As a Real Estate Broker, focused primarily on distressed property sales, I can honestly say that I have. August – October of this year I was just about as busy as I have ever been in the business of Real Estate. Most the people I chat with in Mortgage, Title, Inspection Services, etc. say the same thing. The transactions were typically affordable in nature but it was nice to see a lot of them. More importantly there was a sense of urgency in the market-place. In certain price ranges and neighborhoods demand clearly exceeded supply. When considering the following points I can’t help but feel as if another shoe is about to drop.
The extension and expansion of the credit has left some recent buyers wondering why they were in such a big hurry. Meanwhile some would-be buyers are feeling a little less confident. All are worried they will or have paid too much.
Housing demand is typically created by one or more of the following: Household formation, employment opportunities, attractive financing and the lure of home equity. All of these are lacking in my market.
I sense that many if not most of the recent first-time buyers would have eventually purchased a home regardless. The looming expiration of the tax credit served to get them of the fence. This created a somewhat false demand.
In short I do think we’ll suffer a bit of a hang-over this next year. As a generality banks are holding a bit firmer to their prices when dealing with fore-closed properties. I do expect interest rates to rise at some point. Short sales are just as mixed up as they ever have been. It will be interesting to see how things turn out for the big auto companies after the “cash for clunkers” revenue stops showing up on their bottom line. Perhaps an indicator for the near future in our housing market.
That said, if you’re in the market for a home now, don’t be too concerned. Your income should be secure. The monthly payment should be conservative in relationship to your income. It needs to be the right house at a fair price. If all those pieces fall in place, I say go for it. Prices will inevitably rise & fall and I think the joy of home ownership has been relatively under-rated lately. Planting a tree or shrub wherever you wish, knocking a hole in the wall to hang the family heirloom or driving down your street to the “best” house on the street; some things are priceless.
Our county can conserve more energy. Let’s pledge and win the $5,000.
As of 11/3, Washoe County is only a couple hundred pledges behind Volusia County, Florida in a national competition to conserve energy. Please help us win the competition by signing the pledge and getting your friends and neighbors to sign up by November 30th. Our goal is to capture the $5,000 first place prize to make energy conservation improvements.
We have less than thirty days to go and only 350 more pledges to win! If you haven’t taken the conservation pledge please visit www.greencounties.org/changetheworld.
Also, send this message to your friends, special interest groups, and families. Other than the prize of $5,000, we will receive national recognition and the satisfaction of beating Florida!
An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction (also known as a Trustee’s Sale). Trustee Sales (often an auctions held on the courthouse steps) begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney’s fees and any costs associated with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier’s check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in “as is” condition, which may include someone still living on the property. There may also be other liens against the property. Trustee’s Sales are typically advertised via local, public notices such as local newspapers.
Since what is owed to the bank is almost always more than what the property is worth, very few Trustees’ Sales result in a successful closing. If the Trustee’s Sale is unsuccessful the property reverts to the bank or loan servicer and is now considered REO, or “real estate owned” property.
The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. They will typically negotiate with the IRS and local municipalities for removal of tax/municipal liens and they normally pay off any homeowner’s association dues. As a purchaser of an REO property, the buyer will typically receive “clear title” and the opportunity to thoroughly inspect the property. These are the properties buyers will typically see on MLS.
A bank owned property might not be a great bargain. Do your homework before making an offer. Make sure that the price you’re offering is comparable to similar homes in the neighborhood. Consider the costs of renovation. Last but not least, consider your loan type and down payment amount. Loans with high “loan to value” (small down payment) generally require that the home be in good condition.
A well informed real estate agent, representing the buyer exclusively is invaluable in such a transaction. There are many pitfalls and complications that can be avoided with such representation.
Dan Rider, an Owner/Broker of Dickson Realty, talks about Freddie Mac properties and the Homesteps program in the first part of our Freddie Mac series. Watch the video and learn what Freddie Mac and Homesteps is all about.
Thirty-nine Dickson Realty agents have recently earned the prestigious Certified Distressed Property Expert (CDPE) designation, having completed extensive training in foreclosure avoidance and short sales. This is invaluable expertise to offer at a time when the area is ravaged by “distressed” homes in the foreclosure process.
Short sales allow the cash-strapped seller to repay the mortgage at the price that the home sells for, even though it is lower than what is owed on the property. With plummeting property values, this can save many people from foreclosure and even bankruptcy. More and more lenders are willing to consider short sales because they are much less costly than foreclosures.
