Tough Market? Sell A Starship!
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Pingback: Money Makers February 1, 2012 | Advice Matters
I teach classes on short sales for some agencies in OH. Less deferred Maint. is the biggest factor. Less hit on credit. MGIC will write off the deficiencies which is huge!
Hey Bass Appraiser–
Agree with you IF HVCC appraisal was used for loan modification approvals and short sale credit approvals in a uniform fashion. The problem is the loss mitigation cycle allows the creditors to use different valuation methods–NPV for the loan modification, BPO for the short sale creditor approval, and then HVCC appraisal is the end game. Shouldn’t there just be one uniform valuing process? Why are driveby/exterior BPOs even allowed if HVCC exists to ensure appraisal independence on residential real estate? What if a BPO kills a short sale (comes in higher) and then forces a foreclosure at 60 cents on the dollar. Do you adjust for the short sale BPO against the final foreclosure price? My guess is not–so the property is priced at foreclosure price, even though an accepted offer between buyer and seller (just not their creditor) existed. Have seen several short sales die a high BPO death the past couple of months–the question is–what is the true market value in these cases if so many different valuing methods can be utilized during the default journey?
Reminding you that appraisers should use Reo/short sales when they are predominant in the neighborhood. If they outnumber the normal seller transactions, that is WHAT THE MARKET IS for that area at that particular moment. PLease don’t require us to use or not use what IS the reality of the marketplace. IF the market is trending upward with fewer REO’s (by checking competitive listings/contracts) then the good appraiser should recongize that the better comps may not be Reo/short sales. Please send your checks for this seminar to Bassappraiser at……
perhaps as an industry we could introduce legislation that requires a shorter decision time period for a short sale, and requires the disclosure of bank ordered BPO values if they end up killing (coming in higher) than the accepted short sale offer between the buyer/seller owner.. if these short sales are being listed as pending sales without the creditor approval, the housing statistics will be skewed won’t they? what we should introduce is an industry led legislative effort to require creditors give a decision on a short sale in a set time period. if a creditor ordered BPO comes in HIGHER than the short sale buyer/seller accepted offer, then that information should be disclosed somewhere in the appraisal system to an HVCC appraiser if/when the property goes to foreclosure. in other words–if the BPO came in HIGHER–killing the short sale offer that was accepted between the buyer and seller, then some adjustment should be made to the foreclosure (especially if they are coming in priced 34% below short sales)…the loss mitigation valuing system is at odds with the market value appraising HVCC system…and if that isn’t reconciled INVESTMENT value of real estate will be impossible to determine.
Good program on educating the borrower facing probable foreclosure to strongly consider short sale
Once again your right leaning tendencies clutter your message. Soros has a good message. It is not in his self interest for millionaires and billionaires to pay more in taxes. Unfortunately many Republicans have their balls in the vice due to their signing Grover Norquist’s pledge. If wealth continues to polarize over the next 30 years like it has the last 30 it could get very ugly. Much of the wealth that has concentrated at the top is due to their destroying the middle class.
Those foreclosures put very strong downward pressure on the price of regular sales. The limited number of buyers are going for the best deals. So even if the appraisers use non foreclosure comps, the influence of foreclosure sales can’t be escaped. The only answer is liquidation of the foreclosed and soon to be foreclosed inventories.
You’re on the right track; now how do we market to these people?
We need to DISALLOW appraisers from using REO’s and SHORT SALES when there are viable comparables. This would be such an easy fix. REALLY FOLKS. But if REO’s were the only option, then statistically compute the percentage difference in the neighborhood (34%) stated in this video, thereby adjusting for the REO being distressed. On short sales, require the listing agent to insert into the closed sale data how much addditional money, if any, the seller (or buyer) had to pay to the lender. Then if an appraiser needs to use a short sale, he/she can add that amount to the sale price. (And get rid of AMC’s.) In my community in Arizona, normal sales closed at 38.5% higher than distressed. Also, 60% of our single-family homes sold for cash.
Short sales are viable comps. A lot of buyers don’t understand (or don’t care) the difference between a real seller and a bank seller. Why a buyer want to pay $50k more (or more!) just to deal with a real person? And therefore, short sales are a part of the market.
I feel sorry for those buyers forking over 38.5% higher. They are being taken to the woodshed. I sure do hope those loans are not tax payer backed.
