April 7, 2006

A ‘Nonstop Flood Of Foreclosures’ In Denver

The Rocky Mountain News has the latest on the Denver housing market. “Rising foreclosures are driving the supply of unsold homes in the Denver area to near-record levels, experts agreed on Thursday. There were 27,309 unsold previously owned homes on the market in March, nearly 18 percent more than the 23,214 unsold homes a year earlier, and 5.7 percent more than February.”

“It’s likely that the record will be shattered next month, Steve McGuire said. ‘And then it likely will be broken again in May and again in June,’ he said, because that is when more homes historically hit the market.”

“Rising mortgage rates, aggressive refinancing in which owners pulled out all or most of their equity, and homes bought with no down payments are driving foreclosures, said (broker) Ed Jalowsky. ‘It’s almost been a perfect storm,’ Jalowsky said.”

“He said many buyers of homes priced under $300,000 who locked in adjustable rate mortgages within the past few years are finding their monthly payments rising by $100 or $200. ‘When they go to sell the home, they’re finding that their home is worth less than their mortgage,’ he said.”

“(Broker) Kelly Posiviata agreed that the glut of homes is being exacerbated by foreclosures hitting the market. ‘A lot more (foreclosed) homes came on the market at the end of February and the first part of March, and I think that this nonstop flood of foreclosures is just pushing up the unsold inventory,’ Posiviata said.”

“She said home buyers who took advantage of huge incentives by home builders thought they were getting great deals. But if they’ve owned their homes for only a couple of years, they’re finding that the market value is less than the sales price. Posiviata advises buyers to stay in their homes for a minimum of three years, and preferably five years, if they want to be able make a profit, she said.”

“Independent real estate analyst Gary Bauer said inventory likely is up because foreclosures are up. Instead of holding their own foreclosure sales, banks are using real-estate agents to market their properties, Bauer said. That has been the case for broker Ed Jalowski, Ameriquest Mortgage Co. has assigned him seven listings.”

“He estimates that of his 50 listings, 60 percent are repossessed homes or those being sold to avoid foreclosure.”

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Comment by Getstucco
2006-04-07 05:42:34

Spring season is flood season, and their are lots of floods hitting the RE markets these days:

- inventories

- foreclosures

- condo conversions

- high rise condo towers

- new McMansions

- other?

Comment by Dorothea
2006-04-07 06:57:53

Hurricanes and tsunami.

Comment by mad_tiger
2006-04-07 05:45:13

It’s good to see “the perfect storm” changing hemispheres.

Comment by bottomfisherman
2006-04-07 06:57:48

Evolution is great, isn’t it? ;-)

RE only goes up
soft patch
soft landing
hard landing
perfect storm* …you are here
searching for a bottom

Comment by Getstucco
2006-04-07 07:08:32

Next stage of evolution:

“There has never been a better time to buy real estate” :-)

Comment by arizonadude
2006-04-07 07:12:18

Buy now before rate go up! Your a long term investor so buying now doesn’t matter. This is the garbage now preached to the poor and unknowledeable buyer.

Comment by HousingBear
2006-04-07 05:51:01

CO is the house of pain.

Comment by boulderbo
2006-04-07 07:26:41

view from the ground- we had over 13,000 foreclosures last year and the market held its own (in the backdrop of 20-30% appreciation on the coasts). the banks got almost 100 cents on the dollar because there was a 28 year old with 100% financing waiting in the wings. that foreclosure figure is almost high as when the market hit the skids in the late 80’s. the difference is that there is still crazy money abounding. if that dries up, we’re in for a world of hurt, imho.

ot- the boulder market, which is really the california/new york/florida market is still going strong and shows no signs of letting up.

Comment by Getstucco
2006-04-07 05:51:15

“He said many buyers of homes priced under $300,000 who locked in adjustable rate mortgages within the past few years are finding their monthly payments rising by $100 or $200. ‘When they go to sell the home, they’re finding that their home is worth less than their mortgage,’ he said.”

“(Broker) Kelly Posiviata agreed that the glut of homes is being exacerbated by foreclosures hitting the market. ‘A lot more (foreclosed) homes came on the market at the end of February and the first part of March, and I think that this nonstop flood of foreclosures is just pushing up the unsold inventory,’ Posiviata said.”

