2008 The Year of Foreclosure?

[Joe Mammy]

You don't have to be Nostradamus to see there is an avalanche of foreclosures coming. I just put together 4 reports that show we have 80 current short sale listings in the ECAR MLS for just Destin and SoWal (areas 14 and 15)- single family homes and condos!

http://www.thewiredagent.com/pulse.html

To embellish on Shelly's favorite line: "There has never been a better time to buy a short sale!"

[Smiling JOe]

"short-sale" has suddenly become a marketing term. Some agents have been listing properties as short sale, though the owner has not missed a payment to the bank.

2008 will be interesting, especially for the people who bought in 2005, with a 3yr ARM. We are already seeing the ones bought in 2004 with a 3yr ARM.

A word to buyers of short sales, please know that getting an answer on an offer from the lender or a third party, may take somewhere between 3-6 weeks. You will need to be patient, or skip the short sales, and look for another good value. They are out there.

[jdarg]

This week, 2 people have told me they are in the foreclosure real estate business.:shock: I am assuming this means they are specializing in this type of sale now.

[Smiling JOe]

sounds like they attended a seminar on how to make millions from foreclosures.

[JoshMclean]

Banks are tough to deal with right now. I put in offers on two different properties. One never even responded and the other didn't want to come down at all.
I tell my clients everyday that they are better of dealing with a seller who bought pre-2003 than any bank short sale.

[sowalgayboi]

This week, 2 people have told me they are in the foreclosure real estate business.:shock: I am assuming this means they are specializing in this type of sale now.

sounds like they attended a seminar on how to make millions from foreclosures.

Anyone interested? I have stacks of these I get in the mail everyday at my office.

[SHELLY]

To embellish on Shelly's favorite line: "There has never been a better time to buy a short sale!"

You forgot the rest...."There has never been a better time to buy a short sale--until later, when it will be an even better time to buy a short sale--and then after that, when it will be an even better time to pick it up at a bank auction."

I stuck a fork in it....it's still not anywhere near being done.
.

[SHELLY]

sounds like they attended a seminar on how to make millions from foreclosures.

sounds like they attended a seminar on how to make millions from foreclosures.

"Charlie's" closest friend "The Donald" is cranking up the sausage machine: http://www.trumpuniversity.com/seminars/profit-from-foreclosure.cfm

:scratch: Gee, as I recall in 2006: http://www.learningannex.com/default.taf?newcity=EX&addtocart=yes&sctn=A2&_function=detail&cnum=LA06EX&lc=LA&Refer=
I wonder how many of the clueless wonks who are in the video are now getting the "soiled end" of the stick.


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[barefootguy]

I bought in 2005 with 5 yr ARMs, so I still have 2 years before I'm a hurtin' puppy. I'm hoping to make it through without a scratch, but at this point I can't see how. I might be fine with my Crestview house, if my current renters decide to buy it. My house by the beach rents out wonderfully every year. The renters pay the mortgage and most of the bills, but the value of the neighborhood has dropped a couple hundred thousand. I can't refinance, and I can't sell for close to what I owe. And I'm totally sunk with the house I live in cuz I've heard that nobody wants a Driftwood Estates home. Actually, it seems that nobody wants a home built by Adams in an Olson & Associates development, which all of mine are.

So ... I'll be praying real hard over the next couple years for a miracle!
And when I'm not busy praying, I'll be enjoying the beach.

[Smiling JOe]

barefootguy, maybe you should join in on the lawsuit against the County for issuing building permits and releasing the bond money to the developer without the drainage infrastructure receiving the okay from the final inspection. I don't know if you know Allen O., but he sounds like he is extremely knowledgeable of the overall problems in Driftwood. If you don't know him, I would think it in your best interest to get to know him. He isn't scared to let the BCC know where they screwed up, yet he isn't intimidating at the same time. I sure hate to see all of those homeowners being screwed by the original developer and the County. I wish you guys the best.

[Joe Mammy]

Getting back to short sales (quite a few in Driftwood Estates), agents who steer their clients clear of short sales are not providing full service and may be missing out on excellent buying opportunities.

Each bank's loss mitigation departments have different guidelines for granting short sales. I dealt with a couple last year from two different banks and the process was considerably different for each.

When considering an offer on a potential short sale the key is whether the seller has been in touch with the lender, is delinquent on at least 2 payments, can prove insolvency and hardship and has written the letters to the lender already stating such and most importantly - have no assets to make a payment. The banks are not going to grant a short sale if the seller can make his payment, this is what many agents do not understand. They post short sales in the MLS when the seller has not even discussed it with their lender.

