When Responsibility Becomes A Liability
The Marin Independent Journal reports from California. “Home sales in Marin last month continued to highlight buyer preference for discounted bargains as the overall median price dipped nearly 26 percent from last year’s level, matching trends across the Bay Area. The median price of a single-family home in Marin in March was $670,000, down 22 percent from $862,500 last year…MDA DataQuick reported. More than half of all homes resold in the Bay Area in March had been foreclosed on at some point in the prior 12 months. Though that figured nearly equaled the 52 percent in February, it more than doubled the 23 percent one year ago.”
“Marin foreclosure resales were 23 percent of total sales, up from 19 percent in February and single digits last year. The median price paid for a Bay Area home last month remained below $300,000 with a price of $290,000, down from February’s median of $295,000 and a massive 46 percent from $536,000 last year.”
“‘It is pretty sobering to see month over month, if you look back over the last couple of years we continue to reduce in dollar volume and units sold,’ said Katie Beacock, president of Marin Association of Realtors.”
“A large number of Marin residents - many retired seniors - invested their money with a Santa Rosa investment adviser who has been accused of defrauding investors of tens of millions of dollars and is under investigation by the California Department of Justice. Dilla Sunderland of Novato said she and her husband knew something was wrong when they stopped receiving interest payments on their investments. She said they have lost all of the $239,000 they invested in the Mountain House Golf Course, which has gone into foreclosure.”
“She said other Marin investors she knows haven’t fared so well. Sunderland said Armitage convinced a widow she knows to refinance her house and invest the proceeds with him. ‘She would have lost her home if her children had not moved back in with her,’ Sunderland said. ‘I know a couple who are going to have to sell their home in this depressed climate and leave Marin. They’re just heartsick.’”
“‘This is not a Ponzi scheme. People invested in real estate-based investments, whether or not they were managed-care facilities or properties,’ said…investment adviser, Gary Armitage’s attorney, Russell Marne of San Rafael. ‘The value of those properties have tanked, just like the value of my home in San Anselmo. That’s basically what happened.’”
“Marne said Armitage, who has put his $2.5 million Healdsburg home and his castle in the mountains near Redding up for sale, has lost everything.”
The Daily News. “Almost a quarter of the homeowners in San Mateo County stand a chance of getting their parcel taxes reduced this year as the assessor’s office reviews the value of thousands of properties. The assessed value of about 50,000 residential properties will be reviewed this month, more than five times as many as were examined last year.”
“The surge in ‘decline in value’ reviews can be traced to the depressed real estate market, which has driven market prices of some homes below the assessed values on the county’s property tax rolls. In East Palo Alto, which has been hit harder than most Peninsula cities by the housing crisis, the assessor is reviewing properties sold since 1999, Deputy Assessor Angelina Hunter said.”
“Local governments are already bracing for what they expect will be a sharp decline in the value of San Mateo County properties. The median price of a home in San Mateo County dropped to $502,250 in February, down from $646,500 at the same time last year, according to MDA DataQuick.”
“‘We’re getting kind of nervous because we’re seeing what’s happening in other jurisdictions and we usually look better than they do,’ said County Budget Director Jim Saco.”
The Santa Cruz Sentinel. “An affordable housing unit in the city is scheduled for a foreclosure auction. The couple who owned the condo owed nearly $190,000 on their mortgage plus $2,901 to the River Street Place Homeowners Association. County records show the homeowners had taken advantage of their equity, refinanced, then missed payments.”
“They bought the condo in 1995 for $100,500 with the help of a $20,000 ’silent second’ mortgage from the city. Ten years later, as condo prices topped $400,000, they took out a home equity line of credit with Washington Mutual…Within a year, they were behind on their mortgage.”
“Since housing prices began falling in September, affordable units have become less attractive. Buyers of a Measure O condo get a below-market price but must accept a limit on future appreciation. If values escalate, they will see little benefit. Since the housing finance breakdown began in 2006, more than 300 lenders have disappeared. Of those that remain, fewer offer financing for Measure O units because of the restrictions.”
“‘Always with first-time buyers, we get asked about Measure O,’ said Mark Junod, a mortgage consultant in Capitola, which still offers Measure O financing. ‘With values down, people are opting for market units.’”
The San Francisco Chronicle. “Linnette Edwards, an associate broker who focuses on the East Bay, said that investors are snagging half of the under-$200,000 homes selling in the Oakland flatlands. Some are international and some are local, but most tend to pay all cash. It’s led to an interesting phenomenon at open houses.”
“‘You go to these places listed at $150,000 and you see people in all these BMWs and Jaguars pulling up to check them out - because they’re all investors,’ she said.”
“One recent investor was Julie Chiang, a retiree in Fremont. She used family money to pay $361,000 in cash for a three-bedroom foreclosed home in her city, which she plans to rent out for between $1,800 and $2,000 a month. It sold for about $650,000 at the market peak, according to Joe Metz, a Realtor in Fremont, who represented her.”
“Chiang said she bought the house as a long-term investment after years of looking, because she felt prices had finally reached a reasonable level. ‘I decided this is the time to buy,’ she said.”
The Sacramento Bee. “From retailing to real estate and beyond, some businesses are starting to gear up for the next economic growth cycle. Ethan Conrad, a Sacramento real estate investor, has spent millions in recent months buying vacant residential lots throughout the Central Valley, the epicenter of the housing meltdown.”
“‘If you’re buying (at) 10 or 25 cents on the dollar, and it’s decent real estate, it’ll come back,’ Conrad said of his land purchases stretching from Yuba County to Merced. ‘The question mark is not, will I make money on them? The question mark is, how long will it take?’”
“Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento…said waiting too long can be counterproductive. Once the recovery becomes obvious, prices for everything will have shot up. ‘If this (economy) turns in late 2009 or early 2010, if you wait until 2010, it’s already too late,’ Varshney said.”
The Recordnet. “Real estate brokers and agents in San Joaquin County report that since last fall, more and more people have been investing cash into houses as foreclosures have driven sales prices to levels not seen since the 1990s. They’re either sinking their cash into down payments or paying full price in cash.”
“Valley Springs resident Jim Platner…bought all 11 foreclosures since February, paying as low as $35,000 and no more than $65,000, at an average purchase price of $50,000 to $55,000. Plus, he’s putting in about $10,000 rehabbing each of the houses before renting them out. ‘I’m buying at the low end of the market and rehabbing these houses,’ Platner said. ‘I believe I will be able to triple my price in five years.’”
“Mike Collins of Collins Realty in Stockton said he started seeing a jump in cash offers toward the end of last year. ‘I’ve seen more all-cash offers than I can ever recall seeing,’ he said. ‘I don’t see how you can miss. How can prices go down any lower?’”
The Modesto Bee. “Home sales prices continued to slip during March throughout the Northern San Joaquin Valley. Stanislaus County homes sold for a median $135,000 in March, down $1,250 from February, according to MDA DataQuick. Stanislaus prices have fallen nearly 66 percent since the December 2005 housing boom peak when homes went for a median $396,000.”
“‘We do not seem to have any shortage of qualified buyers,’ PMZ Real Estate President Mike Zagaris told a packed luncheon crowd this week during an Appraisal Institute conference in Modesto. ‘The cost of ownership today is extremely attractive. We’re in the window of opportunity for people to get into a house.’”
“But that window doesn’t look so attractive to homeowners. Property values have dropped so dramatically that many people owe more than their homes are worth. Homeowners who are upside-down on their mortgages can’t afford to sell their homes to buy newer or bigger homes, so higher-end homes are very difficult to sell.”
“‘I don’t think you’re going to see a move-up buyers’ market until we burn through the foreclosures. I think we’re two years away,’ Zagaris predicted.”
The Dallas Morning News. “Non-profit groups around the nation have made questionable loans to their executives, an Internal Revenue Service investigation is finding. IRS officials won’t name targets. But they say they’re focusing on loans over $100,000 — and are troubled by ‘loans with no real terms for repayment or loans where there are terms for repayment but no follow-up if the repayment is not made.’”
“The Dallas Morning News reported in January on a local arts exec who got a loan of more than $500,000. The lender was his previous employer, the Museum of Contemporary Art in Los Angeles. A written contract required him to repay any balance when his employment ended. But Strick — who quit his MOCA job under pressure in December, as the museum’s finances crumbled — now says he didn’t meet the contract’s terms. ‘When I left, we changed that,’ he told me.”
“Strick said that under the new deal, he owes the money when he sells a house that the loan helped him buy. Good luck with that. Southern California has suffered some of the nation’s steepest declines in housing prices.”
The Burbank Leader. “The economic slowdown is maintaining its stranglehold on local development, as virtually every planning-based statistic, down to the duration of board meetings, continues to plummet. A snapshot of the last three years reveals a steady decline in submitted plan checks, permits issued, inspections and revenue generated by permits, said Michael Forbes, principal city planner.”
“Revenue from building permits dropped by roughly 45% over the last year, with the city issuing 24% fewer permits and performing 42% fewer inspections in that time. ‘The reason is almost entirely economic,’ said Tom Sloan, deputy building official. ‘Burbank has a particularly good housing base, and a good commercial base, but it is not protected.’”
The Press Enterprise. “The tidal wave of foreclosures hitting Inland Southern California is leaving thousands in its wake who, like victims of natural disasters, are challenged to find shelter and rebuild their lives. Carol Byrd, a 42-year-old real estate agent, earlier this year tearfully watched her lender foreclose on a house with a pool, spa and view she had bought for $525,000 in Riverside and that had fallen in value to about $275,000.”
“Once pulling down an annual income of $200,000 to $350,000, she earned a fraction of that in her new job working for a company that lists bank-repossessed houses. It was her boss, a broker in Moreno Valley, she said, who advised her to stop struggling when it was obvious that, on her current $3,200-a-month salary, she could not afford the modified monthly mortgage payment of nearly $4,000 a month that her lender offered her.”
“Her biggest worry, she said, was whether anyone would rent a house to her because her credit was poor. She appealed to a landlord who had listed a house for rent. She went to see him armed with a recommendation from her employer. ‘I literally sat down and explained my whole situation for an hour, begging and crying. I was desperate,’ she said.”
“She said she landed the lease after paying a $2,100 deposit and the first month’s rent of $1,625. She said the landlord also insisted on examining the condition of her former house to be reassured she would make a good tenant. Byrd said it is a relief to have enough income to cover her household expenses, and she advises friends who are over their heads in mortgage debt that foreclosure is not such a bad alternative.”
“Her goal is to save enough to buy small investment homes that she can rent out to boost her income. She said she knows she will have to pay cash for the houses because she doesn’t have a hope of getting a mortgage for a long time.”
“James and Rhonda Arias were at the verge of foreclosure on their Rancho Cucamonga home when they were able to arrange a short sale, in which their lender accepted a price of $400,000, although that was about $300,000 less than their mortgage. The couple’s hope is that a short sale will do less damage to their credit than a foreclosure.”
