WatchI watch the foreclosure websites (the kind that trustee's use to monitor sales) and the banks are JUST now starting to dump properties in CA.
What I mean by "dump", is that they aren't buying their properties at the foreclosure auction, they are letting investors buy (by not outbidding investors on their own properties).
Seems the average discount is about 50%. On a typical day, in Santa Clara county, you might see 30-50 properties listed for auction, most 'Cancel' or go back to the bank, usually just one or non go to an investor.
On May 29th, about a dozen properties went to investors, and there are other days over the past week or so that high #'s of houses sold to investors.
We are JUST now starting to see the market tank... hold on to your horses! :)
Larry
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Let's hope you are right. I haven't seen an uptick here in San Francisco, but in the southeastern part of the city there are plenty of unlisted REOs.
I still have this question that no one seems to be able to answer:
If you know of a vacant bank-owned property, and also know which bank owns it - how can you find out whom to contact and see when/if it will be listed, or even make an offer?
It must be possible, because otherwise why would anyone pay for the subscription databases like realtytrac and foreclosure.com? If all those sites give you is the address of the foreclosure and which bank owns it (info. I have been able to find w/out paying), then why would anyone pay for that info.?
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The regulators might have finally been able to break the political gridlock to force disposal of REO. Can you let us know which banks so we can figure out what chartering agency may be pushing their portfolio banks to get real? Interesting and telling news from a player. This won't show up in the newspapers for a year.
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More information Larry. Santa Clara is in fortress territory.
Why do you think the banks are finally dumping REOs? Is it seasonal?
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1sfrenter,"If you know of a vacant bank-owned property, and also know which bank owns it - how can you find out whom to contact and see when/if it will be listed, or even make an offer?"
Go to the property, there on a door usually, front or garage, is the posting. They post a paper, taped or stapled, there will be a contact number, usually for the banks guy or the listing agent. Call and ask when it will be listed or if they can contact you when it is. From the time it becomes REO/BANK OWNED until it is for sale to you may be from 2 weeks to 3 months. Listing agent has to ready it for sale and bank needs to clear up liens etc, clean up property. Call the number on the paper taped to the physical property. This is how you can get a jump on the property before it hits the market. I have done this and got first dibs. The listing agent may or may not want to be your agent as well. If they don't, then they may have you use someone in their office. Or if you want your own buyers agent separate from them, you probably won't get to much more info until it is officially listed.
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bmwman91's website
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Thanks for the information. Although I am not a RE investor (just a lowly would-be first-timer), this is the first good news I have heard in this area in a couple of years.
Could this have anything to do with the stock market taking hits lately? Are banks feeling uneasy about the huge RE liabilities that they are keeping off of their books & trying to clear them out in case their other investments tank?
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bmwman91 says
I wonder if it is a toxic "dump" so to speak. Have the banks realized with Greece poised to exit the Euro zone, and the U.S and Chinese economies probably going to take a hit from the fallout, maybe they are just getting rid of their junk to help keep them afloat in case it's worse than they expect?
Exciting news though for potential buyers.
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Are you kidding me? one day isnt a trend. Its a random day.
The trend of only like 3% or less of the actualy scheduled trustee sales actually 'being sold to 3rd party' (getting bought at auction and not cancelled or 'back to bank' which end up in MLS at some point) is as low as ever, or lower.
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LarryPatrickMaloney says
To me, owners bidding on their own properties at auctions is simply fraud. The fact that it is common and there are no controls to prevent or detect this is why I and many others simply don't bother attending auctions.
Deceiving auction participators only serves to discourage others from participating, thereby lowering demand and competitive bids. Short-term greed --> long-term loss.
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Dan8267 says
America! FUCK YEAH!
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Sometimes I wonder if our downfall is just inevitable, because all governments eventually get captured by big money, and that kills the free market and all motivation.
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Patrick says
See my thread in the investment section about Griftopia. The further I get into this book, the more I become convinced that this is inevitable. Hell, the more I learn, the more I WANT to see our way of life come crashing down, just so that the assholes that behave like this get what they deserve. There won't be anything pleasant about any of it for anyone, but the people that make greed part of daily life need to be dealt the justice that they deserve. Starving is almost too good for them.
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Patrick says
It's happened to every civilization that wasn't wiped out by natural disaster for 3000+ years. Growth, government growth, stagnation, debt, devaluation, conquest. Lather, rinse, repeat. Why should it be different this time?
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Like, Hello?
Nobody noticed for the last FOUR years the slow, controlled drip of inventory from ... whoever?
I know analysis goes farther on this site, but really now.
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Patrick says
My take on it is that the people in government and big business today are pillaging the wealth created by the progressive reforms of the early 20th century. Those reforms lead to massive wealth creation and the current overlords are burning the country for the scraps because in the short run, the selling the scraps makes more money.
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APOCALYPSEFUCK isFrank Sinatra says
Well, that's hard to say, because one would have to do quantitative analysis, like Patrick does with his rent price tracker.
Also, it's not always for sure which banks sell, because they have the Trustee's name listed (sometimes) but not always.
Larry
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Goran_K says
Ya, I can't say for sure 'why', but only that their behavior appears to have changed.
I can hypothesize , that they've finally reached the breaking point, OR perhaps it's been 4 years since 2008, and that 5 year limit on tax defaults is coming up... ;)
But I just don't know 'for sure' why they have changed...
Larry
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ptiemann says
Yes, lets CLARIFY (instead of asserting inaccuracy)
The final sale price of the house, is typically 50% of the banks claim of debt on the house, which always includes:
1.) The Full mortgage amount owed on the house.