Amazing! Who could have possibly foreseen this unlikely scenario which is playing out?

Comment by Salinasron
2006-04-07 05:51:23

“(Broker) Kelly Posiviata agreed that the glut of homes is being exacerbated by foreclosures hitting the market.”

Why beat me with a wet noodle !! I thought that all these people were buying their dream house(s) ! Funny how quickly those dream houses turn into a monster. Wait until divorce rates are figured into the equation.

Comment by Getstucco
2006-04-07 05:58:38

I’ve already seen this sad story in my personal circle — last year, a young family w/three kids bought an overpriced home up the street using the I/O ARM affordability loan, and now she and the kids have moved out to a nearby apartment; not sure whether she and hubby are now sharing the expenses of an overpriced house + apartment…

Comment by OCMetro
2006-04-07 06:20:35

Getstucco, Isn’t that sad, this is some of what angers me so much about the lies being pushed by the RE industry. Think of the families being destroyed because of lies and their own ignorance about the market. I know we can they they were greedy, but quite a few people I know simply bought not because they were greedy, but because everyone told them that is what they should do, their parents, other family, friends, and RE professionals go on and on about how “buy now or be priced out forever.” I think that many people bought because they trusted their Realtor(TM)’s advise and did what was socially prudent.

Believe me, I have fended off criticism for a couple of years, sneers, and feelings of being less socially responsible. Societal pressure to buy a home is amazingly intense. Fortunately, it seems to be waning, no one is bugging me anymore about buying. Unfortunately, it is too late for many decent, but ignorant people.

Comment by Getstucco
2006-04-07 07:09:56

I don’t say they are greedy — I merely say they bet differently than I would have in their situation, and lost…

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Comment by OCMetro
2006-04-07 08:14:50

Stucco, no I wasn’t saying you were calling them greedy, it is just a common assertion on this board that most people that bought are greedy, hoping to flip, when there are quite a few decent people that gave into fear and ignorance. But ignorance is no excuse I guess

Comment by peterbob
2006-04-07 07:15:57

This all makes me wonder why economics is not a required course :)

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Comment by Getstucco
2006-04-07 07:18:08

That would work for me ;-)

Comment by auger-inn
2006-04-07 08:38:11

And which theory do you suppose would be taught? Keynesian or Austrian? My bet is that we would still be in the situation we find ourselves because the gov’t clearly believes debt is good as evidenced by the babble coming out of BB and company. It’s almost as if a lobotomy is a prerequisite for a phd in econ.

Comment by Getstucco
2006-04-07 09:17:56

Evolution will eventually allow the Austrians to overtake the Keynesians. The Keynesian era will be seen in retrospect as a 60-year bubble, including the government subsidies to econ departments who preach the doctrine.

Comment by Steve in Flyover Land
2006-04-07 14:26:36

Perhaps they should just start with simple math. (Like it doesn’t matter if you hold the house 3 years or 5 years, if the value of the house is going down, and you are paying less than the interest on the loan, you are NOT building any equity!)

Comment by hd74man
2006-04-07 08:03:37

Wait until divorce rates are figured into the equation.

Agreed…a current 50% divorce rate in the country…how all this housing holds up is beyond my scope of comprehension.

Comment by jim A
2006-04-07 09:51:25

But making two household out of one has got to raise demand!

Comment by la RE observer
2006-04-07 12:02:24

Yeah, for apartment units.

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Comment by ajh
2006-04-09 01:17:43

And trailers.

Comment by Getstucco
2006-04-07 05:54:53

“She said home buyers who took advantage of huge incentives by home builders thought they were getting great deals. But if they’ve owned their homes for only a couple of years, they’re finding that the market value is less than the sales price. Posiviata advises buyers to stay in their homes for a minimum of three years, and preferably five years, if they want to be able make a profit, she said.”

In other words, Posiviata guarantees that home prices always go up over five years, and usually over three years. If you have to sell sooner than that, you are screwed. Too bad many will not weather the wave of resets which is hitting the I/O ARM crowd, and that those who do weather this tsunami will learn that it swept Posiviata’s rosy price forecast right out of the water and left it high and dry two miles inland…

Comment by dawnal
2006-04-07 07:50:03

“Posiviata advises buyers to stay in their homes for a minimum of three years, and preferably five years, if they want to be able make a profit, she said.”