“The couple said they could no longer afford their mortgage last year after James was laid off from his job with a lender. Their household income shrunk while the monthly payment on their adjustable rate mortgage jumped from $4,300 to $5,800. Each day he called his lender to get the loan modified to something they could afford, but he was unsuccessful.”
“After putting their house on the market, in mid March they moved into a two-bedroom apartment in Eastvale for $1,500 a month. The apartment is about a third the size of their former house. Before moving, James gave up his BMW and paid cash for a Toyota with 200,000 miles on it. Rhonda ditched her SUV. They also held garage sales to shed excess belongings.”
“Having adopted a more frugal life style, they now eat at home a lot more, Rhonda said. James said he is working on a masters of business administration while job hunting. ‘We thought we would scale down completely, get rid of our stuff and save, save, save and start planning for our future again,’ Rhonda said.”
“Many of those who lost homes to foreclosure hope that because the phenomenon has grown into a sign of the recessionary times, mortgage lenders will be more forgiving about the blotch on their credit history. But that may be too optimistic. Robert Satnick, chairman of the California Mortgage Bankers Association, said he doubts that the mortgage industry will soon forget the lesson that lax lending, such as what was practiced during the housing boom just a few years ago, can lead to disaster. New, stricter rules are likely here to stay.”
“‘Given everything we have learned in the mortgage industry over the last 18 months, my estimate would be the guidelines will stay the same and not get looser,’ Satnick said.”
“Mason Gaffney, professor of economics for 32 years at UC Riverside, said he believes foreclosures ‘will turn a lot of owners into tenants, maybe for the rest of their lives,’ and an enlarged renter population will strengthen the labor movement and prompt people to seek greater security from the government, just as they did as a result of the Great Depression.”
“Another UC Riverside economics professor, Richard Sutch, said he does not expect such a lasting impact unless the current recession lingers a lot longer. In that case, he said, it could have ‘a profound impact’ on young adults planning their lives. In an era of high unemployment, he noted, the responsibility of owning a home, which anchors the owner to a specific location, becomes a liability.”
‘Sanjay Varshney, dean of the College of Business Administration at California State University, Sacramento…said waiting too long can be counterproductive. Once the recovery becomes obvious, prices for everything will have shot up. ‘If this (economy) turns in late 2009 or early 2010, if you wait until 2010, it’s already too late,’ Varshney said.’
IMO, what this guy is saying is that bubble prices will return in the next couple of years.
‘Platner said…’I believe I will be able to triple my price in five years.’
Not even the ponzi fools in Marin had expectations like that. Good luck Platner.
‘Mike Zagaris told a packed luncheon crowd this week during an Appraisal Institute conference in Modesto. ‘…We’re in the window of opportunity for people to get into a house.’
Oh my, ‘get into a house.’ As I’ve said before, some of these California UHS are a living, breathing, FB factory. But, some are honest, like Jim in SD and I met one Long Beach broker at the Pasadena meet-up last summer who told me he had been advising that people not buy for the past two years.
Or this one:
“‘You go to these places listed at $150,000 and you see people in all these BMWs and Jaguars pulling up to check them out - because they’re all investors,’ she said.”
“One recent investor was Julie Chiang, a retiree in Fremont. She used family money to pay $361,000 in cash for a three-bedroom foreclosed home in her city, which she plans to rent out for between $1,800 and $2,000 a month. It sold for about $650,000 at the market peak, according to Joe Metz, a Realtor in Fremont, who represented her.”
“Chiang said she bought the house as a long-term investment after years of looking, because she felt prices had finally reached a reasonable level. ‘I decided this is the time to buy,’ she said.”
__
Oh, my.
‘you see people in all these BMWs and Jaguars pulling up’
Well, at least they can afford it, I guess…
Muir,
I’m a little confused here? Is it “family money” or is it cash? If you had to go to relatives to raise the capital ( and you either OWE these people the money, or a portion of the “profit”..? ) how is that “cash”?
Here we go again. Realtwhores making the assumptions on what ‘is’ and what ‘isn’t’. One of my bubble-time favorites was “These are people that ‘have’ m-o-n-e-y”. It was so great, so wonderful, so universal and virtually untraceable!
Hell, you could insert/assign that littel beauty as you saw fit? Any time a bidder ( I mean buyer ) balked in the slightest at the price, this was used to overcome their objections. Worked at ALL price levels and entry points.
The secret about Asians and “family money”. I learned it by working with some of them. You see, Asian immigrants came here, worked hard and succeeded. They had kids who were more interested in hand bags and cars and less inclined to bust their back.
What happens is the elders attempt to pass their wealth to their kids in the form of employment at the family business and bankrolling the kids attempts to get started.
This nonsense will go on until the old one die, or the young ones deplete the reservoir.
In practice, I have never seen this kind of transfer succeed, it only ends up with spoiled Asian adults. They always refer to gifts from their parents as “family money”.
In American, we call it mooching or a silver spoon.
waiting too long can be counterproductive. Once the recovery becomes obvious, prices for everything will have shot up. ‘If this (economy) turns in late 2009 or early 2010, if you wait until 2010, it’s already too late,’ Varshney said.”
Dont’ know what to say to that, that hasn’t already been shouted out.
Is it family money or cash?
My nephew is a Chineese descended Californian. They pool money for the youngsters in the family to buy a home. The yongsters put money back in the pool for the next ones. Family means something different for them.
“One recent investor was Julie Chiang, a retiree in Fremont. …”
‘you see people in all these BMWs and Jaguars pulling up’
“Well, at least they can afford it, I guess…”
- - -
It’s Hammer time.
