The Metropolitan Indianapolis Board of Realtors has released a new quarterly report prepared by 10K Research, a Minneapolis real estate research firm. This is going to be a new quarterly feature from the Board. Here is a direct link and we will post a copy on our website.
Posts Tagged ‘Foreclosure’
MIBOR Releases Central Indiana Foreclosure Report
Friday, August 20th, 2010Cape Coral/Ft. Myers and Orlando Top Foreclosure List
Thursday, July 29th, 2010RealtyTrac released a little more than just their monthly tracking yesterday. Also included were year to date statistics. If you read my posts you know I do not spend a lot of time on the monthly data results as I find them to be for too narrow of a window. When provided with six months of data, I think some conclusions can be reached.
According to RealtyTrac, year to date, Cape Coral-Ft. Myers is the number two foreclosure market in the country. Making its debut in the top ten, Orlando has now in at number 8. The Miami area has actually dropped a few notches to come in at #10.
Foreclosure activity in the Cape Coral-Fort Myers, Fla., metro area decreased nearly 22 percent from the previous six months and was down nearly 30 percent from the first half of 2009, but the metro area still documented the nation’s second highest metro foreclosure rate — 4.98 percent of its housing units (one in 20) received a foreclosure filing during the six-month period.
Other Florida cities in the top 10 foreclosure rates were Orlando-Kissimmee at No. 8 (4.15 percent of housing units) and Miami-Fort Lauderdale-Pompano Beach at No. 10 (3.89 percent).
It is also interesting to distinguish these foreclosure rates (% of total housing stock) versus actual foreclosure totals. When foreclosure totals are considered large metropolitan areas take over the rankings. For instance, the Miami-Ft. Lauderdale-Pompano Beach metropolitan area is 10th year to date in foreclosure rates, but actually leads the nation in total foreclosures with 94,466 properties receiving a notice during the first six months of 2010. This total rate beats out the Los Angeles metropolitan area in second place with 93,263 filings.
The big picture from this news is foreclosure filings are back on the upswing with 154 of the 206 metropoliatan markets in the USA, with populations in excess of 200,000, posting year over year increases in activity. These widespread increases occurred while activity actually decreased in nine of the 10 areas with the highest rates.
“While we’re seeing early signs that foreclosure activity may have peaked in some of the hardest-hit markets, foreclosures continued to rise in three-quarters of the nation’s metropolitan areas in the first half of the year,” said James J. Saccacio, chief executive officer of RealtyTrac. “The fragile stability achieved in many local housing markets hinges on improvements in the underlying economy, specifically job growth. If unemployment remains persistently high and foreclosure prevention efforts only delay the inevitable, then we could continue to see increased foreclosure activity and a corresponding weakness in home prices in many metro areas.”
Make Your Offer The One That Is Accepted And Closed!
Tuesday, July 27th, 2010
I follow many different periodicals, blogs and forums..both in print and on line..related to the topic of foreclosure. There is some really bad advise out there for people as to how easy it is to buy foreclosed properties. Today I am going to focus on a few simple facts that likely go against what many of these self-proclaimed knowledgeable people state.
You Should Make Your Offer At 50-60% Under List Price
Only if you wish to waste every body’s time. Most foreclosures are priced today where they receive multiple offers. The list price is where the discount to market exists. Sometimes the bank gets it right, sometimes they need to move the property. Just know that our average sale to list price ratio on bank owned homes over the last 12 months stood at 98% That is for almost 600 properties in four different markets! HINT: There are properties for sale, often by third party servicers or investors, where they do not seem to want to accept the market realities and over-price. These properties will be on the market for 90 or more days. Sometimes a more aggressive offer might fly.
Use A Superstar Agent Who Leads The Market In Their Sales Production
What..because everybody will cow-tow to their super stardom? This one cracks me up. It is a myth put forward by the large franchise real estate players in support of their top producers who are not funding as much overhead in today’s markets. Actually what you want is to find an agent who will follow the bank’s very specific instructions for how to submit an offer! If they are the superstar agent, then fine. In my experience, they often are not. For some reason, after years of foreclosures being a major part of the market, there still seem to be agents who think the banks will do business THEIR way and act like they can control the seller. If you choose one of these agents because of the confidence they seem to exude, you will likely not end up with an accepted offer. Buying bank owned foreclosures is a rather black and white program. Your agent needs to be somebody who excels at following instructions and details step by step. Find out how many bank owned homes they have sold or if you insist on using your cousin, make them share every shred of paper that comes to ensure that things are being done correctly.
