3 Reasons to Avoid Buying a Foreclosure | RE Insider

This isn't the entire story on buying foreclosures, but most people who ask me about them are first-time buyers thinking they are going to outsmart the market.  Foreclosed homes can be a good buy, and are sometimes in decent condition, but are few in number in a strong market like we have now.

3 Reasons to Avoid Buying a Foreclosure | RE Insider:

On the other hand, pre-foreclosure homes can be a disaster.  Owners are seldom genuinely motivated, and tremendous amounts of time can be wasted trying to pry such homes from unwilling sellers, while genuinely available properties are being purchased by more realistic buyers.

Good topics for conversation; call me if you have an interest! -David

"Seasoning" Requirements after a Foreclosure, BK, or Short Sale

From Ted Kohn of RPM Mortgage: One of the most often asked questions I receive is how long does a borrower have to wait after a BK, Short Sale, or  Foreclosure to purchase or refinance a property with RPM Mortgage.  Here's a guide of current mortgage seasoning requirements for a new loan.  

Note: If the attachment doesn't link or enlarge, contact Ted at the link above or me for a full sized copy. -David

Post-Recession Real Estate Terms & A Great Picture of Ralphie

Via Trulia and Forbes, 14 Translated Real Estate Terms for the current market.  How many of them did you know?  BTW, the South Bay has a far lower proportion of distressed properties (REO, S/S, etc.) than the county, state, and country as a whole. In fact, current inventories of homes for sale are unusually LOW. - David

For The 9th Straight Month, Foreclosure Filings Fall

For the 9th straight month last month, foreclosure activity slowed.

According to foreclosure-tracking firm RealtyTrac, the number of foreclosure filings dropped 29 percent nationwide on an annual basis in June. The phrase "foreclosure filing" is a catch-all term, comprising default notices, scheduled auctions, and bank repossessions.

June marked the ninth consecutive month of sub-300,000 filings after 20 months above it -- a promising signal for the housing market in California and nationwide.

It's also noteworthy that each of the 10 most foreclosure-heavy states showed fewer foreclosures in June 2011 as compared to June 2010, led by Florida's 54% decline. Florida is one of 4 states on the leading edge of foreclosure activity since 2007.

The other 3 states performed similarly well in June:

• California : -22% on an annual basis
• Arizona : -7% on an annual basis
• Michigan : -25% on an annual basis

The decrease in foreclosure filings comes at a time when buyer demand is highest. According to the National Association of REALTORS®, "distressed properties" account for more than 30 percent of all home resales and no wonder -- homes in various stages of foreclosure or sold by short sale are selling with discounts of 20 percent versus comparable non-distressed homes.

For buyers in search of foreclosures in the the South Bay area , talk with a licensed real estate. Buying homes in foreclosure follows a different process path as compared to buying a "traditional" home. Make sure you seek the help of a professional.

Monthly Foreclosure Count Drops For 16th Straight Month

Foreclosure rates are falling.

According to foreclosure-tracking firm RealtyTrac, monthly foreclosure filings fell 2 percent in May to just under 215,000 filings nationwide. A foreclosure filing is defined as any one of the following: a default notice, a scheduled auction, or a bank repossession.

On an annual basis, foreclosure counts have dropped over 16 consecutive months, dating back to January 2010.

Like all things in real estate, though, foreclosures are local. 6 states accounted for more than half of the country's foreclosure filings in May. Those six states -- California, Michigan, Arizona, Florida, Georgia and Texas -- represent just 34% of the U.S. population.

But even on a per household basis, the figures remain disproportionate.

• Top 10 Foreclosure States : 1 foreclosure per 357 households, on average
• Bottom 10 Foreclosure States : 1 foreclosure per 8,764 households, on average

The nationwide foreclosure rate was 1 foreclosure per 605 households.

As a home buyer , foreclosures matter. Distressed homes account for close to 40% of home resales and that's because distressed properties often sell at steep discounts; in some markets, up to 20 percent less than a comparable, non-distressed home. Foreclosed homes can be a great "deal", therefore, but only if you've done your homework. 

Buying a bank-repossessed home is different from buying from "people". The contracts and negotiation process are different, and homes are sometimes sold with defects.

If you plan to purchase a California foreclosure, therefore, speak with a real estate professional first. With foreclosures, there's a lot you can learn online, but when it comes time to submit an actual bid, you'll want an experienced agent on your side.

