Lowball / Short Sale Strategies (mortgage broker, credit, lender)

[cfIfan]

I read an article somewhere, i forget where, but i will try to dig it out for you is that all of this is about perceptions. One persons perceptions wont be anothers, but consider this, with property sales still being high, that tells me that the doom and gloom everyone likes to pervey cant be right. however, i would be gloomy if i have bought an over priced property which i couldnt afford in the first place, was trying to sell it now and it is only worth a fraction of what i paid.

Consider the amount of investors who purchased and are now in trouble. At its prime, they were buying in March and trying to flip it for an extra $100,000 by July. I know as ive seen this. Now they are stuck with a bunch of properties they over paid for. They were what i consider short term investors. The average joe who buys a house, isnt considering what it will be worth in 1 yrs time, because housing is a long term purchase. Of course they have a budget, and dont want to over pay, but they are looking to buy something that suits their needs and their budget.

I suspect alot of the negativity is derived from investors who quite frankly, got caught with their pants down, and cant even rent their houses out because there were so many of them and they have now flooded the market with rental homes that even those cant command the prices they were previously. Im not saying the market is fine and all peaches and cream, but i dont see and hold stock in the complete negativity package which people see alot on here.

Consider also Florida is different to many places in the USA. Investors from Europe continue to purchase homes in record numbers. This coupled with a strong pound and euro, mean even the over priced homes on the market are steals for them.

[hiknapster]

Originally Posted by joe aloha

On the other hand you got allot of nerve coming in and offering 50 cents on the dollar for anything! you either want to exploit the market and are a speculator which are the same type of people that got Florida in this mess in the first place or you cannot afford anything more than 50 cents on the dollar which in that case no bank would even look at you. What happened to fairness? Even if you could buy houses pennies on the dollar in Florida for investment purposes you will have one heck of a time getting a profit out of that house. In addition if these houses need work on them the price should reflect that and IMO not worth the effort with perfectly good houses up for sale right next to it.

You offer fifty cents on the dollar if that is what the house is worth. The bank will definitely look at you if you are getting a deal on the house and can afford the mortgage.

Here's a couple of platitudes: Life is not fair and what goes around comes around.

Oh, look, there goes the comps!

ABC7 News Online - $86,000 homes: Taking the good with the bad

[FlaLadyB]

Originally Posted by cfIfan

Consider the amount of investors who purchased and are now in trouble. At its prime, they were buying in March and trying to flip it for an extra $100,000 by July. I know as ive seen this. Now they are stuck with a bunch of properties they over paid for. They were what i consider short term investors. The average joe who buys a house, isnt considering what it will be worth in 1 yrs time, because housing is a long term purchase. Of course they have a budget, and dont want to over pay, but they are looking to buy something that suits their needs and their budget.

I suspect alot of the negativity is derived from investors who quite frankly, got caught with their pants down, and cant even rent their houses out because there were so many of them and they have now flooded the market with rental homes that even those cant command the prices they were previously. Im not saying the market is fine and all peaches and cream, but i dont see and hold stock in the complete negativity package which people see alot on here.

I totally agree!! Even when I advised buyers that they would have to close on the house AND be able to rent it out and there was no pomise of making any profit.. they still bought. Yes..caught with their pants down is so true.
So much for the crystal ball so many of them seem to have and now sit and complain.

Prices and interest rates are low. If someone is looking to purchase a home to live in and raise their family, now is a great time to do it!

[jbravo]

Originally Posted by cfIfan

I
....
I suspect alot of the negativity is derived from investors who quite frankly, got caught with their pants down, and cant even rent their houses out because there were so many of them and they have now flooded the market with rental homes that even those cant command the prices they were previously. Im not saying the market is fine and all peaches and cream, but i dont see and hold stock in the complete negativity package which people see alot on here.

....

I sold South Fl in 04! Knew it was a bubble then.
Wasn't greedy. Putzed around, bought a cheap house in Central Fl, sold ir two years later, still made a profit. Built a house, subcontracted myself (no builder) broke even (bought land at peak.)
I own nothing right now, nada, zip. I'm all cash with some gold in safety deposit box. So, no sour grapes here.
So, as one not caught with their pants down, I can say, PRICES WILL CONTINUE TO GO DOWN, unless the government subsidizes all housing as in the Netherlands and the U.S. becomes socialist.
Please look at Case-Schiller.
For over 100 years, rents and prices were in agreement. We are still in bubble territory. It makes NO SENSE to buy now, unless you get 1997-1999 prices.
And, I did not even mention the general economy, in a major recession the banks will not be able to sell the houses, period.
I could go on for pages, how about a FED report from 2002, YES, 2002, saying that prices were in bubble territory.
I can wait, rentals are very cheap, it's incredible what you can get for under $1800 / a month (properties that owners are asking 500K for) Do the math. How long can they hold out? I can out-wait them.
As for Europeans and a weak dollar. Wouldn't bet the farm on that.
Anyways, who knows, I could be wrong. Certainly was last this last week on gold.