Well it may work out a little differnently than she thinks. Holding the property for 3 to 5 years before selling may well result in a much deeper discount than today. If I were a betting man, I would bet that prices will be substantially worse then than it is now.

Comment by hd74man
2006-04-07 08:05:30

BS…the Dead Appreciation Zone in most markets following the ‘90/’19 crash was 10 years.


Comment by crash1
2006-04-07 06:01:26

A friend of mine has a daughter who just bought a house in Longmont, just north of Denver, at the urging of her friends and co-workers. She’s just out of college and had a great apartment, new car and lots of disposable income. But, as friends do, they insisted she was throwing her money away on rent. She found a home in a new subdivision near work and was able to get in with no $ down, an option arm, and lots of incentives like free HOA for the first couple of months, window coverings, etc. She bit, and was the proud owner of a $200,000 home at age 25. After living in the home for a few months she noticed the sign at the sales office had been changed to show a price reduction of $10,000 for her home model and quickly realized she was already underwater. She started attending the HOA meetings and found out that the monthly fees were going up to cover their shortfalls. Looking forward to the impending arm adjustment and all the cost of homeownership nobody ever told her about, like high taxes and insurance, she realized she needed to sell, as she could never make the new payments on her salary. Problem is, she’s competing against the builder for the same model, only used and $10,000 cheaper.

Comment by Getstucco
2006-04-07 07:17:31

Sounds like it is time for a $10,000 early installment on her share of the family inheritance. This is small potatoes compared to the amount that many other FBs will lose…

Comment by arroyogrande
2006-04-07 08:04:46

OT, 30 year treasury has popped up above 5% for the first time in what, a year and a half?


I asked this question before, but I didn’t see an answer…why do people tend to follow the 10 year and not the 30 year?

Comment by LV_CPA
2006-04-07 09:05:06

The 10-year is the basis used by lenders for most mortgages.

Comment by MC_White
2006-04-07 10:46:28

Longmont is a nice medium-small town with tremendous views of the mountains in the Indian Peaks Wilderness and Rocky Mountain National Park. It’s also got a good hospital. A good place to live for those who work in Boulder, in the Broomfield high tech corridor, or even in the northern suburbs of Denver. If they are cutting prices in Longmont, I wonder what the builders are doing in all the instant neighboorhoods that have recently popped up on farmland near I-25?

Comment by KIA
2006-04-07 06:04:29

FYI, the process is usually foreclosure => (if no buyer, then) bank REO department => broker listing => sale to new owner. The REO departments usually process foreclosed properties in a relatively sedate fashion. After ten years of good times, they’re not used to massive inventory. When they start backing up with foreclosed properties, and the lender’s cashflow contracts, they will instruct the brokers to begin discounting the properties to get them to move, primarily because they don’t care. Allow me to explain that last part. Just like the builders have massive leeway for big price discounts, so too do lenders because they have federal tax write-offs and, in some instances, loan guarantees, to make up for the difference. This is where widespread price reductions will begin and, if the main article is correct, this process is accellerating. Some of the lenders I work with are already discounting the loan balance by 20% in their foreclosures so they don’t take back too much property. They do this based upon their analysis of current market conditions. If they continue to do that and the fair market values drop, the discounts may increase further.

Comment by Getstucco
2006-04-07 07:15:07

REO = Real Estate — Owned?

Comment by boulderbo
2006-04-07 07:42:37

reo- a very obscure term that not many people have heard or dealt with over the past ten years. it, along with mortgage resets, will become big terms in the coming market.

Comment by KIA
2006-04-07 07:44:41


Comment by jim A
2006-04-07 09:53:37

I was under the impression that the bank examiners wanted banks to dump REO as quickly as possible because it is an unknown liability.

Comment by Mozo Maz
2006-04-07 16:25:29

Some of the most eggagerated reductions on REOs will be McMansions. Bank examiners to some extent understand that reposessions on crummy inner city townhomes and mobiles on lots just “happens”. They are not so forgiving on high dollar properties. Banks don’t want them hanging around on the books to draw closer inspection.