The Process Drags Out So Don’t Expect Things To Happen Fast
Again, quite the opposite is true. Be Available! Whether by electronic communication, in person, or proxy, now is NOT the time to take that international vacation. Nobody from the listing agent to the bank really cares if the proposed buyer has to leave the country and will not be available to review the bank addendum contract until next Tuesday when it is due on Monday. Your accepted offer will be cancelled. Remember black and white.
The Bank Will Accommodate The Buyer’s Need For Repairs Discovered After A Inspection
Negotiation for repairs kills more accepted deals than anything else. Yes, I will admit the banks seem to have more tolerance for making a home habitable for owner occupant purchasers than ever before. Start with considering the type of buyer you are when you feel it necessary to request that the leaking kitchen plumbing be repaired. If you are investor, please refer back to some of my as-is means as-is posts. If you are going to live in the property, this request is a wild card. I do not know how the bank will respond. The first question I often am asked is “could the buyer have seen this need for repair on their own prior to making the offer?” If the answer is yes, chances are not good that the bank will front the repair. TIP-If you really want the property, do not haggle with the bank’s response. They usually make one response and if you do not accept it they cancel the deal.
A commonly heard order from Asset Managers is “BOM”. Back On The Market. Nobody is ever happy when this happens. Avoid these pitfalls in order to improve your chance for success in your foreclosure purchase.
Time To Move On
Monday, July 26th, 2010The following is written to other Realtors. Not to upset but to emphasize a point.
When you are contacted by an agent informing you that the home you have listed has been foreclosed, don’t ask or expect to receive a listing cancellation. The fact your listing is executed by a party no longer in ownership cancels your listing.
If you really do not believe the bank’s listing agent, check with your client or the public records. Don’t waste a lot of time hanging on because somebody has an offer in to your seller. Your seller has no authority to accept it and the bank is going to want to complete their own valuation before looking at any offers.
Assuming the home is vacant, the bank will likely hire a company quickly to change the locks. It should not happen but often those fancy electronic lock boxes, are left hanging on the old removed handset. So, don’t waste any time if you are informed of a change in title. Not if you want to get your lock box back easily.
Speaking of lock boxes, we have over and over again worked in a spirit of cooperation to remove a lock box for the former listing agent and leave it somewhere that they can pick it up. When we do this we are not accepting responsibility for what happen to the lock box…so don’t wait a week to come pick it up.
Same can be said for your signs. We work with the former listing agent, but do not take responsibility and don’t have room in our vehicles to throw them in.
It is common for the banks to have a property preservation company that changes the locks, mows the lawns, and removes interior debris and furnishings left behind. A certain estimated value of between $300 and $500 is going to result in a personal property posting notice. Some Realtors have been known to add a few hand towels, kitchen and bath bric-a-brac, and fake flowers in the mode of staging. Chances are these are not going to cross the threshold of being saved as personal property. I have no idea what happens to these items, but please, when you are told the home is foreclosed, just come get your stuff and then confirm. I have seen this become a big issue in several cases where the agent did not want to stop showings because they were convinced that a sale was about to occur.
Last but not least, unless you really want to make some type of point that will cause you to have a bad name with the bank seller and have a complaint filed with your local MLS, go ahead and withdrawl your listing from the MLS when informed of the foreclosure. I realize this is the last line of defense. I have never seen a bank choose to keep the existing listing agent at this point so there is nothing but bad things to occur by taking this path.
I know it is hard to do, and I do have empathy, but the truth that needs to be accepted is that it is “time to move on”.
Foreclosure News
Thursday, May 13th, 2010
Here are a few bits of news that came across my desk yesterday and my interpretation.
Foreclosure Filings Drop Nationally In April- If you know me you are aware I do not get to hung up on these month to month comparisons. One month does not a trend make. What is interesting is the statement by RealtyTrac’s CEO that there are two significant milestones in the April numbers that indicate foreclosure activity may have plateaued.
The first, April 2010 is the only month in the history of RealtyTrac’s report with an annual decrease in U.S. foreclosure activity. Secondly, bank repossessions, or REOs, hit a record monthly high for the report even while default notices dropped substantially on both a monthly and annual basis.
I looked it up. RealtyTrac started keeping these statistics in 2005. So, we just experienced the first annual decline in foreclosures in the last five years. Interesting..but significant?
In this report, Florida dropped to third in filings, with a impressive 25% decline in filings over the same period of 2009. Indiana remains back in the pack at 18. Remember when Indiana led the nation in foreclosures?