[lostbuyer]

Originally Posted by cfIfan

My opinion based on 6-12 months for the market to stabilize is for a number of reasons. If you look back historically, and Election year has always been good for the real estate market. There have also been a number of posts which show figures for people relocating to the area as being 1200 per month. The majority of my customers are people relocating. Also consider, if you look at the statistics, whilst inventory of homes for sale is not declining, home sales are up. The problem is, and if you look at the stats, the homes which are selling are doing so because the sellers were realistic in their pricing. They know i suspect because they took heed of their realtors advice that they need to be well priced. The number of properties coming onto the market is high which doesnt really show people of the amount of sales, but if you do your homework you will see them. The problem is that even if you take the median prices for areas, they are still too high because the majority of people dont listen to their realtor and are still over pricing their properties.

I firmly believe that prices will stabilize at their true levels in 6-12 months then recover to modest levels. most people thinking that they can get a bargain and then in a couple of years sell them at the same sort of prices we saw at record highs are foolish. We wont see those levels for many many years because it was a false bubble, which is one of the reasons it popped so badly. You hear alot of people on here saying that they are going to wait for a couple of years etc etc. With pricing levels if you look properly being at great levels, if you sort though the over priced trash, why wouldnt you buy now because you can even get them lower than that is you put an offer in. The only reason people would want to pick them up for 50 cents on the dollar is if they intend to turn around in a short time period and try to sell them. This short term speculation is one of the causes for this mess. Whilst the real estate market has always been a good investment, it is only for the long term. No short term gains can be made, you only have to look at the last 2 yrs to see that.

Also consider things such as Regulators are lowering capital requirements for mortgage finance firms - a move that could pump hundreds of billions more into mortgage market, also announced a week or so ago was the new 'help now' plan. The plan, dubbed "Help Now," was floated by the National Community Reinvestment Coalition (NCRC), a nonprofit community advocacy group. It calls for the government to buy up at-risk loans, restructure the terms to make them affordable and sell the reworked loans back into the secondary market.

these are just the tip of the ice berg, and i expect there are alot more initiatives to come.

good points ,but?? has the biggest housing bubble in american history ever popped right before an election year??so that historical trend should be wiped out this time around,and about people relocating some think more are leaving than coming,school enrollment is down,check Uhaul rates from here to georgia, carolina,ect..prices tell the story there,while sales may be up slightly (knife catchers) you said yourself inventory is not really dropping,so supply and demand says prices fall further as a consequence,stability and sky high inventory cant happen at the same time,right now I think theres like a three year supply in florida (at current sales pace)so in 6-12 months inventory would be the same or worse ,(wave of arms re-setting in the summer)so how could we possibly achieve stability??and I think the main point of offering 50cents on the dollar is because thats what houses are actually worth..I think not many homedebtors"homeowners" will be helped in the end ,the bail-outs are reserved for wall street thanks for replying,while we dont agree its a good discussion..

[cfIfan]

They are all fair points, but i think the key you are missing is "in my opinion"

You cant really fairly talk about 50 cents on the dollar, unless you qualify which properties you are talking about. If you are talking about making an offer on an over priced home, then 50 cents on the dollar would probably put the property in the fair market value of where the property should be valued. If your talking about offering 50 cents on the dollar for a home which is aggresively priced and at current values worth what is being asked for (which if you look at the homes which are selling are at these prices) then of course you wont be successful.

Whilst i respect what the poster who has made money in property and i commend you for that, sadly there are alot who arnt like you and were buying multiple properties at the peak, and if were being honest, alot of the sour grapes does come from these people who had it good for a couple of years, got very greedy, and quite frankly got their hands caught in the cookie jar. That is one of the reasons for this mess. as a realtor, i hate to say it but there alot in the profession who were doing this, and they can easily be sought out because if you pull out a selection of homes on the market, many of them are owned by realtors. And, whilst i am the first to slam people for not lumping us all together because we are not all bad, alot of the same realtors are a product and in the same boat, because they believed the same trip they were sppouting.

If you look on the market, you will find there are alot of homes that are well priced and these are the ones which are selling. If your talking about buying a house which in the last few years was perhaps $600,000 but if you bought in the mid 90 could have been gotten for low to mid 100,000, then i think alot of people are going to be very disappointed.

As i said this is only my opinion. I dont say this for people to turn around and start buying, because i have enough customers and that is not my agenda. I do look forward to seeing a year down the line how the market will fair and having an intelligent discussion about it at that point aswell.

In terms of what the other poster said about the Europeans, (being originally from the UK) i think you greatly underestimate, how much money foreign investors pump into Central Florida as a whole, not only by buying homes, but also in tourism in general.