In the Northern Nevada area, currently it is estimated that close to 1,800 homes are in danger of foreclosing. It is happening in all price ranges. Local experts say that even high-priced homes are not immune.
Dickson’s new CDPE designated agents: (shown)Teri Shields, Jeff Geisler, Tammy Olivas, Claudia Byrne, Chris Barns, Victoria King, Jill Deeter, Dan Rider, Andrea Green, Helen Graham, Beth Nitz, Amy Shocket, Mary Robinson, (not shown) Bonnie Beck, Cindy Henderson, Donna Clark, Ivy Cohen, Cyndi Dawson, Gary Edwards, Pam Eikleberry, Denise Fox, Jan Houston, Jen McDonald, Mandie Jensen, Christy Klinger, Anne Lavoy, Gerry Martin, Margie McIntyre, Dee McNeely, Brenda Mee, CJ Risley, Darlene Sharp, Jan Sluchak, Alison Elder, Norm Nicholls, Lil Schaller, Kane Schaller, Emily Sterling, and Maryann Truitt.
“Our job as REALTORS® has changed over the past several years. In our area, our number one goal is to help homeowners stay in their homes. If we are unable to do that then assisting them in a short sale may be a very viable option. A short sale doesn’t impact a homeowner’s credit as disastrously as a foreclosure does. A short sale usually nets the original lender more money and it does not devastate the neighborhood pricing. However working with lenders in a short sale situation can be very frustrating for sellers, for buyers and for real estate agents. We believe successful short sale closings require specialized training and we were pleased to have had 54 agents in this two-day training.” said Nancy Fennell, president of Dickson Realty. “In addition to this two day training, our firm holds monthly “short sale conversations” at each of our branch offices. We have sent our managers to short sale training around the country and we have pooled that information into our Short Sale Toolkit. Because policies and procedures change daily in this market, we find meeting monthly is a tremendous advantage for our agents. We are proud that our agents believe as we do in training, training and more training.”
Alex Charfen, founder of the Distressed Property Institute in Boca Raton, Fla., said that REALTORS such as these Dickson agents with the CDPE designation have valuable training in short sales that can offer the homeowner much better alternatives to foreclosure, which virtually destroys the credit rating. These experts have a better understanding of market conditions and can help sellers through the emotional experience, he said.
The Distressed Property Institute opened in January 2008 and provides training on-site and online. The CDPE is the premier designation for Realtors helping homeowners in distress and handling short sales.
To find our CDPE agents, visit us online at www.dicksonrealty.com or call any of our local offices: Caughlin Ranch 775.746.7000; Damonte Ranch 775 850.7000; Sparks 775.685.8800; Montreux 775.849.9444, or Truckee 530.587.
So I’m trying to explain our market conditions to an entry level buyer. In this case he’s considering homes in the $120,000 range. Key points for him to consider:
Overall, inventory is relatively low with less than two months supply on the market now at this price point.
In this price range, in some areas we are actually seeing appreciation. It’s not uncommon to see multiple bids and often the price is actually bid up from the list price.
We may have some challenges with the purchase appraisal.
The well priced, active inventory is dominated by REO’s & Short Sales
Sans the distressed inventory this is exactly how we counseled buyers when the market was hot (in my market ’03 – ’06). Kind of ironic under the circumstances and one would hope that consumers and real estate professionals proceed with some caution
The five year ARM’s originated during the boom are beginning to reset now. For many if not most homeowners a lack of equity makes refinancing impossible. Meaningful loan modifications are still pretty rare and short sales still anything but “short”. With this in mind we will undoubtedly see increased foreclosure activity and that will likely create another drop in median value. So how should we proceed?
Fist of all Buyers & Agents should talk about this. Some areas and types of properties are more vulnerable than others. For example smaller, poorly funded condo associations may really struggle if a significant number of homeowners stop paying dues.
Secondly focus on the monthly payment and long term tax benefit rather than the market value of the property. We often see monthly payments equal to or less than monthly rental value. For the moment we shouldn’t consider home equity our nest egg.
Buy conservatively. I know, there are a few ½ priced mansions out there and that can be alluring. I like to recommend that the buyer at least consider the possibility of hard financial times ahead. Contemplate job status, reserves and the length of time the buyer anticipates owning the home. I have a physician client that recently told me for the first time in his career he now has big gaps in his daily appt schedule. It seems that few people are immune from this downturn.