Still over 330,000 properties received foreclosure filings in April…so a 2% drop in a year to year comparison is relative to very high numbers of ongoing defaults. Speaking of defaults…
Shadow Inventory To Peak In Summer Of 2010- In another sign that the foreclosure inventory is starting to slowly get sopped up, Barclays released this report earlier in the week. Barclays defines shadow inventory as loans in 90 day plus delinquency or already in foreclosure. The reason the term “shadow” is used is that traditional foreclosure statistics do not take these defaulting loans into account because they have not actually been foreclosed. Government programs have held back foreclosure actions making certain information, like Realty Tracs, left to further interpretation.
So, what can be concluded is this. Foreclosures are still at record highs and there are still approximately 4.5 million loans in default that have not been foreclosed. RealtyTrac’s headlines of a decline are great…but like everything today, we return to the old “is it real or is it Memorex?” Time will tell as we see if foreclosures can level off at the same time the shadow inventory declines due to successful modification and short sale programs, or the return to finanancial health that allows a borrrower to recover.
My point is you can’t read these foreclosure headlines and jump to any conclusions. You have to assess the whole complex picture in the current environment.
Settlement Conferences Expanding To Indiana’s Marion County
Wednesday, April 21st, 2010Therequirement that Indiana homeowners facing foreclosure be provided free counseling settlement conferences, scheduled via the court system when a foreclosure suit is filed, will be expanding to Marion County. The state has a law that lets borrowers know that the option of a settlement conference exists. Very few responses caused the Indiana Foreclosure Prevention Network to try this new creative option to force feed these conferences. Early this year the Allen County served as the test. Enough of an increase in requests was experienced that this method of arranging conferences, not waiting on borrowers to request them, will be expanded to the even more foreclosure ridden Indianapolis area.
From the Indiana Foreclosoure Prevention Network website:
If your mortgage lender has filed to foreclose on your home, you may be entitled to a court-ordered settlement conference with your lender to negotiate an agreement tha could allow you to avoid foreclosure. Look for the notice of your right to a settlement conference in your foreclosure papers. To take advantage of this right, YOU MUST NOTIFY THE COURT that you desire a settlement conference within 30 days after receiving your notice. (My understanding is you will not HAVE to request in Marion County….the court will set it up for you.)
At the settlement conference, you have the right to be represented by an attorney or assisted by a mortgage foreclosure counselor, either in person or by telephone.
If you are facing a foreclosure suit, here is a link to be proactive and request the settlement conference. I would like to talk to somebody who has experienced one of these conferences to learn if they are helpful or what benefit is derived. I hope that this is not just more political talk. It seems that a settlement conference will simply chart the outcome of the foreclosure and possibly offer a modification, short sale or deed in lieu. In today’s world such an offer should have been discussed long before filing of foreclosure.
If you pursue one of these conferences, please write me and share your experience.
What Do They Mean By Sold As-Is?
Monday, July 6th, 2009
For reasons associated with cost, return, and liability, most bank servicers do not want to perform repairs to a REO property. Therefore, most REO are marketed sold as-is. In just a few cases, such as Fannie Mae in some markets who is rehabbing to bring foreclosed homes to owner-occupant buyers, it is up to the buyer to assess what will need to be done to make a home marketable, and the cost to do so. When a property is marketed “as-is” what can a potential buyer expect? In most cases, not much. Buying a home marketed as-is requires the knowledge and skills to assess all parts of the property to assess cost and risk. It is not a game for the inexperienced, or long distance investor. Most REO homes require a hands-on buyer for just this reason.
Lets start with a list of what a bank WILL do. The good news, I have never seen a bank that would try to sell any home with a trash mound like the one in this picture (taken at an actual Wilmoth REO property). Banks will perform trash outs. They will try to offer personal property back to the former owners within the requirements of the local legal system. The bank will usually do what is necessary to stop a problem that risks causing further damage and loss of value to a property. The bank will maintain the exterior to a minimum standard required by the local community (lawn, windows, access). Security of the property will also be provided to the extent the location dictates (steel shutters, boarded windows and doors, deadbolt locksets, etc).
In the category of issues MAYBE the bank will deal with- we have mold. Water intrusion and the resulting damage is usually tackled by stopping the water damage and then assessing the risk to humans of entering the property. Lesser amounts of mold are usually left to a new owner to remove. More serious cases of mold are reviewed and a decision is made whether to market the home utilizing a mold waiver for all parties to execute prior to entering the home, or for the bank to tackle the mitigation process. In general, this decision rests often with the marketing plan and the expected final buyer (occupant or investor). The process of mitigating mold could open the bank to liabilities they do not care to assume. It also usually requires such extensive repairs as part of the process, it likely means a full rehab project for the parts of the home involved.
