Let’s consider the other side of the coin.
1. The news is ALL BAD.
Whether it’s mainstream media or the blogs, the news about the real estate markets is not only bad, but it’s getting worse every day. Heck, even Gary Watts issued his nine-page disaster report!
The government’s programs aren’t solving the problem either, they’re just kicking the can down the road. The trillions they are spending are going to come back to haunt us someday too, and the way it looks, financial armageddon can’t be far off.
2. The servicers are getting worse.
It might just be us, but the processing of REOs and short sales has not improved.
In the last couple of months, I’ve experienced cases getting mangled in the new-clerk shuffle, mortgages being sold while in escrow, and counter-offers coming back from both REO and short-sale lenders that were outrageous. Yesterday, on a short-sale in process at $750,000, the bank countered with $880,000, even though the property had been listed for a year in the low-$800,000s!
Now this:
In 1995, after years of bloodbath, the banks got smart and started fixing up their REOs, offered to finance them, and listed at full commissions. It’s a package that was well-received, and while the market may have been due to improve by then, the REO sales really took off, once they had the right pieces working together. Now it seems that the servicers feel like we’ve already turned the corner, and they can start cutting back.
3. The realtor community is in shambles.
The two big local associations of realtors have spent all year and $250,000 trying to convince the members to merge, only to be soundly defeated. In the meantime, there’s been little effort to improve the internet presence for realtors (like creating a smoking-hot public MLS), there is no decent education for consumers (or agents), and nothing has been done to stop the rampant fraud and deceit being inflicted by realtors on the community.
I had another one this week where the agent said if we wanted to have a shot at buying his listing, my buyers would have to agree to pay his short-sale negotiator $9,500, and around $30,000 to the second mortgage holder to get them to go away. The first mortgage holder would then be paid in full. That’s not a short-sale, that’s extortion!
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In spite of all these, houses keep selling.
Things to watch for that could make a positive difference:
1. Pre-approved short sales.
A few months back when they were rolling out HAFA, the servicers said that they’d pre-approve short sales, – but I haven’t seen, nor heard of any yet. Short-sales with an approved price and date would be more enticing to those buyers currently turned off by the shenanigans, uncertainty, and the long waiting periods.
2. Deed-In-Lieu programs
It was reported last week that Bank of America has mailed 100,000 deed-in-lieu solicitations to troubled borrowers. Hopefully that’ll provide more well-priced inventory, and faster market clearing!
3. Lower Mortgage Rates
To be able to get a 30-year mortgage with a rate under 5% is encouraging, and now they’re slipping into the mid-fours if you don’t mind paying a point. If rates were to go any lower, it would help keep buyers engaged – if they could only find the right house!
Motivated buyers have been willing to shrug off the bad news if they can find the right house, at the right price. If the servicers recognize that this would be a good time to unload some product, and price it right, I think they’d be surprised at how many they could sell.
Thanks for the candid observations. As a potential buyer trying to find a decent place and understand what a reasonable price may be, I find your discussion of positive and negatives very interesting. From my perspective, the nice properties in desirable areas are holding their value. I cannot tell if demand is propping up the prices, or buyers are not viewing prices with the same fundamentals as myself.
I appreciate all the information you provide on this blog. Thanks, Jim!
Simply supply and demand. I am playing the waiting game. There are at least two more years of the stupid mortgages to come due, many years of a flat economy and lots of invisible inventory out there. The real question is how long the banks are willing to hang on to defaulted properties. As someone once said, the market can stay irrational longer than I can stay solvent.
Consider yourself lucky you are not in Arizona. The short sale listings I deal with are insane.
Simple new rules for successful short sales.
1. When someone tells you they have a loan with Bank of America, shake hands with them and wish them good luck. Turn around and get in car.
2. Do not accept any short sales with a second deed of trust. They are killing deals by wanting 10% of note even though they will be wiped out at trustee sale.
3. Tell homeowner they must keep HOA fees current during process along with turning on utilities and maintaining pool for home inspection and new lender appraisal.
The nation thinks we are running around shooting Mexicans with guns and living in the wild west.
It’s 112 degrees in the shade with monsoon humidity creeping in. If you can fog a mirror you can obtain a real estate license. People don’t take it seriously and I pick up the pieces and repair our industry everyday dealing with those that have been mistreated by other agents.
