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Foreclosure Mop-Up


The latest foreclosure numbers are out, and we’re down to less than 1% of all mortgages being in foreclosure:

The national foreclosure inventory – the number of loans in the foreclosure process – fell 29.6 percent year over year in August 2016, according to the latest CoreLogic Foreclosure Report. The foreclosure inventory has fallen on a year-over-year basis every month since November 2011 (Figure 1), and in August 2016 it was 77.5 percent below the January 2011 peak.

The foreclosure rate – the share of all loans in the foreclosure process – fell to 0.9 percent in August 2016, down from 1.3 percent in August 2015. While the foreclosure rate is back to 2007 levels, it is still above the pre-housing-crisis average foreclosure rate of 0.6 percent between 2000 and 2006.

But it still bugs me that NONE of the national real estate players or national media ever questions how or why foreclosures stopped.  After 2+ years of 60% or more growth of foreclosures AND serious delinquencies, all of a sudden BOTH dropped off a cliff at the end of 2009.

Our federal government and the banking industry obviously conspired to stem the losses, and then funded community activist groups who buy mortgages at a discount.  Here is an example:

Nevada’s distressed home loans are still caught in economic quicksand, but not for lack of trying to combat banker haste with consumer-oriented ideas. The National Council of La Raza (NCLR), for example, has invested significant donor funds in efforts to bail out underwater borrowers when banks won’t negotiate fairly.

“You want to keep families in place if possible, so foreclosure is the absolute last choice that we want, if we’re involved in the transaction,” NCLR Vice President for Housing and Community Development Lot Diaz told ThinkProgress.

Diaz’s colleagues at an affiliated non-profit called Hogar Hispano purchase distressed mortgages and then return the homes to the owners at a fair market price that restores their chances of building up equity in the property. Hogar Hispano did 463 of these distressed debt acquisitions in 2013 alone, and saw a favorable outcome for the original homeowner in 316 of those cases.

Hogar Hispano also buys up houses that have already been taken over by the bank, known as REO properties, and then finds a buyer for them or converts them into rental units targeted at low- and moderate-income families. The group says its REO work has created close to 900 new homeowners and turned bank-owned homes into occupied housing more than 1,100 times, in Nevada and elsewhere. (LINK)

The whole mess just got swept under the carpet, which gave the insiders a fantastic opportunity to profit!  What a country!

Posted by on Oct 12, 2016 in Foreclosures, Foreclosures/REOs, Jim's Take on the Market, No-Foreclosure as Banking Policy | 3 comments

Home-Price Negotiations


When it comes down to the last 2% to 4% on price negotiation, why is there so much trouble putting a deal together?

It because the participants had no strategy going in – they just start making offers or counter-offers without regard to where it will lead.

Without a specific strategy, it’s too easy for either party to throw their hands up and say, “I don’t know how I got here, and I don’t like it!”.

This is another reason why we should adopt the auction format to home-selling.  The auctioneer has a very specific strategy on price, and the increments of change – all the buyers have to do is say yes or no.

Until the auction format takes over, what can we do?

My ideas on offer/counter-offer strategy:

  1.  Keep It Simple – Negotiate in 25-50-75-99 increments, they are easier for the receiver to compute the differences.  It also helps to give the other party a strategy for their response – if they are paying attention.
  2.  More Simple – If you can’t get on a 25-50-75-99 track, then sellers’ counter-prices end with a nine ($879,000), and buyers end with a zero ($850,000 or $860,000).
  3.   Buyers – Have your initial offer reflect the days on market. If you offer 5% under the list price on a house that has been listed for 3 days, you won’t get a response.  Make the same offer 3 months later and the seller should be happy to engage.
  4.   Velocity – Make a big price move with your first counter-offer to encourage the other party (heck, they might be so happy they just sign it), but then pull back on the second round.
  5.   Don’t Go Longer Than Two Rounds of Counters – Parties get tired of playing, and burnout sets in quickly.
  6.   Expect to Split the Difference at Some Point – it’s a win-win solution.
  7.   Know the Other Agent’s Level of Competence – If the other agent sells less than one house per month, they are likely to willy-nilly the process. Your agent needs to help them along.

If you are the buyer, it would be nice to pick up some signs along the way to assist with setting a price strategy, and lay out your expectations mentally.

Signs of seller motivations, and what a buyer can expect:

  1.   How difficult it is to see the home.  If the listing agent blows you off for a day or two, or wants to show the house at their convenience, not yours – then you can expect tough sledding ahead.
  2.   How quickly they responds to your offer/counter.  If the sellers doesn’t respond within 24 hours, it means they don’t understand buyer’s remorse – and don’t care.
  3.   How close they stick to list price.  The closer they stick, the more (over)confident they are.
  4.   Who the seller picked for a listing agent will tell you just about everything you need to know about your chances of success.  If they select a reputable, experienced agent, then you will know because the house looks sharp, it’s easy to see, and the price is attractive. If they picked a loser, then the photos are terrible, the house looks like crap, it’s hard to see, and the price is 10% higher than comps, or on a goofy range.

