One of the biggest frustrations is that our MLS police, Sandicor, allows listing agents to leave their short-sale listings in the active category, even though they have an accepted offer.
They are supposed to mark the secret box, “accepted offer, subject to lender approval”, but I don’t think it is made obvious on any publicly accessible website.
As a result, buyers are perusing the MLS, finding homes they’d like to buy, only to find out later that they already have an accepted offer. What’s worse is that the buyers who have the accepted offer feel like they are being shopped around by the listing agent (they are), and are more likely to blow out. That’s not in the sellers’ best interest, is it?
Check out the current inventory, and how it compares to previous Aprils:
4/07 = 20,122
4/08 = 21,257
4/09 = 13,351 – 2,101 = 11,250
There are currently 2,101 active listings that are marked as having an accepted offer, subject to lender approval, yet the public doesn’t know it. You deserve to know the truth.
Did you know the active inventory was that low?
The all-time low inventory was 2,301 in 3/04.
Previous April inventory counts from BMIT (any comeback in the works?)
Attached and Detached properties that went pending between Jan. 1 and April 20:
2007 – 9.205
2008 – 8,050
2009 – 12,197 (previous years have all closed)
Attached and Detached properties that SOLD between Jan. 1 and April 20:
2007 – 8,173
2008 – 6,092
2009 – 8,608
Average Sales Price and $-per-sf for those SOLD between Jan. 1 and April 20:
We’re going to define ‘shadow inventory’ as anything on our list from foreclosure radar, which includes NODs, NOTSs, and REOs. There will probably be some homeowners who will find a way to cure their default, but there are probably just as many coming right behind them that haven’t made the list yet, so we’ll call it even.
Our new hire Richard Morgan compiled and sorted these, as he is becoming ‘at one’ with the foreclosure list, and bringing additonal product for our buyers’ consideration. I did some spot checks, and they look accurate. These are detached-only.
Consider the actual number of shadows, and how they relate (%) to current MLS inventory:
Town or Area
FR In MLS
% Inventory Incr.
SD DT condos
It appears that the higher-end areas don’t have that many foreclosures in the works, compared to active inventory. But you can contribute it more to that fact that their MLS inventories are sky-high, and nothing is selling, and/or folks in the tonier parts of town have more money/credit cards and are able to hold out.
Buyers for SE Carlsbad and Encinitas (92009 & 92024) should be elated to see a possible 100+ bank-owned houses coming to their inventories before long – hopefully!
We included La Mesa and Santee for our good friend lgs, but interesting to note how a couple of relatively blue-collar towns are faring. Will the same result trickle over to the coast?
“We recently wanted to put an offer in on a “short sale” home we had been hoping would go up for sale. We had been watching for this home for two years. (The home has not been approved for short sale yet.) The real estate agent already had 5 offers and told us not to bother. He had made a deal with the seller to take the home off the market as soon as he got what he thought would be an acceptable offer for the bank. He was going to present the first offer and use the other 4 as backup and wasn’t interested in our all-cash offer. Is this ethical on the part of a realtor? He can decide which offer he wants to submit to the bank and stop additional bidders?”
There are no rules, no guidelines, no expectations from banks; there is literally nothing regulating how short sales are sold.
The listing agent is the sole decider on how the process happens, and you are at his or her mercy.
1. At least once a day I see an agent input a new short-sale listing onto the MLS, with the note that they already have an accepted offer.
2. I regularly see listing agents representing both buyer and seller after leaving the property active in the MLS for months so they can shop it around.
3. You see sellers more willing to show the home to buyers sent by the listing agent.
Is there payola between listing agents and sellers? You can come to your own conclusions, but until the MLS starts enforcing some rules on how short sales are sold, expect lots of funny business.
WASHINGTON — Rates on 30-year mortgages dipped this week after rising a week earlier and remain just above record lows.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages fell to 4.82% this week, down from an average of 4.87% last week. Rates have been below 5% for five consecutive weeks.
The all-time low of 4.78% was recorded the week of April 2. (Freddie’s records go back to 1971)
The rates do not include add-on fees known as points. The nationwide fee averaged 0.6 point last week for all mortgages in Freddie Mac’s survey except for one-year adjustable mortgages, which had an average fee of 0.7 point.