Is it true that the deficiency amount resulting from a short sale will not impact the homeowner until 2013? I continue to hear conflicting information on this. And if this is the case, all things considered, I would prefer to foreclose, rather than short sell after 1/1/13. Waiting periods aren’t really that different unless you’ve got 20% down and 3 years is plenty of time to get your credit back up.
I think I have a brilliant idea on how the banks / goverment should deal with foreclosed and short-sale properties.
If foreclosures & short sales are selling for approx. 35% LESS than fair market value… thus hurting our industry, housing values over all and costing the banks BIG $… and they intend to compound that further by selling these properties in large blocks to investors for even less… why not INCREASE the demand for these properties by offering Buyer Incentives for these properties such as:
1) 0% Interest Rate loans… with only 5% down payments required
2) the 5% downpayment $ could be dipersed after closing for any improvements made to the property / investment.
3) all 0% financed properties must be owner occupied
4) have reasonable, but less rigid qualifying guidelines
By doing this, the banks / Govt. could create a HUGE Demand for these properties… and help the Housing Sector overall, by:
1) driviing UP the average sales prices on these properties
2) help our overall market (in regards to market values / appraisals)
3) significantly reduce the Bank’s losses (in lieu of 35% avg. hits)
4) enjoy quicker sales (reduce carring costs)
5) significantly increase the condition of these properties / investments with 5% going towards improvements… thus limiting the Bank’s exposure should the new buyer default.
Am I missing something here?
D
And what investor is going to offer a 0% mortgage loan? and WHY? How does this solve the problem? Why wouldn’t the investor just reduce the interest rate of the current homeowner to 0% and reduce the principle balance to current market? Same result…but it can never happen. Would you tie up your money at ZERO interest for 30 years??? The only solution unfortunately (IMHO) is to cut some of the red tape on qualifying for a new loan, and making sure that values are better determined as “Market” value on Short Sales and REO’s. HOWEVER….remember thew old adage, “WHAT IS A HOME WORTH??” …..Answer: “Whatever a buyer will pay for it.” Market value aside, there has to be demand at the higher price points everyone is speaking about, and since the government is messing with the “AFFORDABILITY” of new loans by adding additional MI and paying for tax policy with permanent fees, prices will be driven down even further. AFFORDABILITY is the new government enemy.
You might be interested to know that last week a delegation of folks from the mortgage field, including two appraisers, had a lengthy sitdown with the top staff of the Consumer Financial Protection Bureau, including the director. They tell me they went through the entire range of appraiser problems, from crazy turn times to unfair indemnification clauses (AMC contracts) and compensation issues. Don’t know if anything concrete will come of it…but it just might help.
Do you have any other details about the meeting? Who were the delegates, the appraiser’s, where was the meeting held and do you know if the meeting was a public meeting?
I really wish you wouldn’t use the term Realtor like it applies to all real estate professionals. Some of us are not drinking the NAR Kool Aid and think NAR is nothing more than a bunch of self-serving propagandists–a club we’d rather not join.
I definitely agree with you. The market is calling for a good strong look at foreclosed and short-sale properties. The sad part is that people are losing homes from that boom where they bought to high and are having to sell so low, instead of the banks first looking at a modification. The other problem is that banks are not “maintaining the properties” and more and more issues are occurring due to the empty status of the home. I understand the banks are in no rush to sell these properties and take the loss, but a home with running water is going to sell for more then one that needs to be condemned.
Hey Brian, nice shoulder nips.
I agree that we need to help those who are behind on their mortgage payments. However, I would not rush them into a short sale. In NJ, it takes at least 5 years to foreclose on a property. This is if you do nothing (i.e. file bankruptcy to delay the process even more). If I were to give a homeowner who is upside down and living paycheck to paycheck some good advice, it would be to stay in the house house for a few years before starting the short sale process. This way, you will be able to save tens of thousands of dollars before you become a renter. Plus, there will be new programs coming out to try to keep underwater homeowners in their houses.
I wonder what the ratio of people who actually save the money as compared to spending it all really is… any idea?
Frank,
I know a lot of people who are not paying their mortgages. They come to me for advice. It is true, many of them are not able to save any real amount of money even though they have not paid a mortgage for a long time. That is why it is important for them to stay where they are so they can try to save as much as they can. If they were to sell the house as a short sale and become a renter, their budgets would be even tighter then by just paying the utilities on their current property.
I do have a few who have been able to save a substantial amount of money during this time. Shoot, by the time the banks get around to foreclosing on the property they may have enough to buy a house with cash. Go figure.
