Well, if you have been following me on Twitter you know I have been working a lot of foreclosures recently. The problem is that the vast majority of foreclosures have not arrived on the market yet. As a result there is actually very little supply in the market, but lots of demand. (I am specifically talking about the $300k to $700k price range in Santa Clara County in Northern California.) The result has been lots of bidding and no real deals for a first time home buyer. This has been very frustrating to my clients who look at the national news and hear about all these foreclosures out there.
This is what my crystal ball is telling me: Late September will be the beginning of the flood of foreclosures. This will continue to build through at least the first quarter of next year. November and December will be great for buyers who don’t obligate themselves to the holidays and make themselves available to the process--previewing, writing the contract with their agent, being available for the inspections, etc. The perfect scenario would be find the house in November and close by December 1 so that you can take advantage of the $8k tax credit. But if you miss the deadline all is not so bad. You could pay more than $8k in the currently overpriced local foreclosure market or you can save $20k to $50K later when the market softens.
My prediction is based on the effect of the "California Foreclosure Prevention Act" and recently released economic data. As you may have read in my previous blogs, California passed the “California Foreclosure Prevention Act," which basically delayed foreclosures from coming on the market. This moratorium will end on September 15th and should produce a spike in supply at that time. Remember... price is a function of supply and demand. A higher supply with a unchanged demand factor should lower price.
According to RealtyTrac’s Midyear 2009 U.S. Foreclosure Market Report, more than 1.9
million foreclosure filings were reported on more than 1.5 million U.S. properties in the first half of 2009-a 9% increase from the previous six months. Lurking in the shadows? A large wave of bank-owned properties yet to hit the market. Add this additional supply on top of the supply pent up from the California Foreclosure Prevention Act and you can see that a storm is brewing favoring buyers.
If you are a buyer or investor and looking for more information, please feel free to email me at brent@brentsellshomes.com
If you would like a list of foreclosed properties in Santa Clara County, click here.
Wednesday, August 12, 2009
Wednesday, August 5, 2009
Home Sellers Frustrated as Short Sales Collapse
I saw a article with the same title as this blog here: http://www.usatoday.com/money/economy/housing/2009-08-04-short-sales-mortgages_N.htm?csp=usat.me
I found no irony in this as I have been commenting on this very subject for the last couple of months. What I do find ironic are the many realtors I talk to who believe Short Sales are the wave of the future and aggressively pursuing them. I have called Short Sales ticking time bombs waiting to be taken over by the bank.
I have a perfect example of this exact scenario. My client really likes this house. It turns out its a short sale. So I call the agent to find out what the story is with the property in regards to the seller, talks they have had with the bank, the amount the bank is going to forgive, etc. Well, it turns out the seller is the agent. Conflict of interest: You BET! But, my client really wants the property so I dig deeper with warning signals going off in my head. The property had been on the market for year. Initially listed at $455,000. Then about 9 months later reduced to $419,000. The agent (who is also the seller that is getting a divorce and behind on her payments) is trying to convince me that she has 3 buyers ranging from $485k to $500k. Bing! Warning bell: how can this property that has sat for a year at $455k, reduced to $419k suddenly be in a multiple bid situations for $500k ish??? I asked what the bank has agreed to. She doesn't know and says they better take it. Bing! Another warning. The bank has not agreed to anything and she has no clue (let me remind you she is a licensed real estate agent who should know, so do your homework before hiring a realtor.)
I go back to my client, explain the situation and we agree that something fishy is going on. So we pass, and move on. Well guess what happened? The property got foreclosed upon by the bank and now the property has been listed as a REO (which means Real Estate Owned) as in owned by the bank.
If you are interested in foreclosed properties in the greater San Jose area, please visit my website here
I found no irony in this as I have been commenting on this very subject for the last couple of months. What I do find ironic are the many realtors I talk to who believe Short Sales are the wave of the future and aggressively pursuing them. I have called Short Sales ticking time bombs waiting to be taken over by the bank.
I have a perfect example of this exact scenario. My client really likes this house. It turns out its a short sale. So I call the agent to find out what the story is with the property in regards to the seller, talks they have had with the bank, the amount the bank is going to forgive, etc. Well, it turns out the seller is the agent. Conflict of interest: You BET! But, my client really wants the property so I dig deeper with warning signals going off in my head. The property had been on the market for year. Initially listed at $455,000. Then about 9 months later reduced to $419,000. The agent (who is also the seller that is getting a divorce and behind on her payments) is trying to convince me that she has 3 buyers ranging from $485k to $500k. Bing! Warning bell: how can this property that has sat for a year at $455k, reduced to $419k suddenly be in a multiple bid situations for $500k ish??? I asked what the bank has agreed to. She doesn't know and says they better take it. Bing! Another warning. The bank has not agreed to anything and she has no clue (let me remind you she is a licensed real estate agent who should know, so do your homework before hiring a realtor.)
I go back to my client, explain the situation and we agree that something fishy is going on. So we pass, and move on. Well guess what happened? The property got foreclosed upon by the bank and now the property has been listed as a REO (which means Real Estate Owned) as in owned by the bank.
If you are interested in foreclosed properties in the greater San Jose area, please visit my website here
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