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There is a real market at the higher value. But it has a year of inventory. There are places where the inventory is less...but they don't have any REPOs. There are places with lots of REPOs but there the non distressed inventory is probably three years. It is two different isolated markets. And you cannot easily move a property from one to the other. The sensible thing to do is not flip. It is buy and rent. And that is what I am doing and suggest to others that they do.
One of the reasons RePOS are an different market is simply because purchasing a Foreclosure is somewhat of a risky prospect. If you purchase at an auction , say, the potential buyer needs to do their due diligence prior to purchasing.. and that means possibly tracking down any liens that may be on or against the property that may become the responsibility of the new owner. Not all buyers are suave enough or know how to do that type of investigating.
When purchased on the market as a listing they are often sold AS IS and there could be lots of question marks. Water is usually shut off, a is electric (in cold weather the house is winterized) which leaves large question marks for a new homeowners. While they may be getting a great bargain price on a home, they may be getting a home that needs repairs that can't be seen. (Some people pour concrete down their drains.. etc.).
People who are going to buy a foreclosure are taking a risk they have to calculate and that is not for everybody.
short sales comes with their own headaches, but often time these propertie are NOT abused, however it takes patience on the buyers behalf a the owner works through the process and the bank approve both the sale itself AND the buyer looking to purchase and it can become a timely aggrevating proccess (in my short sale it was pretty smooth, for the most part).
Then there are those that have neither the stomache to take a risk on a foreclosure nor the patience for a short sale and will purchase a home from a person who in neither situation.
But alas, the point is that forclosures ARE separate from regular sales and when taking into consideration a person either short selling or just selling, foreclores are NOT included in those comps.. because who knows what host of problems, conditions come with that home.
One of the reasons RePOS are an different market is simply because purchasing a Foreclosure is somewhat of a risky prospect. If you purchase at an auction , say, the potential buyer needs to do their due diligence prior to purchasing.. and that means possibly tracking down any liens that may be on or against the property that may become the responsibility of the new owner. Not all buyers are suave enough or know how to do that type of investigating..
All very true. I'd recommend staying away from any RE auction that isn't an absolute auction, an opinion discussed in greater detail in another thread and where I wholeheartedly agree with the OP. I know there's not many of them out there today but there are increasingly more & more as intelligent sellers -mostly developers at this rime- start using them to clear unwanted inventory directly. You know the seller is serious when it's an absolute auction because it indicates he realizes a bird in hand is worth TEN in a bush. The seller's not there to jerk people around with secret reserve prices, undisclosed commissions and shills. They just want to cut their loses. THIS is what banks should be doing with their REO's instead of lolligaggling while they wait for more bailout money.
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Originally Posted by TristansMommy
When purchased on the market as a listing they are often sold AS IS and there could be lots of question marks. Water is usually shut off, a is electric (in cold weather the house is winterized) which leaves large question marks for a new homeowners. While they may be getting a great bargain price on a home, they may be getting a home that needs repairs that can't be seen. (Some people pour concrete down their drains.. etc.).
People who are going to buy a foreclosure are taking a risk they have to calculate and that is not for everybody.
short sales comes with their own headaches, but often time these propertie are NOT abused, however it takes patience on the buyers behalf a the owner works through the process and the bank approve both the sale itself AND the buyer looking to purchase and it can become a timely aggrevating proccess (in my short sale it was pretty smooth, for the most part).
Then there are those that have neither the stomache to take a risk on a foreclosure nor the patience for a short sale and will purchase a home from a person who in neither situation.
But alas, the point is that forclosures ARE separate from regular sales and when taking into consideration a person either short selling or just selling, foreclores are NOT included in those comps.. because who knows what host of problems, conditions come with that home.
Agreed. I think buying (or trying to) a foreclosure or short is purposely made a complicated & difficult process because the banks aren't really interested in selling them. Yet. To really get the inventory moving all they'd have to do is return to 1998 prices which were still more or less in line with actual earnings.
But of course to do that would mean taking a hit for losses in the trillions. They don't want to accept the consequences of their stupid financial irresponsibility if they can avoid it, particularly while Uncle Sam is standing before them dangling his wallet in the air and throwing dollars at them like there's no tomorrow.
And at this rate there actually will be no tomorrow!.
All very true. I'd recommend staying away from any RE auction that isn't an absolute auction, an opinion discussed in greater detail in another thread and where I wholeheartedly agree with the OP. I know there's not many of them out there today but there are increasingly more & more as intelligent sellers -mostly developers at this rime- start using them to clear unwanted inventory directly. You know the seller is serious when it's an absolute auction because it indicates he realizes a bird in hand is worth TEN in a bush. The seller's not there to jerk people around with secret reserve prices, undisclosed commissions and shills. They just want to cut their loses. THIS is what banks should be doing with their REO's instead of lolligaggling while they wait for more bailout money.