We’re still waiting on the “super-conforming” loans to be offered. Though they’ve been advertised on Fannie and Freddie’s website since February, none of the local lenders are offering it yet.
By May 1st, we should start seeing lenders offering loans up to $697,500 at rates that are roughly 1/8% to 1/4% over the conforming rates, which puts them around 5.0% if rates stay where they are today, with a cost of 1.0 to 1.5 points (1% to 1.5% of loan amount).
Scott emailed that he saw a property in North Park yesterday that had 52 offers on it.
Bidding wars will be more common, as prices get more reasonable.
Sellers who need to sell must list at an attractive price. The internet provides instant mass exposure, and – boom – many interested buyers show up. The short-sale house on Sonoma in Carmel Valley was open Monday morning for the first look, and the agent had 7 people waiting for him when he got there at 10:00am! By the end of the day he was calling it a ‘stampede’.
Don’t want to get in a bidding war? No problem, there will be years of opportunities ahead.
But if you find a house that suits your needs – here are some tips, in case there is competition:
Clean Offers – Simple offers work. If you can beef them up with a higher good-faith deposit, more down payment, and shorter escrow time, great. But a simple yet solid offer portrays a low-maintenance buyer, and sellers and listing agents appreciate those.
Conventional Offers – If you can avoid FHA/VA offers, especially those packed with credits, you’ll stand out from the crowd. If you have to go FHA, then go for it, but the appraisers are tougher on the condition of the property, so listing agents try to avoid them if possible.
Supporting Documentation – Every pre-qual letter these days say it’s a “pre-approval”, so if you really want to impress the seller/listing agent, include the bank’s actual approval sheet to prove it. If you win you have to show a bank statement as evidence of funds to close, you might as well send that in too, help your case.
Be First – Every once and a while there is a lull in the market, and you might get lucky. if you are the first to send in an offer, and the seller is anxious and doesn’t see or hear of any other offers, they might sign it. But be sure that you’re on to a great match for you, and not just jumpy.
Electronic Signature – Not required, but it is faster, easier, and gives the impression that the buyer’s agent is a top professional.
Introductory Letter – As goofy as these are, I think they make a difference. There is less personal interaction in the real estate business these days (we get many offers sent to us without a phone call from the buyer’s agent) and a simple paragraph on your intent would be favorable. The listing agents don’t care how many kids you have, or that you’ll live in this house forever, they want to know how strong you are – will you endure a tough bank addendum, buy “as-is”, and close on time.
Read Bank Addendums – It’s hard to read every bank addendum in advance, but if you can, and mention that, great. It is a stumbling block for many buyers, and the listing agents know it.
Buyer’s Agent Intro – There are so many agents that most are unknown to the listing agent. Have your agent submit their history/experience too. Don’t go crazy, a half-page will do, just enough to give the impression that they can close a deal.
Amount to Offer – Most banks are going to counter-offer for every buyer to submit their highest-and-best offer, but if you think you might be able to sneak in unscathed, at least offer full price and hope they sign it. If you know there are already offers in, make sure your agent gets the protocol on how it’ll be handled from the listing agent. There are NO rules or standards, the listing agent can handle it however they want – be clear on the procedure. Then know that most buyers cap out at 10% over list price, if you love the place, and can stomach paying 11% or more over list, that should take it.
The Dixon property had 13 offers, and went out at $351,000, or 11.5% over LP with a 20% down conventional offer, and there were higher FHA/VA offers submitted. But the possible low-appraisal issue wasn’t worth the risk.
There are more ideas – leave your thoughts in the comments section!
A hearty thank you to Vicki Mabrey, Matt Stuart, and the ABC News staff for last night’s spot!
I thought it was a courageous move by them in this environment to feature anything positive about realtors. Hopefully it’ll motivate other media outlets to keep reporting other good things about the business.
I have also been impressed with the accuracy in which stories are being reported. Last night was factually accurate, and other stories this year have been telling it like it is. I think the media wants to get it right, and have struggled to sort it out. I applaud their recent efforts!