Comment by Simmsays...
2006-04-07 06:05:50

‘It’s almost been a perfect storm,’ Jalowsky said.”

After all this time, this is the article that tells me things have really really changed, Spring is not going to be the salvation and that prices really are going to fall.

I feel for these people but I finally feel a cool moist breeze in the parched summer of my existence for the past five years. Let prices tank.



Comment by norjacwy
2006-04-07 06:18:46

Perhaps we can return to a time when “investments” didn’t have negative cash flow, “homes” were where you lived, and “prosperity” was a function of time, money & hard work. If not, at least speculation will return to its rightful home, the securities (how ironic!) markets.
It’s funny how quickly sentiment can turn and I suspect reality will begin to seep in the national conscious after July 4th, when all the #’s from the dismal spring selling/dumping season are published.

Comment by Housing Wizard
2006-04-07 07:11:33

Boy do I agree with you norjacwy. Investors/flippers use to be such a small percentage of the housing market . Now short term investment made up such a high percentage of the housing demand that it created a false speculative bubble in alot of markets.Short term speculation does not create a strong housing market :only sends out false signals to over build /runs up prices.

Comment by flat
2006-04-07 06:34:12

does denver have possitive pop growth - the biggest boom/bust city in USA

Comment by flat
2006-04-07 06:51:47

yes- up 20,000 or so from 04-05
wow, image a city w declining pop

Comment by Getstucco
2006-04-07 09:15:17

I am imagining San Diego right now…

Comment by jim A
Comment by CA renter
2006-04-08 01:03:55


That’s a very interesting article. It’s amazing how quickly neighborhoods can change. Thank you for sharing it.

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Comment by Housing Wizard
2006-04-07 06:36:39

This article shows you how unqualified and marginal the buyers were that were put on loans ,(even under 300K.) I’m sorry but maybe some 25 year old people are mature enough for home ownership, but it seems to me like its trying to get any buyers that can sign loan doc.

Comment by Larry Littlefield
2006-04-07 06:40:19

Please keep the Denver posts coming. I know someone who is moving there, and is getting the business from the brokers. When they asked to see homes for rent, they were shown only dumps.

Comment by cabinbound
2006-04-07 08:45:09

LOL, that’s the most transparent trick in the book — lower their expectations by showing them dumps, especially overpriced ones, then pretend that that’s the going rate for houses and they really need to spend another 20% to get what they want.

Comment by climber
2006-04-07 10:25:37

Denver is actually a hard place to find rental houses. Apartments, townhouses, flats and such are all pretty common, but houses tend to be in older neighborhoods and in higher crime areas.

The bubble in Denver wans’t in prices so much as people overbuying with risky loans and using cash out refi money for silly toys like 4×4 trucks and jet skis.

There may be nice house rentals out there if you look hard enough. On the other hand there are loads of nice apartment and townhouse communities that you can live in for a year or two while you settle in. Most of them will have nice pools, weight rooms, tennis courts and playgrounds for the kids. Many of them have access to trails and parks too. In a lot of respects it’s better than renting a house unless you really need the yard for pets.

Comment by MC_White
2006-04-07 10:51:04

Agreed. Denver is stacked with nice townhouse complexes. The apartment finder services have a seperate listing for complexes that are pet-friendly. Many of them have big green spaces or nearby parks that are suitable for exercising your pooch.

Comment by Former Saratoga CA homeowner
2006-04-07 06:45:32

This is a bit OT but I’d like some feedback on whether or not I should accept an offer.

I sold my own home in Oct ‘05 (now am renting). I am still trying to sell an elderly relative’s home in Riverside County, CA. The relative has a reverse mortgage but no longer can live in the home due to health issues.

I put the house on the market in Dec ‘05 at a “reasonable” price according to comps (around $400). I completely fixed up the house with new carpets, paint inside and out, etc. The house is in excellent condition (only 15 yrs old) although it is competing with LOTS of brand new houses in the area. A few wees ago I lowered the price $5K and added a $5K cash outlay for closing costs.

