For those who were on vacation last week and are interested in trustee sales, we did an informative trilogy with Adam Rappoport. Click here to start at the beginning, and scroll up from there – and read the comments, Adam was very candid in responding numerous times!
At first glance it would seem crazy to take the additional risks when buying at the court house steps, and once you consider Adam’s thoughts, they might convince you further!
But here are the reasons you should consider buying at the trustee sales:
1. Less competition.
Adam and the other flippers are competing intensely over the cheaper homes they can turn and burn. For those who want to buy a house over $600,000, the competition thins out quickly – those properties are more risky for flippers, and most buyers don’t have the cash or guts to purchase off the ‘steps.
2. More selection.
On the MLS there are only 1,311 active detached listings of detached homes between Carlsbad and La Jolla. On foreclosureradar.com there are 3,951 properties in the same area (567 SFRs on the auction list, and another 3,384 on the NOD list).
3. No listing-agent involvement.
The listing agents are running interference for the sellers. The pricing is all over the map, they’re reluctant to provide any real help, and they leave the bidding open for days or weeks. As a result, you don’t know anything about the competition, if any. At the trustee sale, if there is competition, you’re looking them in the eye, and can walk away as a homeowner.
4. All homebuying is risky.
The risk seems more alarming when you hear that you aren’t guaranteed a tour or inspection of the house, and there could be undiscovered liens. A regular transaction has safeguards, but all houses are sold “as-is” without warranty – the only difference is that you’d have more people to sue if something went wrong on a regular sale.
As you’ve seen here I’ve been working on my own trustee-sale program for clients, where I help find the right properties, navigate the inspection/lien concerns, and help arrange for bridge financing.
I am being very deliberate in putting this together, and it’s coming along nicely. We are going to attempt 1-2 in December, and use video to help document the process so you can see how it works.
If you are in the $600,000+ price range and have at least 30% down payment (with a maximum loan amount of $697,500), then contact me for more details if you’d like to consider buying a house at the trustee sales!
If you think it sounds too risky, no problem, it is.
I don’t mind battling it out with you for those regular sales, and I think that’ll still be my primary service provided. But the activity doesn’t appear to be waning for the “quality” properties. Here’s a short-sale listing that looks fairly plain-jane in the photos:
WASHINGTON, DC — Fannie Mae (FNM/NYSE) today announced that the company has launched several initiatives supporting neighborhood stabilization and promoting home purchases by owner occupants and buyers qualifying for public entity housing programs.
To provide owner occupants and public entities an advantage in purchasing Fannie Mae-owned foreclosed properties, the company has created the First Look initiative.
With First Look, only offers from owner occupants and buyers using public funds are considered during the first 15 days a property is on the market.
Offers from investors will be considered only after the first 15 days have passed.
“First Look provides owner occupants and public entities that are committed to the community an early opportunity to purchase one of Fannie Mae’s Real Estate Owned properties,” said Terry Edwards, Executive Vice President for Credit Portfolio Management at Fannie Mae. “As a result, we believe First Look will help us make progress toward stabilizing neighborhoods and building stronger communities in this difficult market.”
In addition to First Look, buyers using Neighborhood Stabilization Program (NSP) funds from the U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) program, HOME Investment Partnerships Program funds from HUD, local housing trust funds, or charitable foundation funds may also qualify for the following benefits:
Deposit Waivers – Fannie Mae will waive the earnest money/deposit requirement for public entities using public funds to purchase a Fannie Mae-owned property. Individual homebuyers who have qualified for public funds and want to purchase a Fannie Mae-owned property do not have to meet the usual earnest money/deposit requirement. Deposits for these buyers can be as low as $500.
Reserved Contract Period – Upon receipt of an acceptable offer, buyers have the ability to renegotiate their offer after obtaining an NSP-required appraisal.
Extra Time for Closing – Buyers receive up to 45 days to close — 15 days more than is usually permitted for purchases of Fannie Mae-owned properties.
Fannie Mae’s First Look initiative was piloted in August and is rolling out across the country. Initial response to the initiative has been positive.
A realtor had listed this house in June, noting that it was a short-sale flip in progress. They had arranged (conspired) with the seller to submit to the existing lender a short sale package at a lower price, and then listed it on the MLS for $598,321 before the short sale was approved – intending to pocket the difference.
