to reserve the perception they are creating currently, and/or will REO's have a stigma for a long time even after the market turns?

How does the trustee sale work? I know you have to pay in cash, but when do you pay? If the prospective bidders have no idea what the properties will go for, how do you prove that you have the cash so you are allowed to bid? I can't imagine the person who bought the Olivenhain place had a cashier's check for $3.2 million in his pocket on the courthouse steps.

There is no reserve at a trustee sale, if someone would have stepped up with $880,000 on Cordgrass, they could have bought it right there.

Maybe it was the street name?

I'll comment on the REOs that hit the open market after foreclosure - the greed and dishonesty is that of the listing agents. Some want to play games and demonstrate to all that they're a big shot, and this is their little power trip.

Unfortunately, if they happen to list a property that you really want, you better have a skillful buyer's agent who can counter their ego, or, you'll end up like one buyer told me, "I got the agent as the booby prize".

just me,

Cashier's checks only - hard to believe yes, but it happens. I'd expect that anyone who purchases a property in that price range must be fairly certain that it is WAY BELOW value. But in this case, the house better have been completely finished and ready to move into for that kind of money.

This is what SMC said when I told all that this Heritage property would be a big money maker.
.....

Flip,
Did the 925K one sell for a huge profit already or did you forget to add "in 20 years" to your sentence?

.......

Looks like one of us knows what he is talking about

Jim, you are doing a great job of showing what it takes to be a real estate professional today. It isn't thee crushing guilt that I owe you a cup of coffee, you are providing a valuable service.

17265 Camino de Montecillo, Fairbanks
...rented it out instead, for $10,500 per month.

That cash flows nicely for the owners if they didn't HELOC the property. My point being that we have here a property that should have been an excellent investment as well as awesome place to live if it were treated that way and not as a magically refilling piggy bank.

Keep up the good work.

"I'll comment on the REOs that hit the open market after foreclosure - the greed and dishonesty is that of the listing agents. Some want to play games and demonstrate to all that they're a big shot, and this is their little power trip."

Not always. There's one in my neighborhood that is owned by a very stubborn little bank. They have so far ignored both the BPO as well as their listing agent's advice, and sit on the property at a price tag that is about $40K higher than what it should be. I guess they'll wise up eventually.

Anyone know if the buyer was related to or a friend of the flipper. I find it very hard to believe that this is legitimate. That house sat forever at a much lower price before the flipper bought it. On top of that, there are a ton of other similar properties for sale in that neighborhood that have just been sitting at similar or lower prices. Why would this property get two above list offers, while everything else (including this one prior to flipper purchase) just sits? It just doesn't smell right.

Let's say an investor wanted to buy that Fairbanks rental and earn 6%. On the rent of $10.5k, the investor would be willing to pay:

$2.1m

Is 6% asking for too much? I'd think not given that after the mortgage cost (after tax), maintenance, property taxes, etc., the net cash flow would be about zero.

David,

I would agree, and think if you listed it today for $2.1 there would be multiple offers.

With the auction only bringing a bid of $1.6, I guess we can say that the auctioneers brought a value to the table of approximately -$500,000.

Those Auctioneers sucked.

1. No Draw
2. Poor performance
3. No Booze???

come on, Booze is a given in any auction environment.

Thanks, Jim. Maybe I am just being dense, but how can you bring a cashier's check if you don't know how much you will need to bid? If the opening bids are not published beforehand, how could you possibly know what size check to bring to the auction? Do you just get a check for the maximum amount you are willing to bid and somehow get "change" if the required bid is lower? That is the part of the process that I don't understand.

Flip,
You are the man (or woman, don't know by the tag)! I will take being wrong about a house in a neighborhood I am not looking in and being right about the market in general for past 3 yrs any day. You should grab one of the other places for sale in that hood and flip it, let me know how you do.

Re: 3371 Calle Tres Vistas

The folks that bought this said they expect to flip it 6 months from then (thus available August). So I am not surprised they haven't done much to it yet. However if they expect to get much for it from a knowledgeable buyer they better do some serious work to it other than just cleaning the pool.