Luv,
Jen
“One recent investor was Julie Chiang, a retiree in Fremont. She used family money to pay $361,000 in cash for a three-bedroom foreclosed home in her city, which she plans to rent out for between $1,800 and $2,000 a month.
Some investor! For $361,000 she could earn more than $2,000 a month from a AAA corp security right now, with no maintenance expense, no insurance cost, and much risk of loss.
You can’t depreciate a AAA corporate bond. And they send you a 1099…
The inevitability of a V-shaped recovery in housing prices is gospel to many…too many.
“if you wait until 2010, it’s already too late”
Wow! We’ll all be priced out forever again! When everyone was priced out the first time, what happened? Oh right, we all became homeless living under bridges while the few elite lived well in their equity-rich 10 McMansions ever after.
It’s as if these “experts” never lived in a time when houses were affordable.
‘I believe I will be able to triple my price in five years.’”
This is NOT an investor, this is a SPECULATOR. The same people that had a good hand in driving this bubble up.
What will these idiots do when they realize that those prices are not going up?
When that happens, this bubble will finally be over.
SMF,
Exactly, and as Orangetabby said, the UHS would like nothing more than to “reset the game” and start anew! Whatever consequence to the broader economy be damned.
they should have bought b of a stock when it was $3, and of course sold before today. speculators should gamble in the stock market! houses will not triple in 5 years. they won’t even double in 10 years.
RE: “Her biggest worry, she said, was whether anyone would rent a house to her because her credit was poor. She appealed to a landlord who had listed a house for rent. She went to see him armed with a recommendation from her employer. ‘I literally sat down and explained my whole situation for an hour, begging and crying. I was desperate,’ she said.”
Looks like a future Craiglist’s erotic services provider to me with OTJT provided by potential landlords.
Just another little asterisk to recent Fed stats noting that more US women are now employed than men.
Isn’t it better the get on your knees when you beg ?
“James and Rhonda Arias were at the verge of foreclosure on their Rancho Cucamonga home when they were able to arrange a short sale, in which their lender accepted a price of $400,000, although that was about $300,000 less than their mortgage. The couple’s hope is that a short sale will do less damage to their credit than a foreclosure.”
Short sales damaging credit less then a foreclosure is a BIG FAT LIE told to homeowners by real estate agents trying to get the shortsale listing. The fact is that it affects your credit score equally. WHether it is a deed in leiu, a short sale or an outright foreclosure it is looked at no differently as far as your FICO is concerned. They are all considered to be accounts “not paid as agreed” In fact a foreclosure looks cleaner, in my opinion, on your report as it shows a zero balance for the loan on which you were foreclosed. The short sale will show the balance that was not paid through the sale. Not that it has to be paid, just that there is a remaining balance.
It is unfortunate that realtors are allowed to lie to clients and not be held accountable. I have corrected every realtor I come in contact with when they make this claim, and refer them directly to the fair issac website for the information. It’s printed in balck and white. Many of them are reporting that they are getting the information from classes they are going to on short sales! So the idiots at the top are spreading lies to the idiots at the bottom. Yay. THe financial ignorance continues.
I appreciate the input. But it isn’t just the realtors:
‘The couple’s hope is that a short sale will do less damage to their credit than a foreclosure. It was a smart move, said Robert Satnick, chairman of the California Mortgage Bankers Association.’
‘The wait required by credit agencies to qualify for another mortgage drops from a minimum of five years to three if a homeowner opts for a short sale rather than foreclosure, he said.’
Around here everybody tries a short sale first and fewer and fewer are successful. Anyway, I have my doubts that these ‘credit agencies’ will even be around in 3 to 5 years.
You do not have to wait five years to get a home loan after a foreclosure. Either way it is three years, foreclosure or short sale. You just need to get your credit score back up to “acceptable” levels, which for an FHA loan is only 620, and VA is 590. Either way you go, foreclosure or short sale, it remains on your credit for 7 yrs. I am not sure about the credit companies saying they “require” 3 or five years, as it isn’t their decision. They simply compile and report credit history, the banks, or should I say government, are the ones that set the lending standards. The reason that i say govie is that loans these days are either fannie mae, freddie mac, VA or Fha. And after 3 yrs as long as your credit score is back up to their minimum requirements, they’ll give you the loan. At least that has been my experience for many years. Not sure how things will or will not change going forward.
then maybe all these people walking will cause a new boom in 2-3 years as they seek a second chance at getting rich off housing!!
This is an interesting fact that might lead to a prediction of when the bubble’s implosion will valley out. At the peak of foreclosures add three years when these Einsteins can get back in the game and you have the market low. Thus, that puts us at 2012 or 2013.
This is quite possible, however I think there is still going to be a significant number of foreclosures in 2011, 2012,2013 as the buyers of today as well as the past couple of years realize just how far under water they are and feel almost hopeless about their homes value rebounding to what they bought it for. Especially FHA buyers, which is a significant amount of the current and recent (past couple of years) buyers pool. They don’t have much skin in the game, and in my opinion are stretching to purchase at todays prices in many markets, especially here in so cal. One small financial hiccup and they are SOL. So while the market might bottom by 2011-2012, it’s probably going to stay there for some time to come. Fha foreclosures are going to be the next wave to hit after the alt a and prime. I can smell it. By then, they will probably know somebody or have heard of somebody who walked away from their home and are buying at 1/2 of what they bought their house for. There will be stories and evidence of life after foreclosure and people talking about walking away from their home as being one of the best financial decisions they ever made. It’ll make the decision that much easier for them.
Ben,
Excellent point! What better way to tell what a person’s credit profile -used- to be than look at his/her FICO? It’s like driving through your rearview mirror.
