Pro's.....Please chime in.... - Posted by acw

Posted by Kristine-CA on July 30, 2007 at 20:23:58:

OMG. Catholic Guilt Complex is CGC. CMG is something else altogether.
Pay no attention to me after 6:00 pm…

Pro’s…Please chime in… - Posted by acw

Posted by acw on July 29, 2007 at 11:11:16:


I suspect this is happening in “most” every large market around the country. Every week in my area, Banks are taking back 500 props per week. Thats properties being sold at the CH steps of which 99% go back to the banks as REO’s.

This has been happening consistantly for the last 5mths and it is expected to continue.

INVENTORY in my area is VERY HIGH.

I suspect the banks have a HUGH inventory of homes for sale at this point…AND if they decide too, they can flood the market with even more property…

What is the Best plan of action for the Banks to Eliminate or rid themselves of this inventory?

Re: Pro’s…Please chime in… - Posted by StevenS(CPA)

Posted by StevenS(CPA) on July 31, 2007 at 09:48:05:

I have a friend who works pretty high up at BofA here in L.A. and he told me that up until about two months ago they were debating if this was going to be a market crash or a soft landing with a workable loss portfolio built in. The debate is OVER and they are completely reworking all of their estimates on their holdings.

There should be some big changes coming and I’m sure a number of banks are reworking their loss portfolio estimates now.

But like anything predicting the future should be left to those who know what the future will bring. Which is no one but God and maybe VISA :wink:

PART 2 - Posted by acw

Posted by acw on July 30, 2007 at 04:08:49:

THanks Guys…the only problem with the issue of banks fixing and selling so many homes is that "they would litterally flood the market with so many homes. That would create MORE downward preasure on RE.

I was just reading news about CA…Foreclosures are up to 17,408 for the three months ended June 30, 2007. This is an increase of 799% from the same period last year. Riverside County is up 792%. San Diego County is up 487%. San Bernardino County is up 986%. Orange County is up 686%. Ventura County is up 754%. (latimes72507)

There’s an opportunity here…somewhere!

Re: Pro’s…Please chime in… - Posted by Terry

Posted by Terry on July 29, 2007 at 18:04:42:

I first got my real estate license in 1978. In EVERY case of a property sitting unsold after being properly exposed to the market, it is always overpriced. When renting or selling, the price must be dropped to attract renters or buyers… or sit around indeffinately waiting for someone to pay more for yours than others on the market.

ahhh… - Posted by Jack

Posted by Jack on July 29, 2007 at 17:12:21:

lower the price?

Ding, dong…ding dong…chiming in here… - Posted by Don (VA)

Posted by Don (VA) on July 29, 2007 at 14:53:05:

The best plan for the banks really would be the same as for anyone who wants to sell a property:

Get the property into good shape. Make obvious repairs. Do cosmetic clean-up and some home staging. Price it aggressively.

Obviously, I’m not a banker. They don’t do the repairs or clean-up, and often don’t even price it aggressively. And they make it very difficult to complete the purchase. For some reason, a lot of them would rather have the properties sitting there, deteriorating, and sitting on their books. And I know the big lenders must have a lot of newly-minted MBAs providing some very expensive advice on how to handle the situation.

Still, as the Cowardly Lion says in The Wizard of Oz, “If I were king of the jungle…” I’d clean up the properties, price them aggressively, even offer financing (go with your strength…that’s what lenders do), and market them with good agents.

Re: Pro’s…Please chime in… - Posted by lukeNC

Posted by lukeNC on July 29, 2007 at 13:04:34:

its happening in my area too, probably 300 homes a week in my county.

It is isnt really affecting the overall market much though. There are alot of investors watching “flip this house and real deal” thinking they can make it big by buying foreclosures.

The strategy that appears to work is selling to those newbie investors.

Re: PART 2 - Posted by JT-IN

Posted by JT-IN on July 30, 2007 at 05:34:05:

You’re not thinking that the Banks care whether they flood the market with REO’s, are you…?

RE is like any other supply and demand business; there are times when either the buyer or seller are favored, based on inventory and other circumstances. Now RE is out of favor, prices have escalated over the past half dozen years based on easy available credit, and frenzied demand. So what will happen over the next several years is an adjustment to current market conditions. Lower prices are in the cards, like it or not.

Lenders are not about to sit on the inventory in hopes that the market will heat up again. They can’t, as they are mostly publicly traded entities, that have charter requirements for handling inventory that they must follow. They will simply sell the property for the highest and best price they can, therein liquidating their inventory. It that comes at 50% of what they have invested, then they take a loss. This is offset by the years past where they took NO losses, as they were able to foreclose, and due to the ridiculous market we lived through, they could sell anything for the price they asked, in nearly any condition. The times have surely changed.

Just all part of the RE cycle, and yes, there will be some opportunities. They probably aren’t in buying REO’s in large numbers, that need work. Just remember the old saying about trying to catch a falling knife, it will draw blood in most cases.


Re: Ding, dong…ding dong…chiming in here… - Posted by Rich-CA

Posted by Rich-CA on July 29, 2007 at 19:03:56:

I’ve recently looked at several REO properties that matched my numbers and found that while a few banks (like Fannie Mae) get the properties into shape most (like Wells Fargo and HUD) leave them in such crappy shape that if they don’t heavily discount, they won’t get any offers. Sometimes the “discount” is retail minus their own low ball estimates for new carpet and paint in a property with more than just these minor things wrong and where anything other than their cheapo carpet makes it over priced. On top of that they are so slow to get their paperwork out, its clear they don’t really want to sell.

