You’ve probably been able to follow where the blog is going – the all-out battle for product.
If you’re a realtor and can’t figure out how to bring fresh inventory to your buyers, what good are you? Anybody can monitor redfin or sdlookup, can you duke it out in the streets? Are you fighting to win, or just trying to hang on?
The video library is growing, and we’ll preview snippets all along the way:
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.
Traffic report, tour of the court house steps, a flying rat, and the old standard:
They have to do something, right?
As servicers receive more and more REOs, they have to be discussing their options:
1. Use the trustee sales as a primary liquidation channel to off-load more properties quickly, cheaply, and without recourse.
2. List the habitable properties with realtors, and sell for retail.
3. Sell the fixers at auctions.
4. Bulk Sales.
They have to be encouraged about the tax-credit extension, and dozens of bidders at trustee sales around the country. They have to be loading up the truck, and thinking they should take advantage over the next six months.
I think buyers will flock to any well-priced new listing, but take particular interest in stealing one from the bank. You can probably expect that options 2 & 3 above will be very active channels of re-distribution.
But if they get to the point where they really want to off some property, doing it at the court house steps is very handy.
Let’s be there to take advantage:
There have been more discussions lately about pursuing homes at the trustee sales.
Here is an interesting chart stolen from http://effectivedemand.blogspot.com/
The percentage of homes being purchased by third-parties, rather than going back to the banks, has risen to the mid-20% range.
Two thoughts:
1. The banks are being more realistic about their opening bids, and are using the trustee sale as a vehicle to efficiently sell product.
2. The investor groups are running at full strength.
In July there were roughly 325 homes purchased at the trustee sales by third-parties.
That’s a lot of flipping!
There’s been more discussion lately about what’s been happening at the trustee sales, and it’s become clear that these investor groups are dominating the action. They are making $50,000 to $100,000 per property on the flips, and are being very aggressive. They are willing to pay a little more to out-bid the individual novice buyer, and, in effect, squashing the hopes and dreams of any small guy getting a “trustee-sale deal”.
For the most part, these investor groups are staying under $500,000, so for those of you who are looking, there should be more opportunities higher up. But checking out the properties, and tracking the foreclosure process is challenging.
I have dedicated and mobilized additional staffing to this effort (in other words, I gave it to wifey), and I think we’ll see some success in having our buyers be successful at the trustee sales – but I think it’ll be limited to those buying a more-expensive home to owner-occupy.
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
CA DRE #01527365, CA DRE #00873197