Foreclosure Filings Fall To 40-Month Low

Foreclosure activity continues to drop nationwide.

Based on data from foreclosure-tracking firm RealtyTrac, foreclosure filings nationwide fell below 220,000 in April 2011, a 9 percent decrease from March.

A "foreclosure filing" is defined as any foreclosure-related action including Notice of Default, Scheduled Auction, or Bank Repossession.

April marks the seventh straight month in which foreclosure filings have dropped and total filings are down more than one-third year-over-year.

One reason why filings are down is that banks are letting more time pass between delinquency and foreclosure, exploring alternative courses of actions such as short sales and loan modifications. It now takes, on average, 400 days from an initial default notice to bank repossession.

That's more than double the 151-day average of early-2007.

Another reason may be that job growth is returning to the U.S. and job creation is associated with fewer home loan defaults.

Regardless, in the states in which foreclosures are occurring, bank repossessions are concentrating among just a few. 

5 states accounted for half of the country's April REO:

• California : 19.8 percent
• Arizona : 9.5 percent
• Michigan : 7.5 percent
• Florida : 6.7 percent
• Texas : 5.6 percent

Collectively, these 5 states represent just 32 percent of the nation's population.

On the other end of the chart, Vermont accounted for a measly 0.007% of April's foreclosure filings.

If you're a first-time home buyer considering foreclosed homes , or a seasoned investor adding to your portfolio, the good news is that foreclosures are selling at steep, 20 percent discounts relative to non-distressed homes. Just make you know what you're buying. Foreclosure purchases carry different risks and follow different procedures than "traditional" sales.

Rely on a seasoned real estate agent to navigate the deal.

Foreclosures Drop 35 Percent Year-Over-Year

Foreclosure activity is much slower this year than last.

According to foreclosure-tracking firm RealtyTrac, the number of national foreclosure filings plunged 35 percent in March 2011 as compared to March 2010, a statistic that reflects a more healthy housing market and more robust outlook for 2011.

A "Foreclosure filing" is defined as any of the following : a default notice, a scheduled auction, or a bank repossessions. Foreclosures filings were down in all but 8 states last month.

Activity remains concentrated, too. More than half of all bank repossessions can be tied to just a handful of states.

In March, 6 states accounted for 51% of activity.

1. California : 15% of all repossessions
2. Florida : 9% of all repossessions
3. Arizona : 7% of all repossessions
4. Michigan : 7% of all repossessions
5. Texas : 6% of all repossessions
6. Nevada : 5% of all repossessions

At the other end of the spectrum is Vermont. With just 5 repossessions for all of March, Vermont accounted for 0.008% of repossessions nationwide.

Distressed homes remain in high demand among today's home buyers, accounting for almost 40% of all home resales. It's no wonder, either. Distresses home typically sell at a steep, 15 percent discount as compared to non-distressed properties.

Buying foreclosures can be a great "deal". However, make sure you've done your homework.

Buying homes from banks is different from buying a homes from "people". Contracts and negotiations are different, and homes are often sold with defects.

If you plan to buy a foreclosure, therefore, make you you speak with a licensed real estate professional before submitting a bid. You can research a home online and learn a lot of the process, but when it's time to purchase, put an experienced agent on your side.

New Short Sale Website for California Consumers AND Realtors

With fewer than three of five short sales closing in California, C.A.R. is well aware of the complexity and difficulty of navigating lenders’ and servicers’ short-sale procedures.  To assist both REALTORS® and consumers, C.A.R. has launched shortsalescalifornia.org, a website specifically focused on short sales.

On the new site, visitors will find information ranging from short sale news, foreclosure timelines, and red flags to watch for, to legal Q&As, a short-sale glossary, and much more.


Additionally, consumers can find a REALTOR® to assist with their short-sale transaction, learn what to expect as a buyer or seller of a short-sale property, and find out whether they qualify for government programs to keep their home.


Visit the new site at www.shortsalescalifornia.org 

Foreclosure Activity Plunges (But With An Asterisk)

According to foreclosure-tracking firm RealtyTrac, the foreclosure filings fell 21 percent in November to 262,339 units nationwide. A foreclosure filing is defined as default notice, scheduled auction, or bank repossession. 