An offer has been made that is $20K below asking price. That’s fine, I can counteroffer and I don’t object to receiving any and all offers. But this person making the offer is only willing to put $2K as earnest money. She also wants me to cover ALL her closing costs and she is planning to get a 100% mortgage! My concern is not her future, but whether or not she will really close this deal with so little in the game. According to my realtor I have to actually take the house off the market (for at least a month). My agent feels that we can counteroffer and get much closer to the asking price, but she says that $2K earnest money is just fine. Is this true?

Will this loan even go thru? My agent says the person has excellent credit and a good job — but get this…she actually has 2 jobs both in the real estate industry :-)

Any comments? Thanks.

Comment by Spunkmeyer
2006-04-07 07:12:52

Sounds as though the offer has a very good chance of falling through unless there would be an expedited closing. The earnest money deposit really sounds like a pittiance to me.

Comment by loonofficer
2006-04-07 07:33:30

Ask to see a copy of the pre-approval letter the prospective borrower has from their lender. Make sure that the wording is “pre-approved” and not “pre-qualified”.
Look for wording such as “Based on the information you have provided us XYZ Loans is prepared to offer you blah, blah blah”. Such wording is vague and suggests the pre-approval is based on what the buyer has told the lender….. not what the lender has verified.
By all means ask for the loan officer’s contact information, call them and verify that they have actually collected supporting documents (W2s, paystubs, bank statements, etc.). The loan officer will tell you wether the pre-approval is “subject to” or based on substantiated information.
If there is any hint that more information needs to be provided in order to receive a full pre-approval your buyer has no loan (yet).

Comment by dawnal
2006-04-07 07:46:38

One thing is clear with your prospective buyer. She has no money and will need a suicide loan to buy the house. Perhaps she will get it but if you take the house off the market right now, you have to wonder how far the market will fall before you can get it back on the market if she can’t perform. Tough call. Right now you are a little ahead of the rush to sell. It will get worse soon.

Comment by Mort
2006-04-07 07:49:46

I certainly don’t know the whole situation but sometimes you have to “go with your gut”. Do you have to sell within a certain time period? Have any other offers been forthcoming? If the answers are yes and no respectively it might be worth it to work something out with this person. Do you feel the house has had fair exposure to the market and just sat or would a little more effort be worthwhile? I say listen to your inner instinct. Does the thought of holding this house for awhile give you a knot in your stomach? Maybe you should take the offer. Do you feel that maybe you can do better by waiting, or if holding the place a little longer doesn’t bother you that much, that would be different. Okay a little story. (groans from the peanut gallery) I had an old Mustang I put up for sale. Wanted $600, soon got an offer for $350. I said no way. Talked to my mom later that day and she said: “They offered you $350 for that piece of junk? You better take it!” Good advice. I have sold other cars that I wish I’d held onto. Moral to the story? My beloved Mustang really was a piece of junk, I just couldn’t see it for what it was. Maybe $350 is the best you can do, maybe not. Don’t get emotionally involved in the decision.

Comment by arroyogrande
2006-04-07 08:18:30

If you really wanted to sell fast, I would:

1. Price the home to be the least (or second to the least) expensive house in that area, for that type of house. When a buyer pulls up a list of houses similar to yours, and sorts from lowest to highest price, you want yours to be one of the first that show up.

2. Get some realy nice purty pictures of the house up on sites like realtor.com…people do a good amount of browsing for houses on the interent now-adays, and if your house looks good on-line, and is inexpensive relative to similar houses, you have a better chance of driving traffic to your listing.

3. Require a REAL deposit. C’mon, $2K is only 1/2% deposit. How about between 1% and 2%? I’d counter the current offer, but bump up the deposit…AND provide a list of ways that the buyer can hang themselves, err, I mean, come up with the deposit from other sources [parents, relatives, payday advance :) ]

Comment by say what
2006-04-07 14:10:10

Good advice. I would not even consider this offer, waste of time and money as the market will slip even lower during the month that your house is off the market. The key is your price; lowest or the second lowest will get you the best offers especially if your house is in good condition. The “savy” :) buyer now will look for the best price and will be prepared to act fast with adequate bank to make the deal, (if they were really smart they wouldn’t be bying now) because they think that any minute market will be back again.