I’ve always despised these parasites but you’ve heartened me to consider NO lender will trust their “findings” when you have legions of 750+ FICO’s sending in jingle mail.
I haven’t checked, but it seems the Calif. DRE does not have a rule requiring licensed agents to disclose that a sale is a “short sale” in advertising materials, including on the MLS. What we end up with is like a bait and switch: A 3,000 sq ft house advertised for, say, $350,000 really isn’t “for sale” at that price point, you discover when you make a call on it. It is merely a price that the agent and the owner think/wish/suppose/believe that a bank would accept. They oughta tighten the rules in Sacramento. With car prices, they have to have “one at this price” when you inquire.
milkcrate,
I’ve been cringing on this one for months. With no legit sales in their pipeline we’re going to have all kinds of scumbag realtwhores coming out of the woodwork to exploit the very FC’s ‘they’ ( and their kind ) have created.
Of course spending $199 and doing a weekend seminar qualifies one as an “expert” in short sales.
DinOR
Seeing the same thing hereabouts. Nicer home market is in hibernation, stillborn, DOA, whatever we want to call it. Frozen. Dead.
It’s the same as in the 90’s slowdown. They’ll continue to claw for life for 1-3 years and then capitulate.
Most listing contracts should (basically) prevent that. If you (buyer) were to actually offer list price and meet your contingencies for closing, the seller would be bound by the listing agreement to pay the agent’s commission (whether or not they could fill their obligations for a clean close). I suppose they could have worked up a special arrangment/understanding with the L.A. and the broker, but that won’t end well.
Milkcrate, if you want to open a can of worms, go to that agent’s broker on the 3,000sf house and tell them their agents are working for free (and depriving them of their cut). Oh they’ll LOVE to hear that!! The only thing worse than no commission to the agents is marketing the house, finding a full price buyer, and then getting no commission.
Agents do not have to disclose that its a short sale, but these days, it helps. Around here the spin in the descriptions read “APPROVED short sale - no waiting for the bank!” (like a hidden reserve price, the bank has already given the agent the lowest number it will take).
Kim,
Again, where’s the transparency? After -everything- that’s happened, the buyer ( the -only- guy bringing anything to the party ) is still in the dark.
Full Speed Astern!
Kim:
All I know is that if I ever get around to writing a contract on a “short sale,” I’m going to word it that the deal is off if they can’t close in 90 days. Might be even grouse about liquidated damages.
Which is really to say, at the moment I hear those two words, the discussion ends.
I find that surprising, that CA doesn’t require disclosure, as somewhere in those 30+++ pages of which one has to sign, it must be in there somewhere, along with that pony.
but then I am still digging through a ‘roomful of sh@t” to find my “pony”.
Yeah, you have to disclose that mold might have grown in the property since the time that the earth cooled. And that you could be in a 100-year flood zone (never mind that it rains eight inches a year). And make sure that hot water heater is bolted down and tagged properly.
No disclosure that representations of a V-shaped recovery, and handsome profits free from capital gains, could bear no relationship to reality.
milkcrate,
Nailed it! This is why I have such issues with their licensing dilema. When you cross the line from making general observations about the neighborhood and the home itself into making “profit projections” it’s a whole other ball of wax!
Why aren’t the public and regulators up in arms over this?
i have only seen 2 houses out of about 100 i looked at in phoenix where it was not listed bank owned and was in fact a short sale. i usually drive by the potential house and most bank owned have all blinds open so you get a basic idea of the cosmetic condition. on a couple i went up and all their stuff was in the house, i left and would not consider a short sale. I say let them go into foreclosure and i won’t tie up my time on a house that is not ready for a quick sale.
i’m going for a house in phoenix, owned by freddie mac. they asked if i was going to live in it and if i was a first time buyer. its nice and had multiple offers, i only went up a small amount because i decided i will not get into 2005 bidding war mentality. anyhow, they picked me probably more due to it being cash only, but i bet the fact i would not be flipping made a difference. anyhow, doing the inspection soon to make sure no hidden problems!!
Congrats Jay.
We found 17.58 acres w/woods;
4/3/3; hydronic heat; the list goes on.
Yeah - we’re knife catchers.
Hubby broke out of the closet - what is a girl to do?
Lucky Lady!
Best Always,
Leigh
“‘If you’re buying (at) 10 or 25 cents on the dollar, and it’s decent real estate, it’ll come back,’
ConradVictor Borge said of his land purchases stretching from Yuba County to Merced. ‘The question mark is not, will I make money on them? The question mark is, how long will it take?’”Luv [comma]
Jen
“‘This is not a Ponzi scheme. People invested in real estate-based investments, whether or not they were managed-care facilities or properties,’ said…investment adviser, Gary Armitage’s attorney, Russell Marne of San Rafael. ‘The value of those properties have tanked, just like the value of my home in San Anselmo. That’s basically what happened.’”
It would have been better if it was a ponzi scheme! The Madoff “victims” are getting special tax breaks and possible tax payer restitution (up to a certain limit). And long time investors get to keep their gains (fraud)…!!!
2banana,
LOL! Yeah, they probably would… be better off? But it’s *not* that simple. There’s a little thing called “suitability” that’s going to snatch a KNOT in this dude’s @$$.
When you take MEW $’s from seniors and widows and assure them of an income stream, it’s a little different than going to a bunch of VC guys for a start up w/ zero track record.