Consider your own point about supply and demand. At the moment it is static, because as many properties now are coming on the market as a re selling, which we agree on. In those instances, it suggest, supposing that the prices are at the right level, then pricing wouldnt continue to fall as it is at a stale mate. They would continue if more homes come on to the market than are selling. I maybe wrong, but the last time i checked the inventory level was at like 16 months i think, and i think i saw a thread that confirmed that, so not sure where the 3 yrs came from, but of course i may be wrong on this.....lol according to most people on here i usually am...;-)

[jbravo]

Good post CFIfan.
Very honest.
A point: inventories have continued to go up in most Fl markets, AND supply of QUALIFIED buyers has plummeted with new regulations (mean the old ones from long, long ago, 9 years back and 60 years before that )
_
Other points that I addressed earlier are really somewhat irrefutable, at least I dare anyone to:
PRICES WILL CONTINUE TO GO DOWN, unless the government subsidizes all housing as in the Netherlands and the U.S. becomes socialist.
Please look at Case-Schiller.
For over 100 years, rents and prices were in agreement. We are still in bubble territory. It makes NO SENSE to buy now, unless you get 1997-1999 prices.
And, I did not even mention the general economy, in a major recession the banks will not be able to sell the houses, period.
I could go on for pages, how about a FED report from 2002, YES, 2002, saying that prices were in bubble territory.
I can wait, rentals are very cheap, it's incredible what you can get for under $1800 / a month (properties that owners are asking 500K for) Do the math. How long can they hold out? I can out-wait them.
As for Europeans and a weak dollar. Wouldn't bet the farm on that.
Anyways, who knows, I could be wrong. Certainly was last this last week on gold.


Anyways, good post. Who knows? After this election maybe all housing will be subsidized (the banks are now, anyways )

[lostbuyer]

I see what you are saying but I feel the key word in all of this is "affordability"look at the states median income and then look at the markets median price,is that sustainable?? the short and simple answer is no,credit is drying up,that means more downpayment,better credit score,so there is very few people who will qualify for loans going forward,and a sea of inventory,its like kicking the stilts out from under a circus performer,what happens, he crashes to the ground and people are shocked well that just happened to house prices,with no more ninja loans,kamikase,liar loans,ect...now this next statement might sound crazy or even stupid to some of you,but I believe every house is still overpriced,(in bubble areas)compared to where they"ll be in 2 years,or where they should"ve been had the bubble never occured,
I also dont see how peoples perception of the market will change anything,if they cant afford they cant and thats it ,no matter what they perceive they can payback ,the banks will simply not lend it to them.we will have to wait and see what happens.

[cfIfan]

The point you bring up is a very good one about affordability. But i have to laugh when i think about this (not at what your saying or you), but consider this. Now that banks have cracked down and are probably tighter than ever, it is becoming increasingly difficult to get loans, or is it? The problem is we are coming out of a time period where banks were giving out loans to people and the only qualification was that you had a pulse. Now, you can still get a mortgage, but you need to have an income which can sustain the payments with your debt to income ratio being within reasonable parameters. I deal with people everyday who cant understand why they cant get a mortgage, and its simple, your credits shot, you have debts coming out of your ears, and you somply cant afford that dream house which is priced at $400,000. Is it a matter of living whithin your means? Yes, but it is more of a mantality. People are used to and have heard through friends and pushy realtors who are only interested in a higher commission that they can get that house because in the past the banks would bankroll it. Guess what, now they wont give out freely. Yes its true, wages are lower here, but there are also tax incentives which kind of offset that, and if your a professional, wages are pretty comparable to anywhere else in the USA.

My point about prices and i completely agree with you that if you take a sample of homes for the most part they are over priced. And i have made the point in other threads, that alot of realtors take these listings at these prices just so it looks like they are busy. I on the other hand walk away because there is no way i can sell it at that price, and it costs me to market it and i only get paid when and if it sells. But there are homes out there that are at the price i believe they should be. An example is an ex model home in Winter Garden was sold perhaps 8-12 months ago for just under a million. It is now on the market for under $500,000. Even at this price it is still way over priced, when you consider in the same area there are properties between 3500-4000 sq ft in the $350,000-400,000 price range. to my mind this does represent where we should be at, and those properties will sell and indeed a number already have. But im sorry if i sound nieve but i cant see that properties of this size with 5 bed 3 or 4 bath in a nice area which is NOT in the tourist trap and Short term rental area can be sold for under $300,000 and i think its nieve to think so. Now if your talking about Poinciana/Davenport Kissimmee area then absolutly. Indeed there are alot of properties like this for less than $300,000 and many close to if not less than $200,000. Are the majority over priced, absolutly, but once sellers realize that they cant sell their homes at these inflated prices and 6 months on the market will do that, then we will see them fall back into line because i still firmly believe that alot of sellers were under the impression that this was just a blip in the road, give it 6 months and the prices will go back up. Now they know this isnt the case they have 2 options. Lower your price to where it should be regardless of what you paid and you will sell. dont lower and stay in the house, its as simple as that.

[lostbuyer]

good observations but you know how most people are,they cant just "give it away"the majority will chase the market all the way down,or in some cases get foreclosed.