Agreed. I think buying (or trying to) a foreclosure or short is purposely made a complicated & difficult process because the banks aren't really interested in selling them. Yet. To really get the inventory moving all they'd have to do is return to 1998 prices which were still more or less in line with actual earnings.
But of course to do that would mean taking a hit for losses in the trillions. They don't want to accept the consequences of their stupid financial irresponsibility if they can avoid it, particularly while Uncle Sam is standing before them dangling his wallet in the air and throwing dollars at them like there's no tomorrow.
And at this rate there actually will be no tomorrow!.
I am curious how many transactions you have been invovled with for REO's because all the ones I have done within the last few months have had multiple offers in the first few days, answers to offers within 24 hours, and closed very easily, one with a loan I got closed in 20 days.
The people having problems with REO's are probably the people going in lowballing on already below market value prices.
Agreed. I think buying (or trying to) a foreclosure or short is purposely made a complicated & difficult process because the banks aren't really interested in selling them. Yet. To really get the inventory moving all they'd have to do is return to 1998 prices which were still more or less in line with actual earnings.
But of course to do that would mean taking a hit for losses in the trillions. They don't want to accept the consequences of their stupid financial irresponsibility if they can avoid it, particularly while Uncle Sam is standing before them dangling his wallet in the air and throwing dollars at them like there's no tomorrow.
And at this rate there actually will be no tomorrow!.
finally someone who gets the picture. i was starting to feel incredibly lonely on this planet.
about a month ago i went to the county court house foreclosure sales. of the hundred or so foreclosures going that day about 95 went back to the bank and about 5 were bought by investors, flippers, 'bottom feeders' if you like. this happened because the bank set their reserve too high. without tarp, all of those properties would be sold without reserve and those properties get the necessary repairs, maintenance to make them habitable.
I have no good source of the geographical distribution and performance of AltAs. I am reasonably sure that the option loans had a relatively low penetration into NV.
Bad assumption. Nevada is second only to California in Alt-A loans per capita. It's about 2x the national average. About 72% of them are current, which is actually worse than CA but better than FL.
I also believe the temporal distrubition of AltAs is spread over a long period.
The vast majority were originated between 2005 and 2007 (91%). Add 5 years for the ARMs, and you'll see why people say that 2009-2012 will continue to be rough for real estate.
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Not interpretating Shiller at all. Only the data. I know how this stuff works and think there is no question CS is at a negative peak. Nature of the data.
How do you go from the fact that the year over year price decline is getting larger each month to "CS is at a negative peak"? That seems to take some interpretation of the actual numbers reported by them.
Bad assumption. Nevada is second only to California in Alt-A loans per capita. It's about 2x the national average. About 72% of them are current, which is actually worse than CA but better than FL.
The vast majority were originated between 2005 and 2007 (91%). Add 5 years for the ARMs, and you'll see why people say that 2009-2012 will continue to be rough for real estate.
How do you go from the fact that the year over year price decline is getting larger each month to "CS is at a negative peak"? That seems to take some interpretation of the actual numbers reported by them.
Option arms and AltA are not the the same thing. That is the problem with figuring what happens in Las Vegas. AltAs are probably better than sub prime loans...but options are likely the worst. Options however were mostly a higher end thing...which was never big in Las Vegas. In fact the higher end neighborhoods origination in 2004/2005 are much better than the lower end ones. I was just examining a neighborhood of 60 homes which sold in 2005 for between 800K and 1.5 million. One foreclosure and two shorts for sale. Value down about 33% but only five for sale.
Note that five years after 2005 is 2010 and that is where it starts with the impact going on to 2012.
CS is a differential. Prices continue to drop but less so than they did a year ago..hence the formation of a Case Shiller bottom.
I know. I was responding to your statement "I have no good source of the geographical distribution and performance of AltAs".
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CS is a differential.
Nope, it's a price index.
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Prices continue to drop but less so than they did a year ago..hence the formation of a Case Shiller bottom.
Huh? The latest data shows a 32% year over year drop, the largest on record. Last year showed a 11% year over year drop. A 32% drop is bigger than an 11% drop, not less. I'm still not sure how continually increasing year over year drops is a bottom.
I know. I was responding to your statement "I have no good source of the geographical distribution and performance of AltAs".
It is the options that create the problem. They are not called out separately. I too have had the fed res data right along. It also indicates that AltAs are not a significant 2009 problem
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Nope, it's a price index.
Yup...it is a price index driven by a differential
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Huh? The latest data shows a 32% year over year drop, the largest on record. Last year showed a 11% year over year drop. A 32% drop is bigger than an 11% drop, not less. I'm still not sure how continually increasing year over year drops is a bottom.
If it goes 32,32,31,31,30 that is a CS valley. It has ceased to get worse. It is not getting better but it is not getting worse. Historically CS will form a valley and then climb out. Does not have to but has...
I have a reasonable insight into the data for November and December. The CS values for those months will be less than Sept/Oct. Hence we see the valley forming.
Why should the REO's drop the prices more when most are having multiple offers in days?
What planet are you posting from?
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