“Home sales in Marin last month continued to highlight buyer preference for discounted bargains…”
Let’s see, the realtor has shown me three houses on the same street. There’s a regular sale pretty much in move-in condition that’s asking $550K. Then there’s the short sale at $425K, in almost move-in condition. Or I can buy the foreclosure that the inspector said was sound, paying $275K and putting in about $25K (which usually means $40K) to spiff it back up. Dang, tough choice!
That’s the dilemma we faced when we moved here in 2005. Tough choice! (Although the price differences then weren’t nearly as profound.)
“They bought the condo in 1995 for $100,500 with the help of a $20,000 ’silent second’ mortgage from the city. Ten years later, as condo prices topped $400,000, they took out a home equity line of credit with Washington Mutual…Within a year, they were behind on their mortgage.”
$20,000 ’silent second’ mortgage ???? WTF? They didn’t have to pay that back first? No strings? Take the money and run.
The fraud is amazing. $400,000 for affordable “housing” with taxpayer subsidies…
City/Muni gov’ts better start focusing on keeping their fire trucks fueled than helping their developer patrons move overpriced condo stock.
I’m wondering if the second remains silent given their foreclosure status?
sounds like low income city financing loan, i have seen this in phoenix and tempe. the city gives you 10-20k toward downpayment and it is an interest free loan, you pay it back when the house is sold or you turn it to a rental. hope the city has a first lean on the house..or everyone pays up in more taxes?
This is almost always RDA money for low-mod income housing. By law (in Calif.) Redevelopment Agencies have to spend 20% of the increment they receive on low and moderate income housing.
“The Dallas Morning News reported in January on a local arts exec who got a loan of more than $500,000. The lender was his previous employer, the Museum of Contemporary Art in Los Angeles. A written contract required him to repay any balance when his employment ended. But Strick — who quit his MOCA job under pressure in December, as the museum’s finances crumbled — now says he didn’t meet the contract’s terms. ‘When I left, we changed that,’ he told me.”
Yet these non-profits almost non stop demand/beg for more and more donations and tax payer moneies…I think I will stick with giving to the Boy Scouts.
…I think I will stick with giving to the Boy Scouts
Be careful with that.
Couple of yrs back…Recall the head of
BSof the World, “respected church going citizen,high society of Dallas” who got busted for going to Mexico for child/boy sex.
So true. Show me a guy who wants to legislate morality and I’ll show you a NAMBLA member. I’m talking to you, Santorum et alia.
MrBubble
(Just found out that Mr Bubble was a notorious pederast in Australia. I am not a pederast. “What’s a pederast?” “STFU, Donnie”)
“Once pulling down an annual income of $200,000 to $350,000, she earned a fraction of that in her new job working for a company that lists bank-repossessed houses.
“She said she landed the lease after paying a $2,100 deposit and the first month’s rent of $1,625. She said the landlord also insisted on examining the condition of her former house to be reassured she would make a good tenant. Byrd said it is a relief to have enough income to cover her household expenses, and she advises friends who are over their heads in mortgage debt that foreclosure is not such a bad alternative.”
She made all that money for years…now she can barely afford to rent a so-so apartment and had to beg to do it. Don’t people save anything anymore?
And, with her salary, she is going to buy more cheap housing to make as rentals to increase her future income.
Hey. Whoever is doing her acctg pre taxes, I want his name. Obviously I am doing it all wrong.
the answer is no, absolutely no saving has gone on for a decade by the majority. thats why credit cards will cause massive losses going foward, we don’t even have the cash to make the payments on all our debts. i never understood people who focused on payments…like ok i can afford $300/month on a car, $2000/month on a house, $200/ month on the boat, $1000/ month on the credit cards. my sister is like that and of course ended up in massive credit card debt for awhile, she eventually payed if off and learned. but, i look at the debt i’m agreeing to and assuming i will someday get layed off and be in deep trouble. i guess that is why i’m buying a house for cash and others are losing their homes!
Anybody notice the math on the Chiang lady?
Bought house for $360k cash. Plans to rent it out for $2k a month, or $24k per year.
Ok, fine. But if you have $360k, then it would take 15 years to get your $360k back at $24k a month.
During that same time period, $360k invested at 5% per year (you could probably get pretty close to that tax free when the economy turns) is $18k per year. After just 7 years, it would return more than $24k a year. For doing nothing more than moving some bucks around every now and then.
What an odd investment choice.
It would have been nice for the Chronicle to run the math, but oh well. If it doesn’t pencil out versus other investments, then she is simply…
speculating!
Right, remember, previously $650,000 were borrowed against this house at some point in time? So they passed the hat in the ‘hopes’ that it will ’snap right back’ closer to those big ones.
Speculation is Alive and Well in America.
The family is going to be so surprised when the price of the investment house doesn’t magically double in price in the next year.
Yea… but the return isn’t too bad versus a CD today. But that CD is for a 1 to 5 years (or less). Good luck cashing out the house…
This is an artifact of low interest rates. I know of dozens of near retirees who are dumping the majority of their next egg into housing this year. All are buying properties that ‘cash flow’ after their large down payments. Most are buying in ‘geographically diverse’ areas. (Read, all over the map in areas they really shouldn’t be buying.)
Geebus. This still can come crashing down! Every other person I know is over invested in real estate and now, thanks to the Fed’s low interest rate policy, the retirement accounts are getting plundered. Sigh
So all of this foolish money is being tied up. But what happens when there is no snap back and its time to pay for something of value? Or they run out of 401k’s to raid?
Not to mention, rents are dropping fast! It seems like everywhere…
Got Popcorn?
Neil
whilshire state bank has a 2.75% e-link savings and from what i read they have a stong balance sheet unlike the big banks. they are in los angeles!