Unfortunately, for low-income families, even deeply discounted foreclosures are out of reach because of competition from more prosperous first-time buyers and investors. “If it wasn’t for this program, they wouldn’t qualify for something like this,” Quezada said. “Someone like them wouldn’t stand a chance to an all-cash offer.”
The home, which was bought out of foreclosure by Habitat, will cost the couple $208,000. In order to afford the property, Habitat arranged for the couple to receive a $65,000 silent loan through the city of Lynwood. (A silent loan, repaid only when the property is sold or refinanced, is often offered by cities and other local governments to facilitate affordable housing.) They will get a traditional loan for the rest.
The couple put in 125 hours working construction sites and other jobs for Habitat to qualify to buy the home.
Habitat for Humanity, Greater Los Angeles, aims to buy and renovate 20 properties during the fiscal year ending June 30. Rank said she sees the new availability of bank-owned properties as a way to preserve the group’s mission despite sagging donations from traditional donors, including banks, builders and the entertainment industry.
“We have a heavy investment in these communities, and we don’t want to see the families fall down again because of a high number of foreclosed homes sitting boarded up and vacant in their neighborhoods,” Rank said. “Right now it is really hard for low-income buyers to get a loan on properties, so Habitat is the builder and the lender, and we lend at zero interest.”
We were talking about the sampling of 100 REOs in SD County that sold since 9/1/09.
Only 5 of those 100 sold by BofA/WFB ended up closing for more than $600,000, and ONLY ONE was in our Carlsbad-to-La Jolla stretch.
It seems like all we talk about here are trustee sales, foreclosures, REOs, etc. If you are waiting to buy one, let’s keep track of how many and the relative activity.
Let’s quantify how many properties are in trouble currently, and in particular, how many valued at $600,000 or higher in the Carlsbad-to-La Jolla region.
You can sort by ‘property value’ in foreclosureradar, and it is fairly accurate.
Foreclosureradar.com Carlsbad-to-La Jolla Properties Valued Over $600,000:
Town or Area
Oct MLS sales-all
There has to be several in each of the first two categories that still think they are loan-mod candidates, or in line for short-sale approval. We’ll see if they can pull it off, and why I want to track these stats over the next year or two.
The “Oct MLS sales-all” above includes attached & detached, REO and non-REO over $600,000.
How about the MLS REOs vs. Non-REOs?
REO Listings, $/sf
Non-REO Listings, $/sf
Use this data at your leisure – some people may find the tsunami moving so slowly there’s no use waiting any more (there are 828 in the pipe and only 14 closed on the MLS last month?).
Others may find the foreclosure pipeline a bit daunting, and wait some more. Consider the 743 NODs and NOTs and how many will loan mod or short-sale successfully vs. how many won’t.
I’m guessing 50/50, because I think there are plenty of loan-mod candidates that will cave when it comes down to it, and take a slight change in terms to stay in the house – for now.
Mortgage rates moved up significantly last week. Will rates continue to rise? Expect mortgage rates to go up this week closer to 3.1%. Freddie Mac will release the 30-year fixed mortgage rate tomorrow morning. Stay tuned.
Jim the Realtor is legit - I interviewed three brokers; he said list price should be $100,000 higher than the other two brokers; listed it with him and had all cash (no financing) offer in two days, five day contingency period, closing in two weeks - and it closed at his recommended list price. I could not recommend anyone more than I recommend Jim the Realtor.
When we moved to San Diego in 2005 we rented a big house on Mt. Soledad (La Jolla) with 180 degree ocean views for the same payment as a mortgage on a dump in Chula Vista. Clearly something was wrong. Yet, the media was full of the usual happy-talk nonsense, so I was glad to find Jim's blog. I've followed his honest assessments and data since.
We decided to sell and move to AZ at Thanksgiving. Dec. 1st we met with Jim to sell our home. We closed today (29 days later). Jim orchestrated a feeding frenzy -- we had 25 showings in 2-1/2 days, multiple offers, and sold for well over asking price. I'd say he earned his commission! We have owned and sold homes in 5 different States always using experienced, productive, full-time realtors. Jim outshines them all.
You don't decide to sell and close 29 days later over Christmas (with COVID lockdown) without some miracles. Donna was amazing at performing lots of those miracles and ensuring that everything was done right and on time. They are a terrific team with a very responsive and professional network.
Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. Basically we just approved what they suggested and Donna handled literally everything. We placed our house on the market and within the first day we had multiple offers well above asking price! We couldn't believe it. We were overjoyed! Jim countered the offers to weed through them, and everyone came back with way more. It was amazing, and we are ?? sure it was because of the staging and repairs the Klinges suggested we do.
Due to unforeseen dishonesty from the buyers lender, we hit a big hurdle when trying to close. We had already moved out of state and were shocked when three days before closing the lender dropped a bombshell on the buyers and us. However, Jim and Donna handled it like veterans, not afraid to play hard ball and represent their clients. After a few phone calls with us, and several between Donna and the lender, they had a plan B-Z to make sure we were taken care of. In the end we closed with even more money than we ever thought possible and with very little work from us. The Klinges handled this entire "2020" worthy event with the utmost professionalism and did everything in their power to not only make this as smooth as possible for us, but we also walked away with more money from the sale of the house than we ever hoped for. After working with Jim and Donna, you don't ever use anyone else. They are hands down the best team to represent you in any scenario.
Working with Klinge Realty Group was a great experience! They are very responsive, professional and knowledgable about the real estate market! I would definitely recommend Klinge Realty Group.
Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. We had a few challenges with our property and they were able to coordinate the resolution to everything, including items that I would not think would ordinarily be their responsibility to handle. They made the whole process effortless on our part. They are folks with high integrity and we cannot recommend them highly enough.
Review for Member: Donna Klinge
I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in about 15 years. On the buy side, Jim is the PERFECT combo of: completely digitally savvy (he will pull data all day long until you feel comfortable with your chosen house, area, school district, anticipated appreciation rate...anything!), he's super well respected and known in the area by other agents, an amazingly cool but strategic negotiator, is totally devoid of desperation for a sale/commission, and more.
Then once you get into contract phase, Donna literally handles every last and final detail in a concierge-like manner -- totally shielding you from the daily back and forth, noodling and annoyances of the buyer's requests. She solves it ALL; it's miraculous what that woman accomplishes over and above what is even expected in a buy/sell transaction.
On the sell side, Jim and Donna do the same, but even moreso. Donna in particular truly takes everything off your plate: she'll manage getting the house painted, the carpets replaced, she'll go on site (as she Jim both did for me when selling our rental properties) to work with the renters and make sure the house is ready to show -- freeing me to have to take time off of work to do so. They work with A+ integrity, too, so you know you are serving all parties fairly and lawfully throughout.
A home purchase/sale is the most considered you'll ever make. HIRE A SAVVY AGENT, not a friend!, and get what you need out of the transaction. Jim and Donna are our agents for life.
Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community. Jim's vast experience means he has worked with several realtors and knows the market all over north county. Donna is AMAZING in processing everything in the transaction. She scheduled trades people to work on the house in preparation for the sale as well as the repairs needed before closing. She communicated clearly every step of the way about what would be happening. She took the weight off my shoulders for the whole process. I will always use Jim and Donna for my future real estate needs and I whole heartedly recommend them to anyone buying or selling a home.
Jim and the team at Klinge Reality are without a doubt the best in the business! Not only was Jim helpful and extremely knowledgeable, he was patient and determined to help me find my first home. Jim and his team have been in the business for many years, and it shows. Jim is a wealth of knowledge and was my biggest proponent despite the temperature of the competitive market. I ended up getting the perfect property in my dream neighborhood all thanks to Jim. From the day my offer was accepted, Donna was a real lifesaver. She was extremely helpful, responsive, and knowledgeable when it came to every minute detail, and held my hand through the process. As a first time home buyer I had no idea what the process would entail, but Donna curtailed every concern I came across and made the escrow process feel seamless. Jim and Donna provided me the best home buying experience, and I am very grateful for all they did for me. It was truly a pleasure to work with Jim and Donna and I am already looking forward to the next time we work together!
Review for Member: Richard Morgan
Richard is an amazing realtor! He has high integrity and genuinely cares about his clients and their needs. Richard paid close attention to what I was seeking in a home and was very patient in our search to find it. I would highly recommend Richard and will use him for future transactions. Truly a different kind of realtor experience!
Could not be happier with my experience with Jim and his team. He helped me sell a very unique and challenging property. Throughout the entire process he was always available, honest, transparent, trustworthy, and always put my interests as a seller first. A (rare) true professional! During close of escrow Jim went above and beyond to complete the deal. It would not have been possible without his experience, fantastic team, and pure dedication. Highly recommended!
Thanks Jim and Donna Klinge!