There is a FAR 9 addendum for short sales now which basically just outlines time frames and removes the seller from any liability caused by delays from the lender. If left blank the default time period is 45 days.

Poking around the MLS will show you the lowest priced listings in most subdivisions are short sales. If the buyer has patience these can be the best bargains around today. One thing for certain, the loss mitigation departments of most lenders are going to get busier and busier as more desperate sellers take a crack at negotiating their mortgage balance.

[full time]

During the S&L mess, the banks took back properties from borrowers and learned that they didn't much like being a property owner. Some short sales will get better, but I don't look for the banks to be rushing in to take back property for auction. Keep that fork handy Shelly and check town to town, neighborhood to neighborhood and block to block. Some areas here are probably closer than you think.

[Smiling JOe]

Getting back to short sales (quite a few in Driftwood Estates), agents who steer their clients clear of short sales are not providing full service and may be missing out on excellent buying opportunities.

Each bank's loss mitigation departments have different guidelines for granting short sales. I dealt with a couple last year from two different banks and the process was considerably different for each.

When considering an offer on a potential short sale the key is whether the seller has been in touch with the lender, is delinquent on at least 2 payments, can prove insolvency and hardship and has written the letters to the lender already stating such and most importantly - have no assets to make a payment. The banks are not going to grant a short sale if the seller can make his payment, this is what many agents do not understand. They post short sales in the MLS when the seller has not even discussed it with their lender.

There is a FAR 9 addendum for short sales now which basically just outlines time frames and removes the seller from any liability caused by delays from the lender. If left blank the default time period is 45 days.

Poking around the MLS will show you the lowest priced listings in most subdivisions are short sales. If the buyer has patience these can be the best bargains around today. One thing for certain, the loss mitigation departments of most lenders are going to get busier and busier as more desperate sellers take a crack at negotiating their mortgage balance.
Given the current market conditions, I respectfully disagree with your first paragraph, Joe. Not all buyers are interested in playing waiting games, when there are other good buys to be had. Someone who bought in 2002, may be able to undersell even the "short-sale."

Regarding the third paragraph, I fully agree. The ECAR Board of Directors was going to come up with a definition for Short Sales, but I think it is too difficult to define. The MLS Committee toyed with the idea of putting check boxes on listings to identify short-sales, but I understand that they didn't want to do this without having a good definition. Your third paragraph has some good identifiers of a short sale, but it fails to address the short sale, where the seller will eat the difference owed to the bank, and that is one of the problems with the definition.

One other huge problem for many of the listings being called "short sales" is that the lender, in most cases, is not willing to pay the agreed brokerage fee, established between the listing broker and the seller. If this is not disclosed in the Agent Notes on the listing, the listing broker may be responsible for paying out the difference to the selling broker. Want to make some money over the next year, become a real estate contract attorney. I see potential lawsuits written all over place.

[Busta Hustle]

Yep real estate attorneys have done very well around here for years, just ask the guys at roebuck auctions

[Joe Mammy]

Given the current market conditions, I respectfully disagree with your first paragraph, Joe. Not all buyers are interested in playing waiting games, when there are other good buys to be had. Someone who bought in 2002, may be able to undersell even the "short-sale."


Trust me, I would much rather deal with a 2002 seller than a bank. The problem is when you are sending properties to clients via the MLS they are looking primarily at the price. They say, "Wow, this looks like a deal".

They do not see the agent notes that announces this is a short sale where the offer will be up to the lender to accept. That is where I come in and educate them that it is possible to get a great deal on this property but it is going to take longer than a conventional deal where the lender is not involved in the sales price being less than owed. I don't immediately give up on the property because the seller is attempting a short sale. I will investigate with the listing agent and gather as much info as I can to see just what page the seller and lender are on- if it's page 1 than I will likely advise that we move along, page 10 and we can get this done.

[njackie]

Excellent Posts Joe Manny, thanks for the info provided in all of them!

[Indigo Jill]

Any Realtors interested in commenting on their outlook for the Sowal Real Estate market in 2008? Is it the year of foreclosure for Sowal as well IYO?

I just launched a South Walton Blog and would love to put your opinion on there as well. PM me if you are interested.

[Bobby J]

I think I agree with 2008 being the year of the foreclosures but I do notice a trend that is hard not to look at. The A properties seem to be going under contract and leaving the market. I think we have allot of pent up demand in the market. We are getting calls and showing at an alarming rate. The hard part has been converting lookers into buyers. The positive side to this is we are seeing energy entering the market place. I think when the so called bottom bell rings many folks will be surprised at what product is really available.