You want the SF Comical to run the math? Keep dreaming. Then again, I read the SF Examiner on the Caltrain today. Holy cr-p, those people are absolute loons. Not to mention rhetorically jejune…
BTW — anybody make an allusion to Chauncy Gardner from “Being There” when Obama & Friends talk about “green shoots” in the economy?
“Mr. Gardner, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives?”
[Long pause]
“As long as the roots are not severed, all is well. And all will be well in the garden.”
“In the garden.”
“Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.”
Creepy…
“I would rather watch” he said…….
The Chiang lady’s math bonked me over the head too.
IIRC, you’re supposed to calculate the house purchase price based on 100 to 120 times the monthly rent. Meaning that she shouldn’t be paying more than $200-240k for her rental house.
That is, if she can actually get some tenant to pay $2k a month in rent. And, these days, that’s a big IF.
Arizona Slim,
Oh and don’t you know it. Right now I have a client that bought a rental and he’s sunk a pauper’s fortune into getting it tenant ready, and there-it-sits.
Really wouldn’t bother me except for the fact that they tend to take it out on their CPA’s etc. It’s never… the poor choices ‘they’ have made that have put them in a tough spot. Always somebody else?
She overpaid by at least $120k.
“Anybody notice the math on the Chiang lady?”
Yes.
I always heard Chinese ‘rithmatic was hard!
and that’s not even factoring in maintenance. My neighbors are new landlords. The home was owned by my sweet neighbor for nearly 50 yrs until she passed away about 9 months ago. Her son decided to rent it out until values came back up. He’s getting up there in age too, I hope he knows he’ll be waiting a looong time. Anyhow, the tennents moved in 1 1/2 mos ago, but the landlord/son has been here all morning because they are having major plumbing issues. I overheard him on his cell phone griping to someone about the outrageous quote…$2200. The place is only renting for $1950/month. There is another guy over there now checking out the pipes, but I wonder if now they are wishing they would have just sold it. They never did much maintenance to it as it was just my neighbor living there alone, and really how hard can a 90 yr old lady be on a house? But now there is a family living in there. Everything that once worked fine for her may need some updating. Time will tell, but I would say it’s not looking good if they are already having issues. I doubt they factored any of this into their already poor decision to rent rather they sell while they could. They’ve probably lost 60k or more in just the nine months they’ve waited. Factor in the costs as well as an additional year or more as the tennants have a yr. lease, and they are out a whole lot more. Shoot, just by the loss in value in the past 9 months, they will need to rent it for almost three years without any additional maint. issues just to recover that 60K. and values are still falling………….
Well, I sincerely hope that the tenants aren’t expected to pay for his house that hasn’t been probably maintained.
Sorry, no disrespect, but as a renter, that’s my pet peeve!
None taken. As a renter I completely agree with you. My only point was that you have to factor maintenance into the picture when considering becoming a landlord.
I have a neighbor who did that. She inherited the house in 2005 and has spent the last 4 years working on it. She could have had $600K in 2005. Now she’d be lucky to get $400K. And it’s still empty - she lives about two miles away.
I can help but wonder…
Hopefully the house was paid for??
Are there some tax / inheritance reasons they’d use to rationalize the delay cashing out?
And didn’t the son help keep an eye on the care of mom’s house?
While the old lady probably had different expectations than a renter the idea of plumbing problems makes me think there was a lot of “benign neglect”. (Plumbing goes way beyond the cosmetic. Old lady wallpaper patterns may be ugly but they’re cosmetic not structural.)
they do own the home outright, and the son is a really nice guy. They did a bunch of cosmetic work to get it ready to be a rental, new windows, refinished the hardwood floors, painted inside and out, and the plumbing issue is just due to it being the original plumbing, the house was built in the early 50’s. Unless and until they repipe they are bound to have plumbing issues and you don’t really know what they are going to be until they arise. I didn’t mean to imply that he is a slumlord or anything. I just don’t think he anticipated maintenance issues of this size so early on in his landlording. When we talked of his plans for the house after my neighbors passing he just told me that he didn’t want to sell in this down market, he wanted to wait until he could get more $$. But I think part of his waiting to sell is that my neighbor passed away in the home. She was in the hospital and they told her she probably only had a couple of more days. She wanted to be in her home. So the whole family came and stayed with her until she passed. If they wait three years, they don’t have to disclose that she died in the home. That very well could be a huge part of his reasoning, but he didn’t say so, and I couldn’t think of a tactful way to ask.
She could have bought California munis at the beginning of April. They carry a 6% coupon and the interest is tax-free…
Although in this economy it’s probably a toss-up as to which investment is riskier.
yes, they are assuming the house will double in 5 years and they will sell for a profit. it does work in phoenix, i’m buying for 82k a house that need little work and i can rent it for easily $1000! and, assuming rents don’t fall more as the economy slows and people lose jobs. now, i’m not going to rent because i’m moving in and going to stop paying rent and only have taxes, insurance and utilities. much less than i’m paying now! oh, and i’m going to challenge the property taxes because the appraised value is 130k for 2010, but i’m buying now for 82K. you can actually take the county assessor to court if you don’t agree with the assessment, i liked that idea as they are not lowering taxes a fast as prices are falling! are they excluding all bank owned sales?
Jay, I think that $82,000 for a house sounds good. Enjoy.
Good luck with your house Jay, and congratulations.
Is this a BAD Idea? Don’t we all want people to pay cash or a high down payment for a house?
Any negative consequences to this?
————————————————
They’re either sinking their cash into down payments or paying full price in cash.