Not sure who is smarter, those of us struggling to pay our mortgages every month or those who get to live in their house for years with only the utilities as an expense.
I agree short sales are in the best interest of all. The borrower, the community, the economy, the immediate neighborhood and the lenders. However I would caution homeowners who are behind in their mortgage to seek the help of a real estate agent who has the experience and training and understands how to market a short sale and more importantly obtain the approval from the lender and mortgage investor. Far too often the horror stories that we hear about attempts at a short sale failing is the direct result of the “on the job training” that the agent involved undertook.
With one in six home borrowers in foreclosure and one in four homes underwater homeowners must take the initiative and seek advice from a Realtor who has the training, experience and knowledge to help with a foreclosure. We have been assisting MAssachusetts homeowners for over two years and encourage borrowers to get a clean start, begin to restore their credit and position themselves to purchase a new home just a few years from now. Halting a foreclosure by being proactive is their best choice by far.
Sounds like Brokeback obama ia attempting to violate the civil rights of fellow Hispanic Americans, in case you did not know this is what makes America wonderful!! FREEDDOM.
Fernando:
In today’s world the hyphenated American and for that matter any other hyphened country is the problem no matter what country you are in.
People of other countries came here because they did not like their homeland’s lifestyle now they want to change ours…..No Thank You.
There goes your last shred of crediblility, Nick. Stop posting.
LOL…but David…he does have a slight point. Although off topic, I don’t consider myself an Irish-Scottish-Italian American…I am an “AMERICAN” period. The word alone says enough about me and my family regardless of previous homeland. It has become too big to ignore that many groups have separated themselves as Hyphenated Americans instead of being a PROUD part of the collective.
Agreed, Erik, and neither do I nor most of my friends and colleagues of Asian, African, Latino or European descent. The “hypenated American” term is used in large part by two groups: the media & those with a political axe to grind. Nick’s blanket statement is insulting both to today’s immigrants and to all those in the past, including his own ancestors, and offers nothing to move us forward.
Just a thought on the Star Trek property. Specialty properties like this tend to sell for much higher prices, with out contingencies and in shorter timeline with a skilled auction firm. Here is how it works. You now are selling more than just the real estate value. You are selling the perceived value to a buyer of the real estate plus the Star Trek theme. Specialty properties like historic, iconic and unique ones have an added value if position correctly. Just something to think about. Contact me if you have any questions on the auction process.
Hey guys!!!
You may want to check with your travel agent later this afternoon re: your Oakland trip. I understand that they are going to start a rehab and remodeling project around noon today in the downtown district.
Racists? You’re supporting racists? If we are to forever get beyond racism, we have to stop enabling racists from practicing racism…
Can you imagine if we had a White, Middle-Aged, Overweight, Association of Mortgage Professionals, what the outcry would be? That would DEFINITELY be met with a claim of racist!!
Why do we enable the National Association of HISPANIC Realtors? Because we have no spine… Get over it, HISPANIC people… We are not in need of artificial ratial divides… You came to America… Now you’re trying to change the most successful country on the planet to the country you came from… We are AMERICANS… Not a group of individual races trying to get a piece of the pie… We ALL succeed when we ALL succeed…
Grow up and get a pair, AMERICA… It’s time to bury racism in all forms that racism occurs!!
B B B
Good comments….too bad it did not have a very loud volume option along with a REPEAT button.
and they invite 2 white guys to speak at their group. also if you were to look at their roster i think you’d be surprised that they’re not all hispanic. these guys are trying to provide value to the industry as a whole.
I still think we should require the banks/lenders of foreclosures to have to fix them up before selling. This in turn puts people to work, the homes will bring market value (possibly) get sold quicker because you will not be required to do 203K, Homepath loans etc. This will also cause sales of paint, carpet, appliances, lighting etc at those stores to increase etc. The buyers I have today just don’t want to fool with repairs. So to me, this solution is a win win and the only way we could possibly stop the endless downturn of markets due to foreclosures and banks who don’t care what they sell it for because they know the fed will pay them the loss back later on. For the homes that are in really bad condition, require they bank to tear it down if the cost to renovate it exceeds the value it would bring with a sale at market value. In other words if the bank can’t recoup the repair cost on the deal then tear it down. It would be one less piece of crap house out there bringing the neighborhoods down.
I guess your next suggestion would be to have your Latte home delivered???