[Sarah Choe]

Sarah Choe

Here is what is happening:

Up until now, the lenders have been trying to hold the price of REO’s at an unrealisticly high price.
They have been very difficult to deal with and have been slow to reduce prices.

An example: You put in a bid and they might give you an answer in a couple of months! (this is a recent experience dealing with a bank).

Since several lenders have announced these loses some changes are occuring.

The most dramatic is that they are beginning to lower asking prices by large amounts.

Today a local bank owned house was reduced from $350,000 to $248,000!

While the $350M was a little too high, the new price is substantially under even the current market for this house. It got several showing today and will probably be sold by tomorrow.

It just goes to show that the market is extremely unsettled.

What seems like a super deal today, may seem like a poor deal tomorrow!

Use caution, this downturn has a long time to run!

My theory, is to buy only houses that would provide positive cash flow and that you would be happy to keep for long term investments if you could not sell them.

[Sarah Choe]

Sarah Choe

I have been to a couple of these auctions in the Sacramento and LA areas
recently.

They are interesting as they usually take place at a large convention center and use large screens to display the houses as they are auctioned.

They start the bids low, usually 30 to 50% of the so called “former market price”.
It goes fast and the prices tend to bid up to about what I would pay if I really needed to buy a house. Not really a great deal.

Here is the rub. You have to put up a $5,000.00 cashiers check immediately and the difference of 5% of the winning bid in the form of a regular check.

Many properties are re-auctioned a few minutes later as people who bid do not seem to understand this.

There is a 5% buyers fee.
You must close within a set time. Usually 30-45 days. If you are not pre-approved by their lender and you cannot close you may loose your 5% deposit.

If you win the bid, you may not really get to buy the property as the lender reserves the right to refuse the high bid in many of the sales. They may give themselves 7 days or more to review the high bid and accept or reject it.

I talked to a realtor in Sacramento after a recent auction and was told that a very high percentage of the bids were rejected and the properties were to be resold at the next sale. Not too encouraging!

However some of the best deals are on the properties that get no bids. You can contact the lenders after the sale and deal directly.

I did not think that these auctions were very worthwhile. However, the lenders may get a little more realistic in future sales?

It is probably worthwile to keep an eye on these sales just in case they get better.

[Sarah Choe]

Sarah Choe

Michelle,

A couple of other options to get comps:
1. Subscribe to a service such as
DataQuick.com

2. If you do a lot of business with one title company ask them to give you access to do your own property profiles.

I do pretty much all of my business with Stewart Title and they used to use Data Quick but have recently switched to Profilez.

The comps are pretty good.
They provide access to me free of charge but I would be willing to pay if it were necessary.

[Sarah Choe]

Sarah Choe

Quote:

Posted By Brad Wickliffe on 09/13/2007 11:38 PM

The volume of houses being sold today at Trustee Sales with any equity remaining in them is seriously dwindling.

They are all being sold to some guy named Bennie.

Who do I need to make friends with in order to get his phone/fax number for the purpose of presenting offers before the property is placed out for retail sale? The Agent at the sale? Trustee officer handling the file?? And why would any of them want to talk to me, even though I am a cash buyer?

I am sure you have experience navigating through the REO maze and look forward to hearing from you!

Brad

To find the contact person can be very difficult as loans are sold, assigned, etc. Even the person crying the sale usually does not have the information that you need. However I have found a way to get to the right person.

After the foreclosure sale a new deed will be recorded, usually within a couple of weeks.

Go online to the county recorders website and do a search for the foreclosed owner. This will show a copy of the new deed.

Somewhere on the deed will be a “return to when recorded” name and address.

Once you have this, go to the internet phone directory and look up the phone number, call and ask for the loss mitigation department.
You will probably need the trustee’s sale number, loan number, former owners name and address. All of which is available at the county recorders website. Read the various notices recorded in the former owners name.

This takes a little work, but you will get a jump on others who wait until the sale information appears on REO lists.

Sometimes you can deal directly with the lender or they may refer you to a local realtor who handles REO’s for them.

Go ahead and call the realtor and let them know you are interested when it is available for sale. Be sure to call them every couple of weeks to remind them that you are still interested. They may call you first and let you put in a bid before it is listed and available to everyone.

I have purchased several properties this way.

[Sarah Choe]

Sarah Choe

From Reno, NV.

The credit crunch is really starting to have an effect on our sales.

Many lenders are now looking for fico scores of 725+!

This is causing long delays in closing sales as loan brokers are having to shop loans in order to sell them to investors and get sales closed.

Mobile homes are being effected more than SFH’s.

It appears that we are going to be dealing with FHA and VA loans again.

About 100 properties a week are still closing, so the market is still moving but at a much slower pace.
The houses that sell are priced at the bottom end of the comps and are in nicer condition than the competitions.

In order to be able to sell we must buy at a much lower price level than a year ago.

There are lots of sellers now, so if we can’t “steal” it we don’t buy it!

For the time being we are sticking to the lower priced properties. Much less risk. If the time comes that we can’t sell them they will rent at a positive cash flow.