When is “Not in my lifetime” Leslie Appleton-Young going to commit seppuku over the drastic reductions in Marin? It’s waaaaaay past the 30% reductions she said would never occur.
If, as she has said, it really is “God’s country,” then I think the big fella needs to call her home!
If the devil is the big fella to whom you’re referring, then she’ll fit right in.
“Her goal is to save enough to buy small investment homes that she can rent out to boost her income. She said she knows she will have to pay cash for the houses because she doesn’t have a hope of getting a mortgage for a long time.”
let me get this straight: she was making 200-350k a year, but shes now in foreclosure, her credit is bad, and she makes 38k/yr,and almost didn’t get top rent an apt, but wants to buy houses for cash to increase her income. really? sweetheart, what are you smoking? if you have $$ to buy houses for cash, why are you in foreclosure?
Ahhh, the “increase the income” idea.
Let’s see how that holds up when one of her illustrious tenants trashes the house and skips without paying the final month’s rent. Or, after she makes all the expensive repairs that said tenant caused, she experiences a lengthy period of vacancy.
Yup, making money in rental real estate is a piece of cake.
Yes, it “is” a piece of cake to make in rentals, and this is exactly the point that most new landlords miss. They think the tenants are going to care as much about their property as they do as the owners, which is far from reality. They will find out. My husband & I, while not bigtime landlords, have had rentals, and I had a section 8 rental and an apartment attached to a business that my first husband & I had years prior. Between my 2nd husband & I, we’ve dealt with 10 tenants or so, and, though the good ones are heavenly, the bad ones can wreck things so fast that they don’t provide the cash flow to keep up with their messes. A real nightmare can ensue. We’ve kept on the positive side of the ledger, helped by the miracle of depreciation, but sometimes it’s been a battle.
Typing so fast that I didn’t quite say it “is” a piece of cake to make money in rentals….I also noticed that my grammar wasn’t quite perfect. Oh well, too late at night I guess. That’s why I normally only contribute on weekends. Anyway, if new landlords think that they’re going to make even a cool $300 per month profit and are carrying a good-sized mortgage on their rental property, think again. One bad tenant can put you $10-$15K in the hole with damages and nonpayment of rent. Thank you for being good tenants, HBB’ers.
Post got eaten again.
But I basically said the same thing…obviously I am not using the right accountant, because with her income now, similar to mine-
I am obviously doing something wrong if I can’t find extra $ to invest in houses, like she plans to do for rental income.
?
“Marne said Armitage, who has put his $2.5 million Healdsburg home and his castle in the mountains near Redding up for sale, has lost everything.”
dang, if I had a castle to put up for sale AND a 2.5 m home in Headsburg… Trust me, I am Sure this isn’t “everything”.
a castle..sheesh.
“It was her boss, a broker in Moreno Valley, she said, who advised her to stop struggling when it was obvious that, on her current $3,200-a-month salary, she could not afford the modified monthly mortgage payment of nearly $4,000 a month that her lender offered her.”
I am frankly surprised a UHS could figure that out.
I am frankly surprised a UHS could figure that out.
Yea… me too. I guess after the fourth of fifth whack of the 2*4 they realize ‘this hurts!’ What’s wrong with America when you cannot service a mortgage at a mere 133% of income?
But hey, those UHS salespeople say if you don’t buy now you’ll be kicking yourself… (Love the RE-Max advert. Please tell me its on U-tube.)
Got Popcorn?
Neil
I particularly enjoyed the detail that the UHS had to wait for the boss to break the bad news on the unaffordability of her mortgage.
Schadenfreude returns. I really am trying to cut back but they won’t let me:
Is anyone else amused at the ‘don’t stare at the wall, vacant homes take twice as long to sell’ ads on the side of this blog? The ‘Virtually furnish any home for $197′ has me chuckling. Its Irony is tasty…
ROTFLMAO.
Got Popcorn?
Neil
I tend not to even see ads. Thanks for pointing that one out!
*Virtually* furnish a home? How much does *actual* furniture cost? Betcha that the price will be more than $197.
Sadly I don’t watch TV, so I miss out on all these gems. On the whole, I think i’m coming out ahead
er, I’m stupid. I didn’t read the whole comment….thought you were referring to a TV ad (obviously).
derrr…back to the red wine…
“‘I don’t think you’re going to see a move-up buyers’ market until we burn through the foreclosures. I think we’re two years away,’ Zagaris predicted.”
Move up buyers? Most people who bought during the bubble will be underwater, so they won’t be move up buyers, regardless of the foreclosure situation. Two years? Yeah right. If you’re a FB, you’re not moving anywhere unless you become another statistic.
I’m starting to think the only buyers en masse for the next few years will be 1st time buyers (or people who got out in time and kept their bubble money) and all cash transactions, but not much in between.
Carol Byrd, a 42-year-old real estate agent, earlier this year tearfully watched her lender foreclose on a house with a pool, spa and view she had bought for $525,000 in Riverside and that had fallen in value to about $275,000.”
“Once pulling down an annual income of $200,000 to $350,000, she earned a fraction of that in her new job working for a company that lists bank-repossessed houses. It was her boss, a broker in Moreno Valley, she said, who advised her to stop struggling when it was obvious that, on her current $3,200-a-month salary, she could not afford the modified monthly mortgage payment of nearly $4,000 a month that her lender offered her.”
My God, did she think she’d be making that much forever? She could have paid that place down to the point where she could now keep it.
Sigh.
This is a woman who couldn’t wait to rent a $1,625/month house when she only makes $3,200. In other words, she likes to live beyond her means.
test
unfortunately I failed miserably…sigh.