November marked the first time since February 2009 that the number of monthly filings failed to surpass 300,000 units.

There were other notable November statistics, too, included:

• November's 21 percent month-to-month decrease was the largest in RealtyTrac's recorded history
• November's 14 percent year-to-year decrease was the largest in RealtyTrac's recorded history
• Nevada led the nation in foreclosure activity for the 47th straight month

However, we can't read into November's RealtyTrac report too much; ultimately, history may treat it with an asterisk. Controversy surrounding the so-called robo-signers forced some of the biggest banks to institute a temporary halt to foreclosures in November. Foreclosure activity did fall last month, but the moratorium makes the figures look better for housing than if there had been no interference.

The halt in foreclosures is also why Utah leaped into the #2 state for foreclosures nationwide. Perennial foreclosure-leading states like California, Michigan and Arizona posted double-digit improvements in November whereas Utah did not.

Banks have since resumed foreclosure activity so December's results may be a better gauge for how the market is truly performing.

Foreclosures tend to be sold at discount and low home prices can entice home buyers to make an offer. If you're such a buyer and want to look at foreclosed homes, talk to a real estate agent first.

Although there's a host of online search engines that specialize in foreclosures, a licensed agent may have access to broader inventory, plus the ability to negotiate it more effectively.

October 2010 : 5 States Account For Half Of The Nation's Foreclosure Activity

According to October data from foreclosure-tracking firm RealtyTrac, foreclosure filings topped 300,000 for the 20th straight month last month as 1 in every 389 U.S. homes received a foreclosure filing.

The generic term "foreclosure filing" is defined to include default notices, scheduled auctions, and bank repossessions. Versus the month prior, filings fell 4 percent, and as compared to October 2009, filings were essentially the same.

As usual, foreclosure density varied by region last month, with just 5 states accounting for close to half of the nation's repossessed homes.

• California : 14.8 percent of all bank repossessions
• Florida : 14.4 percent of all bank repossessions
• Michigan : 7.3 percent of all bank repossessions
• Texas : 6.6 percent of all bank repossessions
• Arizona : 6.0 percent of all bank repossessions

The other 45 states accounted for the remaining half.

It reminds us that, like everything else in real estate, foreclosures are local.

For today's home buyers, though, foreclosures represent an interesting opportunity. 

Homes bought in various stages of foreclosure are often less expensive than other, non-foreclosure homes and it's one of the reasons why distressed home sales now represent 35 percent of all home resales.  But don't confuse less expensive for less costly.  Foreclosed homes may also be in various stages of disrepair. Getting them into living condition can be expensive.

Your best real estate "deal", therefore, may be that non-distressed home that's in sound, move-in ready condition.

If you're buying foreclosures -- or even just thinking about it -- make sure you talk with a real estate agent first. Buying distressed property is different from the "typical" home purchase. You'll want somebody experienced in your corner.

Foreclosure Activity By Metro Area, Q3 2010

Foreclosures are a big part of the housing market, with distressed properties accounting for 35 percent of all home resales last month, according to the National Association of REALTORS®.

But for as common as foreclosures can be, they remain a localized concern. Data from foreclosure-tracking firm RealtyTrac shows that more than half of last quarter's foreclosures came from just 19 metropolitan areas, with the Miami-Fort Lauderdale are accountable for the largest number of filings.

A "foreclosure filing" is defined as a default notice, scheduled auction, or bank repossession.

On a per-household basis last quarter, the Las Vegas area was hardest hit. 1 in every 25 households received some form of foreclosure notice.

The RealtyTrac report features other interesting figures, too:

• California, Florida, Arizona and Nevada account for the top 10, and19 of the top 20 metro areas for foreclosures
• Compared to Q3 2009, foreclosure activity dropped in 72 metro areas, including No. 2 Cape Coral/Fort Myers, FL
• Foreclosure activity dropped 1 percent from Q3 2009 in the nation's 20 most-populated cities

And, despite a 27 percent increase in foreclosures from the second quarter, Utica/Rome, NY posted the lowest foreclosure rate in the nation -- 1 for every 8,003 households.  The next closest city, Charleston, WV, posted 1 for every 2,600 households, by comparison.

Foreclosures, like everything in real estate, are local. And buying them is "different" from buying a typical home resale. If you're planning to buy a foreclosed home, speak with a real estate agent with specific experience with homes in foreclosure. Professional advice is helpful.