In closing when you get up tomorrow in San Diego go outside and take a deep breath of that ocean air. Do something outside. Be where you are. It’s 109 degrees in Phoenix, heat kills.
Speaking of rates…I refinanced last week into a 15 year fixed at 3.89%.
“1. When someone tells you they have a loan with Bank of America, shake hands with them and wish them good luck. Turn around and get in car.”
That’s double ditto in Cali.
Jim should consider himself luck, I think I’ve blundered into all those negatives he listed on just one deal with a bank I won’t mention, wink wink.
I sold my condo last year, renting and loving it. Even if prices lowered 10 or 20% more I still wouldn’t buy in this economy.
Why buy a home if you’re not sure you’re going to keep your job in 2 months?
Thaylor – I guess you’d buy a house b/c you’re not sure you’re going to keep your job. You would have a place to live for free for at least a year 🙁
The news is crazy.
Two months ago my 600k offer (30% down) lost out to 597k all cash. Two weeks ago a short sale came up one street over in the same subdivision…same lot, same sq ft, similar floor plans. I pulled out the old offer and changed the address. Bank countered with 680k!
And that offer on April 28th was priced keeping in mind I had to compete with others looking to make the cheese deadline. What is going to provide urgency now?
THESE DEED IN LIEU’S ARE THE NEXT GREATEST FLEECING OF AMERICAN HOMEOWNERS, AND ARE BEING BACKED BY THE FULL DECEIT OF THE US GOVERNMENT. I’M JUST POSTING THIS INFORMATION, WITH THE HOPE THAT SOMEONE READS THIS, AND GETS THE BASIC REASON FOR THE DEED IN LIEU SCAM, TO SOMEONE WITH THE KNOWLEDGE TO INVESTIGATE, AND EXPOSE THESE RAPIST, BEFORE THEY SCRAPE BILLIONS IN PROFITS FROM THIS MOST RECENT TOXIC CONCOCTION!
EVEN THE ASTUTE READER WILL HAVE A HARD TIME FOLLOWING THIS, BUT WHAT I BELIEVE TO BE THE DRIVING FORCE BEHIND THIS PUSH TO HAVE HOMEOWNERS ACCEPT A DEED IN LIEU IS A FASB RULE FAS 157 – 3 GUESSTIMATE VALUE. I COULD NOT GRASP THE TREMENDOUS EFFORT THESE CORRUPT BANKS WERE EXERTING TO GET UNSUSPECTING HOMEOWNERS SUCKERED INTO ACCEPTING THESE DEED IN LIEU AGREEMENTS; SOME OFFERS EVEN CAME WITH PAYMENTS TO THE OWNERS TO WALK AWAY!
THERE IS A MASSIVE LOBBYING EFFORT UNDERWAY – http://noir.bloomberg.com/apps/news?pid=20601087&sid=a.Jenvq3Igss&pos=7 TO SQUASH A BILL THAT WOULD FORCE BANKS TO WRITE DOWN THESE LOANS, AND NOT CARRY THEM ON THEIR BOOKS AS WHAT THEY ‘GUESTIMATE’ THE VALUE TO BE ACCORDING TO FAS-157-3. NOW THE WRITING IS ON THE WALL, AS TO WHY THE TREMENDOUS PUSH BY BOA, CHASE, WELL FARGO, AND MANY OTHERS; TO GET YOU TO SIGN OVER YOUR HOUSE!
I SENT THIS STORY TO THE DYLAN RATIGAN SHOW AS A STORY TO INVESTIGATE… NEEDLESS TO SAY, I THINK IT’S TOO COMPLICATED FOR HIM TO TACKLE. AND, THAT IS EXACTLY HOW THE RAPIST BANKS LIKE IT! FINANCIAL INSTRUMENTS ARE BECOMING TOO COMPLICATED FOR ANYONE TO COMPLETELY UNDERSTAND, WITHOUT TAKING THE TIME TO COMMIT TO STUDYING VOLUME, TO GRASP THE PRINCIPLES OF THE MECHANICS FOR A SPECIFIC TYPE OF TRANSACTION.
THIS ALL NEEDS TO STOP! WHEN WILL THE PEOPLE THAT WE ELECTED TO PROTECT US FROM THESE TYPES OF PREDATOR SCUM, START DOING THE JOB THEY WERE ELECTED TO DO!