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Category Archives: foreclosure

Wayback Wednesday… REOs and Credit Pulls

Wednesday, 16 November 2011 08:00
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great_room_3

Image by lane.bailey via Flickr

Two years ago I wrote about this…  On many Foreclosure and Short Sale properties, sellers are requiring buyers to qualify with a specified lender… sometimes even the lending branch of the seller.

It doesn’t seem to be that big of a deal, right?  I mean all you have to do is call up the specified lender, give them some info over the phone and let them make sure you are qualified to complete the sale of the property.  But the problem is that many buyer end up offering on multiple properties over several months… and that means that the credit pulls can actually HARM the credit of the buyer.

There still aren’t any rules regarding this practice.  And I still think it needs to be stopped…  I can understand it from the perspective of the seller, but it may actually be damaging to the buyer’s credit.

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Wayback Wednesday… Smooth Sailing After Accepting an Offer?

Wednesday, 09 November 2011 08:00
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Sumerian contract: selling of a field and a ho...

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Maybe… maybe not. Last year I had a pretty good post (if I do say so myself) about issues that can arise between Contract and Closing in a real estate transaction.

I wish it weren’t the case… but it is.  There are a lot of reasons that a sale can fall through between the time the seller accepts the offer and the buyer shows up at the closing table.  Some can be easily prevented and others are a little tougher to deal with.  For the most part, though, if both real estate agents do their jobs well and the clients on both side are transparent about any skeletons that might be hiding in the closets, everything should go pretty well.  But even then, there are some issues that can raise their heads at the last minute and derail everyone’s plan.

As listed in the post from last year…

Homes fall out of contract for a variety of reasons.

  • Inspection issues
  • Buyer financial problems
  • Buyer’s remorse
  • Appraisal comes in too low
  • Seller can’t produce title
  • Lender changes standards

And of course there are always strange and unique ways for sales to fail.

It used to be that the most common issue was something popping up in the inspection.  I’ve has buyers jump out of a sale because of an undisclosed issue showing up during inspections… although most of those have been with foreclosed properties (no Seller’s Disclosure statement).  But a couple of times it has been because of a problem that should have been disclosed by the sellers.

Right now, one of the biggest problems is something that was almost unheard of a few years ago… Appraisal coming in low.  I’ve been on both side of this one, and it isn’t fun for anyone.  The buyers begin to second guess their decision, the sellers are over a barrel (especially if the buyer is using FHA financing).  Perhaps the price really was out of market norms and the agents both failed to catch it.  Other times, the property is unique and the Appraiser failed to account for its uniqueness.  In other cases, a sale closes between the Contract and the appraisal that adversely affects the neighborhood’s values.

Of all of them, the one I get most annoyed with is Buyer’s Remorse.  The vast majority of the time, it should be completely preventable.  But sometimes there is a piece of information that comes available during the Buyer’s Due Diligence process.

Buyer financial problems should also be preventable… but sometimes, with (usually) borderline buyers, changing lender standards can jump in and create havoc at the last minute.

Check out the post from last year for more info on how to prevent sales failures between contract and closing.

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Wayback Wednesday… Median Home Prices

Wednesday, 02 November 2011 08:00
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Three years ago I wrote about a quiet little map that the NAR (National Association of REALTORSS®) had built (and they’re still populating with data) showing the median home prices of various metro areas around the country.  It is pretty interesting to see median prices around the country and compare them with the prices here (or where you live).


View Metropolitan Sales Areas Q1 2011 in a larger map

There is a dark side, though.  That would be looking at the numbers in historical perspective.  Here is a quote from 3 years ago:

For the 2nd Quarter, the Atlanta area was at $158,300, which was down 9.8% from the 1st Quarter.

Now, the Median Home Price here is a little more challenging.  For the 1st Quarter this year the Median Home Price was $99,800, and that was down 9.4% from a year ago.  More importantly, it is down about 37% from three years ago.  I don’t have a complete set of data, but I suspect that the median price has dropped around 50% in Metro Atlanta.

One important note here is that this does NOT mean that the value of any particular house has dropped 50%, or that the average value of homes have dropped 50%.  There is NO mistaking that home prices have crashed and burned… then crashed some more.  But there has also been a shift in the last couple of years towards less expensive homes.

Be sure to keep an eye my local market reports for more specific data about individual areas of Gwinnett County.

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Wayback Wednesday… How ’bout Those Housing Starts

Wednesday, 12 October 2011 08:00
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Old photo of the estate Hollander Höfe (Höben)...

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Three years ago I published a little article about how housing starts were at their lowest level since 1991…  There were 820,000 starts in September of 2008.  And to me, that was a good thing.  If there is too much inventory, making more inventory isn’t the best idea.

Well… that was three years ago.  In August of 2011 (the last month with available numbers that I could find) there were 571,000 starts.  And furthermore, aside from a couple of bumps, starts have been bouncing along under 600,000 starts since December of 2008.  And I STILL say that it is a good thing.

Inventory is WAY more balanced than it was, even compared to just a year ago.  However, values are still well below where they should be. And there are still the persistent rumors that “the banks” are going to release millions of foreclosed homes that are “in the pipeline”.  Personally, I have been discounting those rumors for a few years… because the same rumors have been around for several years.  For a couple of years now, there have been rumors alluding to “shadow inventory” that was 3-6 months from the market.

So, if inventory is balancing, and starts have been down for years, how could I think that they need to stay low longer?  Well, it comes down to a few factors…

  • Pricing…  It still doesn’t pay for builders to put up houses in many markets.  Basically, pricing almost has to be below the cost of materials plus land in order to get the house sold.
  • Vacant Inventory…  Even in the depths of the crash, I didn’t see as many vacant homes as I do now.  I don’t have stats to back it up, but it seems like vacant inventory is surging.  (BTW, I think that is actually a sign of a recovery forming…)
  • Buyer Fear…  Despite incredibly low interest rates on mortgages and very low prices on homes (even Clark Howard is saying it might be time to move back into real estate), most buyers are still nervous.

Oddly, if you look over my market reports, I specifically refer to a couple of segments as being WELL into Seller’s Market territory.  And it is hard to square these two points…. that there is an active Seller’s Markets (in some segments) AND that starts need to stay low because the market is still weak.  But it comes down to averages…  One city might be rocking the sales, while just up the road everything is stagnant.

Location…

 

Housing Start Source.

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Wayback Wednesday… From the Meltdown.

Wednesday, 05 October 2011 08:00
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Atomic bombing of Nagasaki on August 9, 1945.

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One advantage of having blogged for more than three years is that I have a LOT of posts to look back upon… and there are some really opinionated pieces lurking back there.

This one actually does push back into the early days of my blog… October 7th, 2008… as the financial systems of the country (and arguably the whole world) were on the verge of collapse.

At that time, TARP wasn’t something we talked about in the past tense.  It was a brand new idea.

Honestly, at the time I thought it was what we needed to do.  But now… not so sure.  Of course, it is a LOT easier to make a decision when looking in the rear-view mirror than it is when looking through the windshield.

Through my connections on Active Rain, I know a particular guy that is a serious “financial wonk”.  He tends to be well to the left of me on many issues, but as TARP was being debated in the public eye, he was VERY much opposed to it.  He wasn’t a big fan of the alternative… but his reasoning pointed to TARP as being a long term issue…

And there is NOTHING I could say in response that had as much validity as what he was saying.  But I stuck to my guns.

Now, I think he might have been right.  Even using the 20/20 rear-view mirror, the best we can do is guess.  We can’t know what would have happened had we taken the other path.

Here is the link again…  Have you been left wondering how we’ve gotten here?

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