Here is why: Out of everything listed only about 15% of it is real product. This 15% is good stuff (location,value) and moving off the market. Many folks are spending too much time analyzing the other 85%. The smart buyers are coming in and grabbing this stuff up. They see value down the road and know that when the market returns the A properties will be easy to sell. Current sales trends show this stuff leaving the market. When we finally get to the so called bottom and everyone agrees it is the bottom many of the A properties will be gone leaving the buyer that always wanted in standing once again on the side line wondering what happened.

Anyway, just my two cents..... Gotta run, just got an offer on a Heron's Watch unit we have had listed less the a week!:biggrin: Another A product because of the price and location.

[Smiling JOe]

Trust me, I would much rather deal with a 2002 seller than a bank. The problem is when you are sending properties to clients via the MLS they are looking primarily at the price. They say, "Wow, this looks like a deal".

They do not see the agent notes that announces this is a short sale where the offer will be up to the lender to accept. That is where I come in and educate them that it is possible to get a great deal on this property but it is going to take longer than a conventional deal where the lender is not involved in the sales price being less than owed. I don't immediately give up on the property because the seller is attempting a short sale. I will investigate with the listing agent and gather as much info as I can to see just what page the seller and lender are on- if it's page 1 than I will likely advise that we move along, page 10 and we can get this done.

Joe, I understand what you are saying. I just disagree with what you said about agents who "steer their clients clear of short sales are not providing full service and may be missing out on excellent buying opportunities." Not all buyers want to mess with waiting one to two months before hearing a reply on an offer. There are too many properties on the market from which to choose, and chances are, they can find equally suited properties, for the price of the "short-sale," or less.

[Smiling JOe]

Bobby J, I agree.

I'll share some sales numbers from Emerald Coast Association of Realtors:

All prices are average sales prices for the year

Condos in SoWal (less the area b/tw Sandestin to Destin)
2004 - $662,419
2005 -$886,569
2006 - $593,110
2007 - $745,496

Condos from Sandestin to Destin
2004 - $492,549
2005 - $614,634
2006 -$602,696
2007 - $604,985

Attached Single Family (townhomes) in SoWal, less the area from Sandestin to Destin
2004-$388,525
2005-$409,327
2006-$275,918
2007-$380,465

Detached Single Family in SoWal, less area from Sandestin to Destin
2004- $757,173
2005- $882,860
2006- $1,016,281
2007- $937,532

Detached Single Family from Sandestin to Destin
2004- $544,963
2005- $662,751
2006- $798,899
2007- $846,697

Detached Single Family in Freeport
2004- $220,148
2005- $325,809
2006- $300,386
2007- $298,837

[SHELLY]

sounds like they attended a seminar on how to make millions from foreclosures.

2008..."Year of Foreclosure" AND "Year of the Rat"....coincidence? :shock:


.

[InletBchDweller]

Regarding the third paragraph, I fully agree. The ECAR Board of Directors was going to come up with a definition for Short Sales, but I think it is too difficult to define. The MLS Committee toyed with the idea of putting check boxes on listings to identify short-sales, but I understand that they didn't want to do this without having a good definition. Your third paragraph has some good identifiers of a short sale, but it fails to address the short sale, where the seller will eat the difference owed to the bank, and that is one of the problems with the definition.



We were just talking in the office today wondering why ECAR did not put short sales out there. It would make it easier that looking through everything...

[Smiling JOe]

IBD, you can run a pro-search and search for the words, "short sale," and you will be able to see ones which are being listed as short sale. However, that doesn't mean that they are really short sales.

On another note, foreclosures are easier to define, and you can now enter listings as foreclosures, as long as they really are. (foreclosure is not pre-foreclosure). You can also run a pro-search on foreclosure, found under financing on pro-search.

[SHELLY]

Interesting twist to short sales of properties governed by HOAs/Condo Fees:
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Overdue association fees by short-sellers hold up condo sales

It took weeks, but real estate agent Caroline Lynch got two lenders to agree to take an $89,000 offer on a Howell condominium even though the homeowner still owed $132,000 on the mortgage. All that remained was to negotiate a discount on the $9,500 in delinquent association fees and charges from an attorney representing the association.

But neither the association nor its attorney would budge, said Lynch, who owns a brokerage firm bearing her name in Brighton.

