When considering buying a trustee sale, you have to wonder, is it better to buy after the property goes “back to bene”?
With inspection contingencies and title insurance included on a regular sale, the risks are lower, but you will probably have the burden of additional comeptition on an open-market sale.
What about price?
We’d like to learn something from the opening bid amounts – are they accurately depicting the property’s value, or just a wild guess based on what’s owed? Will the pricing get better, later?
Does the price get better, or worse, once they hit the open market?
Here’s a review of 100 detached REO listings from Carlsbad to Carmel Valley, listed since 6/1/09:
Listing Status:
ACT: 16
CONT: 7
PEND: 25
SOLD: 52
They aren’t having much trouble finding buyers – how’s the pricing?
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Relationship of opening bid-to-list price:
List Price more than 20% higher than Opening Bid: 13
10% to 20% higher: 18
Less than 10% higher: 21
Less than 10% lower: 20
10% to 20% lower: 13
More than 20% lower: 15
If almost half of the failed trustee sales end up listing for less, should we just wait? Yes, especially if we can determine which banks/servicers are dumping.
Aurora and WaMu are the ones cutting 20% or more off their opening bids – if you’re thinking of buying one of theirs at the court house steps, you may want to re-evaluate.
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Of the 52 solds:
Closed over list: 33
Closed at list: 3
Closed under list: 16
The euphoria of paying over-list has dwindled a bit.
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How did buyers finance the 52 solds?
VA: 2
FHA: 4
Conventional: 29
All-cash: 17
There’s still a heavy influx of capital being used to buy houses, one-third of the sales were all-cash. Are the banks showing their preference? Probably, and a reason to try to be a cash buyer – and once there, you might as well consider the trustee sales too.
The only people who will buy at a trustee sale are those who pay all-cash, are okay with no contingencies, and think that they can get a lower price than after it sells as an REO. That has to be a small number of buyers.
JtR,
Aurora is truly puzzling – I’ve looked at all of their LA County auctions over the past 6 months and they almost invariably (99% of the time) set an opening bid that is higher than the published amount owed. Not suprisingly, they take back almost 100% of the properties they take to auction (the fact that many are option pay ARMS that have been neg-am for a couple of years might have something to do with that too). Why they do that and then cut the price when they market it as a REO is something I would love to hear explained by an insider. I assume it has somthing to do with the pooling and servicing agreements (assuming these loans were securitized) that dictate what the servicer can do to loans pre-auction.
I’d like to see opening bid amt vs close price. how many were +20%, +10%, etc..
JTR, is the opening bid at the courthouse at all related to the price the house goes back to the bene for? In other words, does the bank “buy” it back at the opening bid if there are no takers? Thanks.
Never mind my question JTR, I found that you already answered it in a different post
https://www.bubbleinfo.com/2008/03/20/back-to-bene-2/
Are there any records of the opening bid prices kept? I’m with dafox seeing the relationship between opening bids and actual sales prices would be very interesting.
Bank of America almost never discounts at the court house steps.
Do the banks ever have bidders at the courthouse to bid up the price if there is a serious bidder interested in the property?
What do you guys think of gold?Seems like another bubble to me.All this commodity speculation on the weak dollar seems bogus to me.Been reading about the carry trade madness. Speculators are borrowing at low interest rates from the fed and investing in commodities and risky assets.I guess you have to me a member bank to borrow from the fed?So goldman and jpmorgan are making a killing once again.I guess they are borrowing at 0% and buying a lot of treasuries too.
Is the California Dream still alive?
http://abclocal.go.com/kfsn/story?section=news/state&id=7101769&rss=rss-kfsn-article-7101769
By Dale Yurong
November 6th
FRESNO, Calif. (KFSN) — California has long been regarded as the land of opportunity. But today the state is setting troubling trends because of its economic problems.
The allure of Hollywood in a star-struck state is undeniable. The palm tree paradise has shaped the California dream. Breathtaking beaches are portrayed as playgrounds for the rich and famous.
The stunning views inspire and impress but a reality check does not paint a pretty picture.
An exclusive Action News poll conducted by Survey USA showed just 27-percent of valley residents rate California as one of the best places to live.
Once you open up that Golden Gate you find a state with a double-digit unemployment rate, America’s foreclosure capital, forced furloughs and fed-up college students protesting tuition hikes.
I’ve been monitoring the Trustee sales for the past couple months pretty closely. Some of the opening bid prices are really discounted, I’ve seen 50% or more off of the amt. owed, but Ive ALSO seen some that offer very little discount off of what’s owed so naturally those are the ones that go back to the beneficiary.
There have been a couple of places that I had tried to buy as short sales, only to watch as the lender pulled the rug out from everyone and sold at Trustee…………for 100K LESS! Of course this is a phenomena that is worthy of an entirely separate thread.
Getting back to the Trustee-sale pricing metrics here….. Due Diligence is the motto. There are deals to be had at trustee- worthy of the risk that is inherent in the process, but there are many more that are not worth the added risk and you’d be much better served to buy those as an REO.
Murf2222
what housing bubble,
Commodities like gold are going up because the value of the dollar is going down. This is also called inflation.
Banks aren’t buying treasuries because they’re a good investment. The Fed is forcing them to in an effort to prop up the value of the dollar.
Eventually the Federal Reserve will grind the dollar into worthlessness.
Shadash–Bricks and Mortar have also proven to be an excellent hedge against inflation–Real Estate is a tangible asset.
Real estate is only an inflation hedge if the inflation shows up in wages. With the Fed hinting at structurally high unemployement in the U.S. and with abundant and cheap labor in emerging countries, I’m not sure I’d hang my hat on seeing significant wage inflation in the U.S. any time soon.
Jim,
You *have* to get that new video up.
“Hookers’R’Us”? Hilarious!
There is no inflation. In fact, currently we are in a deflationary period.
“There is no inflation. In fact, currently we are in a deflationary period.”
Deflation + Devaluation (Unhappy times)
Geotpf,
Reality is way more complicated than that. We are in a period that is both inflationary and deflationary.
Liquid assets are currently in an inflationary period, thanks to Uncle Ben and Crazy Timmy’s whirring printing presses and the carry trade they create. That’s why gold, oil, stocks, etc. are all climbing the wall.
Actual goods and services (i.e. the real world) are currently deflationary and with the amount of slack capacity and unemployment and underemployment, that’s not going to change.
Real estate sits at a strange intersection of these two parallel universes, because the deflationary real world is and will push house prices down further and keep them there for quite a while (go look at charts from 1991-1997), but if you mortgage the house with cheap money at a fixed rate, then the mortgage is a good inflation hedge when interest rates go up in the future from the devalued dollar.
Throw out all text books and market fundamentals. History is being re-written and most are behind the wave. And for those who aren’t ridding the wave (the lucky few), it is best to watch from shore. Save for a rainy decade – I’m going long term fixed.
Oil and stocks are both below their peaks. Gold is high because people like you are freaking out.
But when people talk about inflation, they are talking about how much does stuff (housing, groceries, big screen TVs, Barbie dolls, peat moss, Jimmy Choo shoes, power tools, whatever) costs. And stuff now costs less; hence, deflation. Don’t redefine the term.