Q & A: Do you think that the current foreclosure stoppage will affect short sales?

Q via Trulia: Do you think that the current foreclosure stoppage will affect short sales?  I''m seriously considering putting down an offer on a short sale condo...


David's Answer:  Make the offer! While the current foreclosure stoppage is based on a technicality, anything that slows foreclosures increases the incentive for lenders to consent to short sales, which are ultimately much less costly to the bank (but cause them to recognize losses sooner than they would prefer).

Use an experienced, licensed, full-time Realtor (quality, service, ethics, and professionalism vary widely) who's been recommended to you by others. You should have professional representation in what can be an uncertain and time-consuming process, because you deserve it AND because that's what your smartest competitor will have. Good luck! - David

Link to this Q&A on Trulia: http://www.trulia.com/voices/Market_Conditions/Do_you_think_that_the_current_foreclosure_stoppage-247955-p_1-recent?answerId=872368&thisanswer=1#left_content

Bank Reposessions Top 100,000 In A Month For The First Time Ever

The number of foreclosure filings rose 3 percent in September, according to foreclosure-tracking firm RealtyTrac. The term "foreclosure filing" is a catch-all word for housing, comprising default notices, scheduled auctions, and bank repossessions.

September marked the 19th straight month that the number of filings topped 300,000, and the first month in which 100,000 repossessions were logged.

As usual, a small number of states dominated the national foreclosure figures, accounting for more than half of all repossessions.

1. California : 17% of all repossessions
2. Florida : 13% of all repossessions
3. Michigan : 7% of all repossessions
4. Arizona : 7% of all repossessions
5. Texas : 5% of all repossessions
6. Georgia : 5% of all repossessions

Thankfully for home sellers, mortgage servicers appear to be metering the pace at these newly bank-owned homes are made available to the public. RealtyTrac notes that, in doing so, servicers prevent "the further erosion of home prices".

That said, distressed properties still sell at a steep discount.

In the second quarter of 2010, the average sale price of homes in the foreclosure process was 26 percent lower than the average sale price of homes not in the foreclosure process. It's no surprise, therefore, that, based on RealtyTrac's preliminary data, 31 percent of all homes sold in September were "distressed".

There's lot of good deals out there, in other words, but they come with certain risks.

Buying a foreclosed home is not the same as buying a non-foreclosed home. Specifically, you're buying from a corporation and not from a "person". Contracts may vary, and so may terms.

Therefore, home buyers -- even experienced ones -- should talk with a real estate agent before making an offer. It's important to understand the foreclosure-buying process.

Home Defaults Dropped For The 7th Month In A Row In August

According to foreclosure-tracking firm RealtyTrac, the number of foreclosure filings climbed 4 percent in August from the month prior. A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

Despite the number of filings surpassing 300,000 for the 18th straight month, RealtyTrac's report shows some bright spots for housing.

1. The number of default notices served per month fell for the 7th time this year
2. Foreclosure activity in Nevada, the nation's leading foreclosure state, is down 25% from last August
3. Foreclosure activity has not materially increased since early-2009, pointing to a stabilization

In addition, each of the 10 leading metro areas for foreclosures posted year-over-year declines for the second month in a row.

But, perhaps, most important, is that mortgage lenders and servicers appear to be managing their REO more effectively, making properties available for sale at a measured pace as opposed to flooding markets with new homes.  As noted by RealtyTrac, the probable reason is "to prevent further erosion of home prices".

For home sellers, it's a welcome development.

Foreclosures have had a hand in falling home values in California and across the country. And, although it's self-serving for banks to meter the release of homes under ownership, everyday homeowners benefit, too.  Fewer homes on the market helps to provide a floor for housing values.

If you have an interest in buying foreclosed homes, be sure to talk with a real estate agent first. The process of buying a home from a bank is different from buying from "a person". Having the help of a professional should work to your benefit.

How Big Is The Foreclosure Market? It Depends On Where You Live, Of Course.

Foreclosure filings rose 4 percent nationwide last month versus June, according to foreclosure-tracking firm RealtyTrac.com. For the 17th straight month, total filings topped 300,000.

A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

As with most months, just a handful of states dominated foreclosure activity nationwide.