Remember that it takes four things to make a deal – the right house, the right list price, the right seller, and the right listing agent.  If any of those four are out of whack, then a deal is unlikely.

Get Good Help!

Posted by on Oct 11, 2016 in Auctions, Jim's Take on the Market, Listing Agent Practices, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 0 comments

Inventory Watch


The hot streak has finally been broken – only 46 new pendings this week, after averaging 67 per week over the last 12 weeks!

Thus, as buyers take their foot off the gas, we begin a 4-month slogfest where only the motivated sellers will surrender to what the market will bear.  They will still sell for record pricing, if their ego will only let go of that last 2% to 4%!

I saw one this weekend where the seller had an offer that would net him about $500,000 over what he paid, but it wasn’t enough – he wanted another $25,000!

Here is how we compare to previous years:

Click on the ‘Read More’ link below for the NSDCC active-inventory data:

Read More

Posted by on Oct 10, 2016 in Inventory, Jim's Take on the Market | 2 comments

Rates Creep Higher


Buyers looking for any reason not to buy will enjoy this news:

Mortgage Rates were modestly higher on Friday, despite a weaker-than-expected Employment Situation (aka NFP, nonfarm payrolls, or simply “the jobs report”).

NFP is the most important number on any given month in terms of market-moving economic data.  When NFP is lower than expected, rates tend to move lower.  Even though today’s NFP didn’t fall too terribly short of forecasts, rates nonetheless made a counterintuitive move higher, confirming the generally pessimistic attitude in the bond market at the moment.

The modest increase in rates means we continue to operate at the highest levels in more than 3 months.  Most lenders than had been quoting 3.375% on conventional 30yr fixed scenarios are now up to 3.5%.  Many have moved up from 3.5 to 3.625%.

While there are some early signs that a ceiling could be forming, it doesn’t make much sense to float in this environment.  That will continue to be the case until we see either a big push back toward lower rates, or an extended period (5-10 days at least) of stability at current levels.

Read full article here:

Posted by on Oct 8, 2016 in Inventory, Jim's Take on the Market | 1 comment

Granite-Slab Yards


Granite-slab yards we considered – all around Miramar Rd. All are good:

Amazon Stones



Arizona Tile


We were looking for max efficiency, and after I previewed all five, we hit four yards in two trips – which for the homeowners turned into a brief 2.5-hour investment on how to spend smart money to sell your house for top dollar.

Keep going until you find something you like!

Posted by on Oct 7, 2016 in Jim's Take on the Market, Listing Agent Practices, Remodel Projects, Staging, Why You Should List With Jim | 3 comments

Leased Solar Panels

Solar power is a great idea, but do you buy or lease the system?

If you purchase your solar panels, then when you go to sell the house, it should provide some extra value to the buyer.  Exactly how much is tough to estimate, but it wouldn’t be more than 50 cents on the dollar – it is a feel-good feature.

If you lease your system, there are pitfalls when selling:

  1.  The buyers have to assume the lease.  I don’t think the actual assuming of the lease is that big of a deal.  Buyers already have their financials handy to get their loan, and mortgage underwriters are tougher than solar-lease underwriters.  It is the additional hassle that can irk a buyer.
  2.  The seller and listing agent have to initiate the lease-assumption process.  The solar-lease company won’t talk to the buyers until the lease application has been submitted, which means the seller and listing agent need to request it. The leasing company has 10 days to respond, but the listing agent expects the buyer to release all contingencies within 17 days – which is only going to happen if the listing agent knows to request the lease application promptly.
  3.  There is a buyout.  This is where the fun begins.  On one hand, the buyer gets the benefit so the seller expects you to take the full package as-is. But the lease goes for 20 years, and the lease payments total around $34,000. Plus, there is a buyout on top of that?  Buyers don’t expect that additional buyout cost, and would like some negotiation.

Here is a typical buyout schedule:


4. The solar-lease company records a UCC-filing against the property, which prevents the seller from selling or refinancing without permission from the solar-lease company.

Do sellers fully understand what they are signing when they lease solar panels?  Probably not, and if they try to sell their house over the next 20 years, they will get a not-so-friendly reminder.

Below is a link to a general discussion about solar panels:

Solar Panels: Are They Worth the Cost?

Posted by on Oct 7, 2016 in Jim's Take on the Market, Listing Agent Practices, Thinking of Selling?, Tips, Advice & Links, Why You Should List With Jim | 1 comment