Comment by mrincomestream
2006-04-07 14:26:28

Not considering the offer in the current climate is downright arrogant and foolish. Savvy is being able to secure the deal and get it closed. Any so called savy buyer in this market consider’s himself savy because he’s using 100% leverage to get into a home. In this market he considers your thinking idiotic. Your way of thinking means no granite and hummers. Your way of thinking means sellers getting poorer while the market tanks.

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Comment by Darth Toll
2006-04-07 08:34:15

2K in earnest money isn’t all that unusual these days.

I’ve sold several houses in Ca. and have had deals fall through on all of them. The main problem: contigency offers where the buyer has to close their own deal before your deal can close. Sometimes you can get wrapped up in a deal where there are “stacked contingencies” and several deals all close at once. These are especially dangerous in the current soft climate where back-outs are becoming more common.

Sounds like you have a FB with no money on the hook. I’d be far less concerned about that versus someone who has a house to sell. So she’s got no money. This just puts her in the large camp of suicide loan buyers. This will work out horribly for her in the long run, but you need to sell so that can’t be a concern.

JMHO. Good luck. :-)

Comment by Michael Viking
2006-04-07 10:51:43

I agree. ~2K in earnest money seems to be the norm around here everywhere I look. Around here it’s old school to expect a real earnest money agreement. Besides, if she doesn’t have money and has a suicide loan, it’s doubtful you’ll get more earnest money out of her, and the loan will be written “subject to financing” so if she isn’t able to get qualified, you wouldn’t get the earnest money.

Comment by Pismobear
2006-04-07 23:02:17

Take the offer, maybe try to squeeze a bit more earnest money deposit from her, Give her 48 hour right of refusal, leave property on the market.

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Comment by Catherine
2006-04-07 10:13:33

Get an appraisal on the property…I’m seeing tons of contracts collapsing because the house doesn’t appraise in escrow….appraisers are being much more careful these days!
Especially a 100% loan…she can’t bring any cash to the table in the event it doesn’t appraise…big waste of your time.

Comment by mrincomestream
2006-04-07 12:16:12

Screw get an appraisal that’s bad advise. He has already determined what he wants for the property. He asking about about whether he should accept an offer with a light earnest deposit. If it drops in value during the term of escrow he just wasted 500.00 for nothing.

In a cases like these a lot of times you get dragged thru the mud for someone trying to create a deal.

In this instance I would give a 30 day or less close. Then I would put a 100.00 per day per-diem on the contract for every day after 30 days the escrow goes which is deducted from the buyers deposit should it not go thru. That way if everybody knows she doesn’t have the money then the realtor and the loan broker are on notice that they are going to be paying for that deal. If it can be done then all go forward if not the deal goes away. I would also ask to see the front page of the individuals credit report. If the buyer has a 575 or more fico there are lenders lining up to do that deal I can think of at least 10 that I know of. The thing he has to worry about is whether the broker has the experience to close the deal if he doesn’t like the way the deal is going he can cancel. They have changed the way escrow works now he can issue a demand giving the buyer a certain amount of time to perform if they do not then escrow cancelled. Period. All that other crap you folks are talking about is a sure way to not get a deal done.

When dealing with actual deals how and what the buyer has as far as assets is of no concern too you. In blunter terms it’s really none of your f***** business. The only thing you really should be concerned with is how too make the deal work for you with as less exposure to loss as you can possibly create. Hell if all he had was a dollar in the bank as long as he has the credit score and the check is in the sellers name at the end of the deal thats all that should be a concern

Comment by Former Saratoga CA homeowner
2006-04-07 13:03:32

Thanks everyone I am reading your comments avidly keep them coming!

I feel 90% confident the appraisal would be OK since I priced the house fairly regarding recent comps. The buyer says she will close by May 10th which is a little more than 1 month away. I agree I don’t care how the buyer gets the money — but I do care about the probability that the buyer CAN get the money.

All comments greatly appreciated I’ll keep reading this over the weekend.

Comment by mrincomestream
2006-04-07 13:18:31

The probablitiy is 95% if they have a fico over 580, 100% if there fico is over 620

Comment by Upstater
2006-04-07 13:27:26

As my husband said when I was worried about a young family stretching to get our home, “for all you know they’ve got some rich aunt” So true!