In the last ten years a new problem has been found increasingly in homes, particularly in more rural areas. Methamphetamine labs are commonly using a residential home as a cover for their operation. Upon finding a home that was used for the production of meth, the REO broker needs to take precautions and not inhale the air, but obtain a full set of photos. Remediation will usually become the responsbility of the owner (via foreclosure). This is a very expensive project as it commonly affects all parts of the property. Toxins may have saturated the home structure so severely that demolition is the final outcome. I have never seen a home utilized as a meth lab sold on an “as-is: basis.
Another issue are “grow houses” which basically are homes converted to the full time germination and harvesting of marijuana plants. Other than a persistant odor that must be removed, this is not as serious of a cost to repair. Banks will generally remove all carpet and provide fresh paint and a good sterile cleaning.
A new issue being found in the southeast US is the construction of homes around 3-4 years ago with defective Chinese drywall. Unfortunately, there is not a standard available for determining if this drywall is emitting a hazardous toxin in the air, or just an unpleasant odor. Either way, having visited several of these homes, the effect of this drywall makes it unreasonable to expect an occupant to reside with the odor. There is also corrosion to brass fixtures and hardware. At this time, most banks seem to be taking these properties off the market to determine a strategy for their liquidation. Assuming no hazards are found in the drywall material, I expect that banks will sell these properties as-is to investors who will strip the home of all the drywall and refinish the interior. Obviously this will cost the banks in the form of huge losses on each property. The decisions being considered today will likely involve the fact so little is known about this issue that holding the properties until it is all sorted out is also very costly.
There are many issues facing homes that develop due to simple lack of maintenance. In general, these issues will be part of the purchase price when a REO property is sold. There are exceptions and I have tried to identify some of the more significant ones. Each situation is unique and I would never proclaim this is a comprehensive list. Time will add new issues..just as a year ago we were just starting to learn about chinese drywall.
Lehigh Acres Florida Ranked By Forbes As Nation’s Fourth Most Foreclosure-Ridden Town
Sunday, May 17th, 2009
If you have ever been there..this story won’t surprize you. Unlike some of the national city stories, this one looked at actual town clusters to determine where the concentrations of foreclosures were actually the wrost. The only surprize here is there are three towns with larger problems than Lehigh. JWW
Home Remodeling/Renovation Cost VS Value-New Report
Wednesday, March 11th, 2009
Helpful information for investors or others considering purchasing a foreclosed REO home. Click the link below and you can compare costs of many different project and the return on investment..by specific metropolitan areas!! Pretty slick! JWW
The 2008 version of the Cost vs. Value Report, a joint effort between Remodeling and REALTOR® magazines, shows a decrease in project recoup costs across the board compared to 2007. Only a handful of upscale projects -bathroom remodel, deck addition and siding replacement (foam-backed vinyl) – saw an increase on the national scale.
Despite being the toughest region in the U.S. to see recouped costs, the Midwest saw an almost 80 percent recoup on upscale siding replacements (fiber-cement) and more than 70 percent in both midrange (vinyl) and upscale (foam-baked vinyl) siding replacement projects. Inside the home, a midrange minor kitchen remodel paid off the most with 69.1 percent of costs recouped.
Each summer, over 2,500 appraisers, sales agents and brokers are surveyed and provide an estimated value of what remodeling projects would add to the home at resale. This, combined with cost information from HomeTech Information Systems, a remodeling estimating software company, provides the cost vs. value percentages.
Even though recouping costs in 2008 was down in comparison to 2007, renovations are still holding their value. Nationally, home prices fell an average of 7 percent in 2008; however, the value of remodeling projects only fell 3.86 percent. To view the Cost vs. Value Report, click here.
MIBOR
Marion County Indiana Courts Now Require Mediation
Wednesday, March 11th, 2009Indianapolis Star
Marion County Superior Court (Indianapolis) has passed a new local rule that allows homeowners facing foreclosure in civil court the option of settlement conferences, or mediation, with their financial lenders. The conferences are mandatory for lenders if the borrower responds to a notice from the court. The borrower must reside in the house facing foreclosure. Local housing experts estimate that one in 220 Marion County homes is in some state of foreclosure.
How many homeowners, who are still living in their homes, really have the capacity to stay in their homes? Experience says that the unfortunate reality is that most owners are staying for as long as they can for free while saving for a new place to rent. Once foreclosure notices arrive, a mediation option is not something these homeowners are seeking. If they were seeking a modification, isn’t the federal government providing a number of options now? This seems to me to be another step to allow the defaulted homeowner the chance to stall the inevitable. To take that one step further, not getting these homes back into the market, being maintained and with new owners, is delaying the return of the housing market and holding prices down. Do you agree..or am I missing something? JWW