Reviewing the great news about real estate:
The market is fine, and working perfectly. Those areas with greater number of forced sales are coming down faster in price. Areas like Oceanside have dropped so far in price that the demand is very healthy again – there is no shortage of people who want to buy a house. It just an issue of price. It is the same everywhere.
Realtors would do themselves a favor by getting the word out – especially with sellers. I’m convinced that the agents in the tonier parts of town either refuse to believe that lower prices are needed, or if they do think it, they don’t know how to cause it. IT’S OUR JOB to have tough conversations with sellers about price – sellers want to sell their house, and buyers want to buy
The government’s actions will not make much difference, if any. Their attemps at intervention will be forgotten by the end of summer, and the reality of natural market forces will weigh heavily on sellers. The competition between REOs and all other sellers will be the primary driving force for the next few years.
More than anything, I’d like this TV spot to be what inspires both clients and agents to boldly pursue their real estate objectives. There is a great deal to be thankful for, and I am very grateful to those who continue our exploration of the marketplace here at bubbleinfo.com! Stay tuned!
Let’s tackle a touchy subject – multiple offers, and bidding wars.
A regular commenter No_Such_Reality said yesterday:
“Anything over list is stupidity.”
While everyone would agree that paying more than list sounds ridiculous, virtually every quality home with an attractive price is getting a lot of interest. The wealth of knowledge on the internet for all to see has heightened the anxiety among buyers, and the race is on to fetch the hot ones.
There was a short sale yestetday that had five offers, and the seller had decided to negotiate with two of them. Here’s a guy who has nothing at stake, yet feels the need to negotiate with the best two?
If prices continue to improve (go lower) this insanity will only get worse.
The Dixon property is up to 13 offers, and we’re desperately trying to get Countrywide to commit to a buyer, and end the freak show. Most of the bidders have gone a little above list price, but it’ll take the boldest (or craziest, depending how you look at it) to bid high enough to win.
Would you feel comfortable offering 5% to 10% over list price?
It’s a question that buyers should be considering, because if you are only willing to buy that smoking deal, it is very unlikely that you’ll get a clean shot at it.
The internet is making it virtually impossible for you to be the only offeree on the good ones. If you kept losing out to higher bidders, would that cause you to bid higher next time?
These questions are on the minds of anyone trying to buy today in competitive areas. Trying to weigh the threat of global depression against seeing 5, 13, or 40 offers being made on hot listings is a burden.
What would you do?
This is a tee-up for further exploration of how to handle multiple offers.
I haven’t seen the Nightline show tonight, but I shot my own version while they were here last week for a day and a half. The TV crew followed while I was showing buyers some potential investment properties to buy in Oceanside, and we were looking for fixers. We found them!
We stopped for lunch to write an offer on a larger, but uglier, house, the one with the beehive between the plywood and window glass pane. We were scrambling because the listing agent already had tentative agreement with another buyer, and we were hoping to spoil their party. Even though we offered more, the bank clerk decided it was too late, even though she didn’t have signatures – so we missed out on that one.
Since then the buyers have seen 40 properties for sale, made 13 offers, and have 2 in escrow. All decent listings had multiple offers on them.
At the end of the video you’ll see the 6,800sf house next to Camp Pendleton. It was purchased for $1,352,500 in January, 2008, and 90% financed. Not long after purchasing, the owner called me to discuss his plight. He bought it brand new and had been in escrow for months and months, and while he had his concerns, he went ahead and closed. He never moved in, instead he let the bank have it, and it’s currently listed for $949,000.
For those of you who joined us as a result of today’s Good Morning America, welcome!
You’re joining a serious group discussion on real estate, interspersed with some raw videos taken along the way. Their intent is to help document the current state of affairs by looking at houses for sale in North San Diego County, many of them foreclosures.
To make it easier on you, below are compilations of the 100+ videos shot over the last year. The first four have already been seen by the locals, so they are listed in link form only. The last one is a new production, just for you. They tend to be grumpy and find things wrong with the houses in question, but that’s OK, you want to know the truth, right?
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