The association and the attorney "were the only ones saying this can't happen because they need 100% payment," said Lynch, who added that two prospective purchasers walked away rather than pay the fees. "They're killing sales. It's just a nightmare."

Short sales -- sales in which mortgage holders agree to take less than they are owed to avoid foreclosing on the property -- are a last resort for homeowners trying to get out from under a mortgage they can no longer afford without the scar of foreclosure on their credit report. Sellers lose all equity.

Short sales often take longer to close, since banks often require mounds of paperwork and can refuse an offer. But condominium owners have an added hill to climb to get to the closing table for a short sale: delinquent monthly association fees.

Those fees are separate from the mortgage payment, but must be paid since, by law, the association can file a lien against the property. Associations use the fees to cover maintenance, amenities and some utilities.

It may sound like hardball, but the associations say they have no choice but to insist on full payment because the remaining homeowners would have to pay higher monthly fees if debts were forgiven.

Some associations may negotiate fees in individual cases, but Meisner said they have little sympathy for mortgage lenders who granted bad loans or buyers who bit off more mortgage than their salaries could cover, many through adjustable rate mortgages that are resetting at higher rates and increasing monthly payments.

"There really isn't any reason for the association to compromise," said Meisner. "The co-owner knowingly entered into a mortgage situation. Why shouldn't they," meaning association officials, "be paid 100% of the fees that they are owed?

"Realtors were making a ton of money," Meisner said. "Mortgage companies were making a ton of money. All of a sudden, because the cookie is crumbling, they expect the condo association to take a bath on it. I don't see any reason why they should."

http://freep.com/apps/pbcs.dll/article?AID=/20080120/BUSINESS04/801200501/1002

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[rancid]

I think I agree with 2008 being the year of the foreclosures but I do notice a trend that is hard not to look at. The A properties seem to be going under contract and leaving the market. I think we have allot of pent up demand in the market. We are getting calls and showing at an alarming rate. The hard part has been converting lookers into buyers. The positive side to this is we are seeing energy entering the market place. I think when the so called bottom bell rings many folks will be surprised at what product is really available.

Here is why: Out of everything listed only about 15% of it is real product. This 15% is good stuff (location,value) and moving off the market. Many folks are spending too much time analyzing the other 85%. The smart buyers are coming in and grabbing this stuff up. They see value down the road and know that when the market returns the A properties will be easy to sell. Current sales trends show this stuff leaving the market. When we finally get to the so called bottom and everyone agrees it is the bottom many of the A properties will be gone leaving the buyer that always wanted in standing once again on the side line wondering what happened.

Anyway, just my two cents..... Gotta run, just got an offer on a Heron's Watch unit we have had listed less the a week!:biggrin: Another A product because of the price and location.



Regarding Grayton Beach , I don't really see anything selling over the last year. No 15%, maybe 2 or 3 properties ,tops.
Why is this? The supply/demand seems more out of whack here than anywhere else in SOWAL if you are correct that the top 15% is selling.
Let the waiting game continue.

[Bobby J]

Regarding Grayton Beach , I don't really see anything selling over the last year. No 15%, maybe 2 or 3 properties ,tops.
Why is this? The supply/demand seems more out of whack here than anywhere else in SOWAL if you are correct that the top 15% is selling.
Let the waiting game continue.

Very slow sales in Grayton in 2007. I think 2 to be exact. I consider Grayton an A location but current pricing to be a C. Not falling into my 15% theory. My comment was to the market in general. I do believe the A properties are getting attention(A properties= location,price). I have seen several contracts already this week come through our office. Nice stuff.
On another note, I have had a hard time getting buyer and seller to come to terms because the seller will not meet buyers offer. One reason the seller held out I believe is because the property is being shown almost daily. So this buyer says they are going to wait them out.... Not going to happen. They can wait but this home will be gone. I am sure the buyer will find something but not the one he wanted.

[Smiling JOe]

Grayton isn't for everyone, thank GOD! Plus, I think that most of the homes being older homes scares people away. So many buyers looking at million $ homes, expect to see granite and stainless steel. I know of a couple of houses in Grayton with plywood flooring. Grayton is a real gem, and I am so thankful that it isn't shiny in most people's eyes.

[Bobby J]

Grayton isn't for everyone, thank GOD! Plus, I think that most of the homes being older homes scares people away. So many buyers looking at million $ homes, expect to see granite and stainless steel. I know of a couple of houses in Grayton with plywood flooring. Grayton is a real gem, and I am so thankful that it isn't shiny in most people's eyes.

Shhhhh.....