In one case Wells Fargo had verbally accepted an offer but one month later they still had not produced an executed contract. It was a bargain property but only if I could get it closed.

EXCELLANT…! - Posted by acw

Posted by acw on July 30, 2007 at 08:12:14:

Great response JT…thanks!

Now…what do you do in a Declining Market?

Re: Ding, dong…ding dong…chiming in here… - Posted by RichV(FL)

Posted by RichV(FL) on July 30, 2007 at 06:21:17:


I have had some of the same problems with Wells Fargo myself here in FL. I guess they just want to sit on these properties until there is some life back in the market again. Maybe they have more paperwork then they can handle? I just dont know.

I do know one thing…most banks hate sitting on these properties.


Buy at a number that is a slam-dunk - Posted by JT-IN

Posted by JT-IN on July 30, 2007 at 12:03:11:

Or you don’t buy. Just like when you are in an electrical storm, you take cover. All too many folks today are pretending that it isn’t lightning out there, and continue to stand in this storm… That is lunacy.

Buy low and sell low, (the second low being a little higher than paid). Other than that you find big problems provided that you have an inkling of how to solve the existing problem. Title issues, partial interests, liens, etc… These are all opportunities.


Re: EXCELLANT…! - Posted by Gene

Posted by Gene on July 30, 2007 at 09:41:59:

>>>>>>>>>Now…what do you do in a Declining Market?>>>>>>>>>


I know every RE course out there says that it works in all markets at all times…but that is not my experience. Most seasoned investors I know sold in the last couple years and are waiting to buy. (of course they sold to folks that were “getting into investing” and called them selves investors).

I sold most of my properties in 2005 and now I am waiting for the prices to drop. I am in Calif so price drops are already happening but they have a long ways to go.

I have found a few good deals a year since I sold, but they are very far and few and much more work than usual. I have tied up my $$ in private secured loans. I will be ready to buy in bulk in 2009.


Re: Ding, dong…ding dong…chiming in here… - Posted by Rich-CA

Posted by Rich-CA on July 30, 2007 at 07:27:45:

My sister in law works for Wells Fargo Mortgage Lending at HQ. They have so much work built up (they pay the worst of all the banks, so you can guess what that does in the way of trained, experienced or enough people) they could stop getting anything new and it would take more than 30 days to clear off the desks.

I have found them sloppy in issuing loans (I have 5 from them and had to return docs for correction to them multiple times for each one - in one case they had filled out the deed to give Title to the seller with me as grantor). My former boss at BofA said they treat people like “dog meat”. So its no surprise they are unresponsive.

Re: Buy at a number that is a slam-dunk - Posted by Kristine-CA

Posted by Kristine-CA on July 30, 2007 at 18:04:13:

Hi JT. The last part of your post suggests that title issues, partial
interests and liens are all opportunities. It made me smile because I
just bought a partial interest (1/2) in a property. The other 1/2 is a
mess. 1/6 is owned by a little old lady who can’t remember inheriting
it in 1986. 1/6 is owned by her sister who is in a nursing home. The
other 1/6 is owned by their brother’s estate–3 heirs and no probate.
There are liens too.

Good thing you reminded me that this is an opportunity because I was
beginning to think it was a headache! Kristine

Ditto - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on July 30, 2007 at 19:34:08:

Gene -

I’m in total agreement with your strategy. I’m also counting on the feeding frenzy of 2008-2010 to obfuscate the really good deals, i.e., properties with title issues issues like nasty AJ’s, “gray” title, etc. when I can buy them in L.A. County for 10-20 cents on the dollar.

I love the latter because very few investors really know how to work them effectively nor marshall the resources --including risking some capital-- to make them work.

Good luck to you

Re: EXCELLANT…! - Posted by Gene

Posted by Gene on July 30, 2007 at 09:46:03:

OTher things you can do…
(should have included this in my last post)

Study up on forclosures

Create relationships with REO agents and bankers

Get your personal finances and credit in order so you can buy when the time is right

Create a strategy

Study up on market timming. The housing market has behaved like every other bubble market has in history. It was actually very predictable. Study up on past bubbles to see the signs of what may be to come.

There are some great books on timing the real estate market. One I liked a lot was by Robert Campbell. He also posts on this site and some San Diego sights.


Re: Ding, dong…ding dong…chiming in here… - Posted by Gene

Posted by Gene on July 30, 2007 at 09:50:51:

I think a lot of the banks just are not set up to handle the ammount of foreclosures they are experiencing.

In my area, a few years ago foreclosures were almost nonexistant. Not common when appreciation is over 30% a year. The banks just didn’t deal with them. Now for the first time in a while they are getting hammered.

All this while their other depts are hurting.

Re: Buy at a number that is a slam-dunk - Posted by Natalie-VA

Posted by Natalie-VA on August 01, 2007 at 07:46:43:

Hi Kristine,

I’d love to see a new thread on your partial interest deal. It sounds very intriguing. I’d like to hear more about it and the ideas people come up with.