2.) Any previous missed payments
3.) Accumulated 'fines, late fee's, penalties
4.) 'Interest' on any and all of the above.
5.) Back taxes.
Also, could be extras like trustee's fees, and even maintenance if the house has been empty.
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Larry,
My partner saw this thread & asked me about it. So I just looked up the auction on 5/29 for SCC. There were 24 properties auctioned off. 13 bought by investors. 11 got foreclosed. Not sure how you came up with the 50% discount from the banks claim of debt. I eye-balled the numbers, and they look closer to 80%-85% of the bank claimed debt.
Anyways, I look at this data on a daily basis. Yep, daily, 5 days a week. It was a once in a while event. The first week after the new year was exciting, but it didn't last very long. Now I'm hoping for the foreclosure floodgate to hit the market in 2013-2014. Yes that is HOPING. Don't bet against the banksters or you will lose. they own the politicians.
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Housing Patrolman says
advice
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LarryPatrickMaloney says
I find the clarification confusing. Let's just call what is owed the bank the "loan balance". That is the number I would care about.
I am going to ask the rhetorical question:
Why on earth would the bank let someone else buy the property for 50% of the loan balance? That means an instantaneous 50% loss for the bank, when instead they could have bid higher themselves (up to 100% of the balance) with a smaller instant loss resulting, and no cost to themselves except shuffling money between two accounts.
Something is not right about this whole story.
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Justme,
Not to disrespect Larry, but I believe he doesn't have a deep understanding of what's going on with trustee sale. Quite too often, the total loan balance provided by realtytrac or foreclosureradar is wrong. Also, a property may have up to 3 loans and adding the HOA to the mix, you may have up to 4 parties that have the right to foreclose the property. So it is important to know which lender/party is foreclosing.
I saw a property that was worth around $450k. It had over $900k in IRS and FTB liens combined. How about child support lien? How are you going to get that removed? What if you bought a house at the courthouse steps, you went over to evict the current pissed off owner and he set the house on fire, or dump concrete down the toilet, or ripped out the wires in the house or whatever, how are you going to protect your purchase?
With respect to selling the property for 50 cents on the dollar, it depends on who owns the loan. Say Wells Fargo is the foreclosing party, but ING (investor) is the loan owner. The investor/the loan owner is the one that's making the call. Wells Fargo and the trustee only follow instruction. That's all.
Remember all of those CDO's? Some investors own them. They are the ones making the call on how much the opening bid should be. That's the beauty of non-judicial foreclosure. You don't have to prove that you own the "note" to foreclose on a property. In this case, it shows that Wells Fargo is the foreclosing lender, but ING is the owner of the "note".
Hope it all makes sense to you.
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Patrick says
Nearly perfect. I'd slightly expand and say: "...all governments eventually get captured by
big moneyspecial interests, and that kills the free market and all motivation."It is why Democracy alone is not the answer, and any politicians trumpeting Democracy above all else are usually charlatans. Democracy requires dramatic protections for liberty, or eventually the special interests rule the roost.
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E_man, no significant disagreement with what you wrote.
Everyone:
Anyone who wants to learn how foreclosure really works, and what the law is, should read the paper
US mortgage and foreclosure law
by Zachary K. Kimball and Paul S. Willen
The pdf used to be available via this link:
http://www.calculatedriskblog.com/2012/04/us-mortgage-and-foreclosure-law.html
but now it is behind a paywall. I could not find a copy on the web anymore, but if anyone does please post a link to the pdf.
Here is a little quiz that will give an indication on whether you know the basics of foreclosure:
Q1: What is a judicial foreclosure?
Q2: What is a power-of-sale foreclosure?
Q3: What is the PURPOSE of a foreclosure auction?
I have answered Q3 before on patrick.net, see if you can find it.
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Dan8267 says
My view is that the progressive reforms of the 20th century were the equivalent of politicians leading the masses to the farms so that the seed-corn could be raided. This gave the masses in the 20th century the feeling of a fuller belly than before by fast-forwarding the inherent, natural / gradual wealth affect that made the United States the wealthiest nation in the world with the greatest (and vastly growing) democratization of wealth by 1910, long before any real progressive movement gained a foothold.
All the progressives did was raid the seed corn to bestow fuller bellies. Gradually this redistribution redirected the nation's wealth from exponentially growing to subsidizing other things that are more consumptive, if not downright destructive.
Of course, powerful interests (especially in the banking system) made sure than any shuffling of wealth was sure to go through them, and that they were able to play with vast sums wealth moving around. Their legislated right to legally expand the money supply via fractional reserve multipliers is nothing more than legalized counterfeiting, for example. All Treasury purchases are required to go through a cartel of big players, guaranteeing them profits, which are only higher if such debt is monetized by expansionary $$ policy.
We're now at a point where economic harvests are coming in leaner and leaner, while the seed-corn supplies are too thin to do much to increase harvests. Meanwhile, the most prominent / current policy makers demand yet more central planning and high sounding regulation (closing the barn door far too late, on the prior problem vs those currently fomenting) in order to correct the ongoing "market failures", which are nothing more than the effects of the massive distortions caused by Mega Government itself thanks to prior interventions.
So they preach "don't let them accumulate seed-corn! Everything must be distributed now, before it's too late. The only folks feeling good about this are the ones in the business of shuffling around the seed corn, and those who get first access to it: Wall Street and other special interests either buy access or vote for their seat at the trough.
But with this, the prescription they offer is nothing more than the very pathogen that is killing the patient in the first place.
That it's taken nearly 100 years to fall apart tells you just how wealthy the U.S. once was.
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The 1 percent are gearing up to buy. That is a shame. The banks waited until the hedge funds got into the game. How nice. NOT.