Comment by Former Saratoga CA homeowner
2006-04-07 18:17:28

Wow, what great advice! The collective wisdom of this crowd is amazing.

I made a counter offer since the prospective buyer has a stellar credit rating. My agent tightened up the time frame for the appraisal and home inspection to 10 days, and we set the closing date to one month from now. I threw in another $3K for closing costs (total of $8K now) and left the price as is. I’ve already put in about $17K in improvements (carpet, painting inside and out, replacement windows — house in on the 1st tee of golf course, new tile in shower). [The house is competing with brand new homes just around the corner.] In essence, although the price is set by the comps, since I’ve thrown in $25K in improvements and cash, it can be viewed as at a 6% discount (price is at $400K).

I’ll let you all know what happens in a later post.

Comment by mrincomestream
2006-04-08 00:26:02

What no per-diem you dropped the ball. Shame Shame on you. LOL nah just kidding good luck. I hope all goes well.

Comment by Jim
2006-04-07 06:50:35

He said many buyers of homes priced under $300,000 who locked in adjustable rate mortgages within the past few years are finding their monthly payments rising by $100 or $200.

Pikers! Here in upstate NY my property taxes have gone up $100.00 per month ($1200+ per yr) each of the past 3 yrs. Gee, should I be bragging about this?

Comment by Upstater
2006-04-07 13:17:21

Jim, R U in Onandaga County?

Comment by hd74man
2006-04-07 08:00:02

‘It’s almost been a perfect storm,’ Jalowsky said.”


How many times has that scenario been described on Ben’s Blog.

Comment by waiting_for_the_fall
2006-04-07 08:01:37

If she doesn’t have a loan approval letter, don’t accept the offer.
Drop the price by 10% and it will sell within a few weeks. If you don’t, It may take another 2 months to get another offer, and the price will probably be down 10% by then.

Comment by mrincomestream
2006-04-07 12:23:19

Again bad advice. Loan Approval letters are not worth the paper they are written on. If he has someone ready and willing to do the deed at his price why in the hell would he drop the price. Shore up the offer to your liking within what the buyer can do and close the deal. Why on earth would he not do that deal. I like everybody else want to see th market corrected but if you got someone on the hook especially in this current enviroment you do everything you can to close the deal if your a seller

Comment by arroyogrande
2006-04-07 08:05:29

OT, 30 year treasury has popped up above 5% for the first time in what, a year and a half?


I asked this question before, but I didn’t see an answer…why do people tend to follow the 10 year and not the 30 year?

Comment by cabinbound
2006-04-07 08:48:58

30-year loans are typically based on the 10-year loan not on the 30-year loan. Odd but true.

Comment by libertas
2006-04-07 09:07:11

Not so odd when you take into account the fact that the average actual term of a 30-year mortgage is about 8 years. (Because the house is sold, the loan is refinanced, etc. etc.)

Comment by cabinbound
2006-04-07 08:50:32

Oops, should read “30-year loans are based on the 10-year Treasury Note, not on the 30-year Treasury Note”.

Also remember for a couple of years they didn’t even have 30-year Treasury notes.

Comment by Getstucco
2006-04-07 09:24:01

The 30-yr used to be known as the “bellwether” — a reference to a castrated ram whose changes of course dictated where the rest of the herd of sheep would follow.

When the Treasury stopped issuing the 30-yr, the 10-yr became the “new bellwether.”


Comment by need 2 leave ca
2006-04-07 08:21:34

Don’t forget about levees breaking and flooding thousands of new McMansions that were built in flood plains. That is a real scenario for northern CA. Broken levy system, record rain, full resiviors and a ton of snowpack in the Sierras waiting to melt and add to those full areas.

Comment by Peter
2006-04-07 08:34:57

Compared to the number of homes in CA, the threat from flooding is really quite minimal. Sacramento and other parts of the central valley are the only major problem. But LA, SF, and SD are mostly safe. All you see are a few hundred trailer homes and rural houses, and a couple million dollar hillside himes getting caught by the weather; chumpchange for a state of 35 million people. This is no reason to leave CA. The big one is the only true threat that could cause devastation. If you are freaked out by the threat of earthquakes, then happy sailing to whatever benighted state you choose.