• California : 14.9 percent of all activity
• Florida : 11.6 percent of all activity
• Arizona : 6.4 percent of all activity
• Michigan : 6.2 percent of all activity
• Georgia : 6.1 percent of all activity
• Texas : 4.9 percent of all activity

Together, these 6 states represent just 30 percent of the overall U.S. population.

The other 44 states (and Washington D.C.) were home to the remaining 49.0%.

Despite this imbalance, though, in all markets, foreclosures and REO are making a profound impact on pricing and product. "Distressed" homes now represent 32 percent of the overall resale market nationwide, according to the National Association of Realtors®.

Buying a foreclosed home can make for a terrific "deal", but buying in the REO market is decidedly different from buying a non-foreclosed property.

As 3 examples:

1. Buying bank-owned homes can take 120 days to close.
2. Foreclosures aren't always listed for sale publicly. Some inventory is privately-held.
3. Bank-owned homes are often sold "as is". There may be defects that render the homes mortgage-ineligible.

If you have an interest in buying REO, consider talking with a real estate agent first. Even the negotiation process is different as compared to a non-distressed sale. It helps to have an experienced professional representing your interests.

Best Way to Get the Most Home for your Money? - Depends on Where You Are

Amy Hoak explains that getting the most for your housing dollar depends on your market area.  In some, like the South Bay, your best deal may be a standard sale, properly negotiated.  Let investors fight it out over the relatively few foreclosures and short sales!

In others, prevalent foreclosures (REO's) could be a better bet.

How about short sales? Those are a very long shot UNLESS a previously bank-approved sale has fallen through.  Then the pump may be primed for a successful short sale.

More info: Home buyers, get the most for your money Amy Hoak's Home Economics - MarketWatch

California Real Estate News: Beyond the Headlines

California real estate articles from various publications are summarized weekly in Beyond the Headlines, from the California Association of Realtors. Here's this week's version, covering such topics as:

- Year over year median prices up 21% in April
- Consumer confidence rising

- What kind of homeowners walk away from their homes?

A quick way to stay up to date!

- David

Foreclosure Properties and How to Buy Them

A number of people have asked me how to buy a foreclosure property. Of course, the answer begins with "that depends," because foreclosure is a process with several stages through which distressed properties may pass, including:

• Short sales (usually during pre-foreclosure) 
• Last minute fire sales (seller trying to extract a little bit of equity before the property is lost to foreclosure) 
• Foreclosure auctions (bank has just acquired possession and is trying to sell "on the courthouse steps" in order to avoid carrying the property on its books as Real Estate Owned (REO, a nonperforming asset from the perspective of a bank) 
• REO (foreclosed property) sales, after the property has been taken onto the lender's books, the bank having now decided to list and sell the property 
• HUD homes, repossessed by the government.

The the answer is different at each stage, and of course there are other ways to acquire distressed properties not involved in the foreclosure process (such as trust sales, cash for keys, etc.).

A big factor is location.  Where foreclosure properties are scarce, bidders are many (60 at a recent trust auction I attended), meaning any bargain achieved by the buyer will be relatively small, and the risk of bidding too much is great.  Where foreclosure properties are plentiful, you're generally dealing with a depressed marketplace, meaning that prices will be low but so are the prospects for near-term appreciation.

And of course nearly all distressed properties, including foreclosures, are fixer-uppers.

Here's a good overview by CNN Money on the topic of foreclosure-related distressed property sales:: How to buy a foreclosure - May. 4, 2010.  For more info, contact your real estate blogger! - David

Extreme Home Foreclosure Trouble - WSJ.com

This is a little sad, but it's a fair reflection of one of the biggest elements of the mortgage crisis.

Extreme Home Foreclosure Trouble - WSJ.com

While the intentions are no doubt positive when Extreme Makeover Home Edition does it's thing, the result has been quite similar to when mortgage lenders did their thing a few years ago: putting families in homes they couldn't afford. OUCH! - David

Foreclosure auction of Nicolas Cage's mansion is a flop - latimes.com

"Frat house bordello???"  Extreme though it is, here's the best example I've ever seen of why it's so important to depersonalize a home before listing it for sale!

Foreclosure auction of Nicolas Cage's mansion is a flop - latimes.com 

As much as we love living with decor that reflects our own tastes, homebuyers are looking for something to make their own.  They simply aren't interested in adopting our tastes and lifestyle! - David

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