In short I think we all must keep our wits about us and learn from the recent past. Those that ignore history are doomed to repeat it…
On Saturday, April 25th, the City of Reno, in partnership with Consumer Credit Affiliates of Northern Nevada (a federally funded not for profit) will be hosting two workshops. The first workshop will start at 9am and will aim to assist households at-risk of experiencing foreclosures. After the hour long workshop, it will be followed with an informational session and one-on-one time with those attendees who are interested in speaking to counselors and providers.The second workshop starts at 1:00pm and is intended to provide information, resources and first-time homebuyer education to individuals and families interested in becoming homeowners. After the hour long presentation by Consumer Credit Affiliates, there will be an informal informational session and an opportunity to meet with various providers, including credit counselors, banks and Dickson Realty. Get information on such items as down payment assistance, first time homebuyer tax credit or how to purchase foreclosed homes.
The event takes place at the Downtown Ballroom and is free of charge.
My partner and I recently re-directed our marketing efforts to include potential “short sales”. Although we both communicate regularly with our sphere (past clients, friends and business associates), neither of us has made a habit of sending vast quantities of mail to people we don’t know.
The short sale market has changed our philosophy a bit. Typically these homeowners are in trouble and we feel a sense of obligation to help. It’s also a formula to head off foreclosure and ultimately a little healthier for our market as a whole. We’ve become reluctant experts in this field and now market ourselves to homeowners in distress. We’ve run into a few Loan Modification schemes out there and wanted to offer some advice:
Beware of “up front” fees, particularly if they don’t clearly spell out or guarantee their future performance.
Check with your Lender(s) yourself. We often find that 3rd parties often charge for a service that can be easily handled by the homeowner.
If it sound to good to be true, it probably is. We’re all looking for hope aren’t we? This can create an easy target for some.
Ask for and check references.
Check with the Real Estate Division.
Get advice from a trusted attorney and/or real estate broker.
There are some legitimate business models to help distressed homeowners. There are also many free services available for counseling and advice. A seasoned, reputable real estate broker or agent is a great place to start.
Recently our real estate market has been significantly affected by bank owned foreclosed properties. I have spent significant time familiarizing myself with these properties and found them to be in surprisingly good condition. No longer does “foreclosure” mean that the interior has to be gutted and redone. The majority of these properties are basically in “move-in” condition with extremely favorable price tags.
The biggest benefit to purchasing these bank owned properties however, comes when escrow is opened and buyers actually have the right to a preliminary title search to detect any clouds on the title. If the title search reveals any irregularities, the Seller (bank) will normally clear these issues up prior to close of escrow. If not, buyer has every right to back out of the purchase. Another protection offered to a buyer is the fact that they, in most cases, have the right to perform inspections of the property. Banks most often do not do repairs and offer these properties “As Is” but at least the buyer has knowledge of what he is getting into and, if there are significant repairs noted, can rescind his offer to purchase or negotiate with the bank to come to a compromise.
Protecting yourself as a buyer should be your main concern when purchasing property. Bank owned properties offer great pricing and buyers can feel confident about their purchase knowing all of the necessary precautions have been taken.
For more information on foreclosed, bank owned properties, please visit my website at www.renoforeclosureexperts.com or give me a call at 775-843-8187.
Bank owned foreclosures prove to be best deals for buyers and investors in most areas of town, however, they are forcing resale home listings to be competitively priced. The reality for sellers in our current market is that foreclosures are creating comparable sales that appraisers cannot exclude.
My comparative market analysis was based on sold properties from the Multiple Listing Service since April 1, 2008. The following is a breakdown of average sold price per square foot in each area:
South Meadows (Double Diamond, Damonte Ranch): Foreclosures $142/sf. Resales $164/sf
For example in Double Diamond, a bank owned 2000 square foot home would be priced at $284,000 and the same resale listing would be $324,000. Although foreclosures may be a great deal as far as price, one thing to remember is that, in most cases, they are sold “as is” with no repairs.
I run the original “Foreclosure Home Tour” which is an afternoon bus tour of pre-screened foreclosed homes. To join the next tour or view the upcoming schedule of tours or for the latest information regarding foreclosures, please visit my website at www.renoforeclosureexperts.com.
Dan Rider, an Owner/Broker of Dickson Realty, talks about Freddie Mac properties and the Homesteps program in the first part of our Freddie Mac series. Watch the video and learn what Freddie Mac and Homesteps is all about.
Tuesday, November 17, 2009 By: Dan Rider
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