Comment by Pismobear
2006-04-07 23:09:07

The reason to leave California is the F’d government/welfare state and all the illegals.If Sacramento river floods the capitol and all the legislators perish, I would stay.

Comment by climber
2006-04-07 10:16:23

“Instead of holding their own foreclosure sales, banks are using real-estate agents to market their properties, Bauer said. That has been the case for broker Ed Jalowski, Ameriquest Mortgage Co. has assigned him seven listings.” ”

You should see some of these listings too. The realtors put the house on the market as is. The don’t provide measurements for the rooms, no photos or only one of the front door. Then they want to sell it as- is and even try to tell you who you should use for financing. I emailed one agent asking just basic questions about the property and never heard back.

I have to say, it’s like they don’t really care if it sells or not. And the asking prices are silly. They’re trying to price the property like occupied comps that have been well cared for and have excellent photos and no as-is clause required.

Comment by SAS
2006-04-07 11:46:43

We went to see a bank owned property recently. Didn’t know its status until the realtor slipped and said, “We’ll have to ask the mortgage company about…” Found out the house sold in June 2005 for 540,000. In March 2006 they were asking $699,000. The house was empty and looked like a POS. Silly that the mortgage company was trying to make a $150,000 profit instead of just trying to get back what they had loaned.

Comment by Housing Wizard
2006-04-07 12:10:09

The bank will try to get what the market will bear to make up for other loss.

Comment by mrincomestream
2006-04-07 12:30:17

Exactly, it also doesn’t matter whether it’s occupied, well cared for or has pretty pictures on the MLS. If it’s sitting on the market shoot an offer over at 500-540 and see if the bank will play. If it’s been sitting and cluttering the books you’ll be surprised at their leniency.

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Comment by Upstater
2006-04-07 13:25:26

Up here repo’s are often not heated or maintained. A friend who bought an “estate” here in the 90s probably for a song moved into his repo where all the chandeliers&lighting had been ripped out, & ceiling hanging down from burst pipes. It’s a huge piece of property (6000 sq feet) with incredible views now worth in the $700,000s. (That’s high for here. It carries a tax bill in the $20ks) I can’t believe the banks just let these places go.

Comment by Mozo Maz
2006-04-07 16:35:37

Banks are very stingy on commission to agents. It may just be 1/2 a percent, and the banks also do things like require the agent to front money for cutting grass, utilities, etc. I have heard agents gripe about how many months it takes for the REO dept to re-imburse them for these costs.

Agents that handle a lot of REOs understand the game– do as little as possible and wait for the bank to lower the price until it sells. There’s not enough fat there to make it worth their while for open houses, etc.

Comment by mrincomestream
2006-04-08 00:22:45

Are you kidding, banks pay commission like it’s somebodies else money. I made lots and lots of money from banks selling foreclosures. 1/2 a percent my ass. You don’t have the whole picture or someone was pulling your strings. True for freddie and fannie they require you to put up some money for basic maintenance and utilities. But a half a point for commission is fiction. The listing agents cut my not be as high as 6% in some cases but thats when freddie/fannie are sending them 10 deals a month. They also pay for gas and price opinions which other banks don’t do. At the end of the day it evens out to about 5 to 5.5 percent but a half a point come on.

The reason they don’t have open houses is because they have too much other stuff to do like evictions and price opinions, taking pictures of properties which they have allowances for. Has nothing to do with fee they are paid well. Their are hundreds of agents biting at the chomp to service freddie and fannie REO dept. They are not doing it because they are underpaid.

R.E.O.’s are big business it pays extremely well.

Comment by Mozo Maz
2006-04-08 08:32:04

1/2 percent meaning that’s what the agent gets. The listing itself may be 4 percent, but 1/2% to listing agent and 1/2 to listing broker.

Agents are chomping at the bit to get into REOs because they think it’s a gravy train of leads. Then they learn it’s a lot of work. Only a few stick with it and that’s why the majority of REOs end up in the hands of experienced REO specializing agents.

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