I wonder what amount of monthly rent they would accept?

to "just me"

Yes, you get change if the final price is below the value of your cashier's check. Weird huh?

What I want to know is if you are paying interest on the full value of the cashier's check during that day? Or does your bank let you slide knowing that you didn't really spend the money yet?

Keep in mind you didn't really get a chance to check out the property either. That is unless you did something like sneak around looking in windows or pay some cash to the recalcitrant owner to let you look inside; that is if they actually open the door for you.

People are still spending $1mil plus on tract homes... things must not be as bad as they say. Keep an eye on 1467, I have a feeling this isn't the last news on that particular house we're going to see.

just me-

I've never bid at a foreclosure auction.

I read a book written by someone who did this for a living, and he wrote something interesting about this: he would bring a bunch of checks all denominated in powers of two.

For example, he'd bring a $512,000 check, a $256,000 check, a $128,000 check, a $64,000 check, a $32,000 check, a $16,000 check, a $8,000 check, a $4,000 check, a $2,000 check and a $1,000 check.

You can actually make any increment of $1000 up to a million dollars with such a combination of checks. Then at the end of the auction he'd take the unused checks back to the bank.

You may be asking "who has a million dollars sitting around to do this?" If you're asking that, perhaps foreclosures aren't for you. There's people doing these deals who have real money.

You can always bring a single cashier's check instead if you want. As Keith pointed out, the trustee *does* refund overpayments.

Thank you, Keith and greenlander, for the explanation. The multiple check idea is an interesting way to do it. While I don't personally have $3.2 million sitting around, I do have a nice chunk waiting for the right buying opportunity. Maybe I should have gone for the $880,000 place in Carlsbad and Jim could have helped me flip it. ;)

Seriously, I am looking in a high end area that hasn't seen many foreclosures (yet), but that may change. I am looking for something to remodel, so something "as is" might not be a problem. This is definitely giving me something to think about. Thanks again for the info.

Think really hard before you actually bid at the foreclosure auction. You'd better know how to do title searches on your own; don't rely on what some title company told you.

It would be unfortunate to bid half a million dollars at an auction just to find out that there was a more senior lien.

For people who aren't professionals at this, you're better off scouting for well-priced REOs. The bargains won't be as good, but at least you'll be sold an insured title.

Great advice greenlander, thanks.

I'll count five advantages of buying a bank-owned property, compared to one bought at the courthouse steps:

1. You can finance an REO
2. You can inspect an REO
3. You can insure an REO
4. An REO is vacant when you see it and when it closes
5. You can back out of an REO deal before it closes if you don't like any of the above.

If you are going to take a chance on a trustee sale, you better make sure it is a smoking hot deal.

When I say "insure" that's both title insurance and fire insurance, you're only hoping that the occupants aren't burning it down while you are on the way to the courthouse.

Jim,
Off-topic, but I thought you might be interested, if you hadn't already seen it.

San Diego Foreclosures - Gimme Shelter, Pt 1 of 4

Chalk me up as another one who sees 1467 as a total head-scratcher.

Did a buyer's agent get paid on this? If so, legit deal or not, that makes me sick . . .

Love the topical music to go with that video.

The agent has 60 active listings, 49 pending, and 70 closed. Not sure where they get the 500 properties they mentioned, but the company he works for has 172 actives and 102 pendings, which is a lot of business any way you look at it. But not 500.

I'm scratching my head too - I saw the house before and after, and the improvements were limited to the coffin-like wood box added over the stucco hole and callede a pool-toy crate, and the promise of a paint job.

The latest buyer of 1467 had one of the more prominent buyer-agents representing them too, a guy that has been around for years and does his share of business. Not a guy who missed or ignored that it was bought for $925,000.

Call it a fluke? It was worse than that. For $1.18 you could have bought the house on Cascadia that was 3,911 sf with nice yard and better ocean view, and it was on the open market the whole time that these two were selling.

Let me be the first to say, "Welcome to the start of the 1st sucker rally on the way to the bottom of property values!
Got xanax?
Coconutz!

The buyers' market is still a ways off... but it's coming. Every day it is getting a little closer.

Median asking prices in San Diego are down another 1% week-over-week.

San Diego asking prices