patrick.net

I've also heard that bidding on pre-foreclosure (empasis on PRE-foreclosure) and foreclosure property auctions is generally something best left to the pros --especially in a shark-infested market like CA. If you're a newbie amateur, you can get your face ripped off and handed to you in a hurry.

Bank or credit union REO on the other hand might be worth investigating as this mess unwinds...

Consult your astrologer.

Once again,
I plan on doing no dickering around. The plan's still the same: A: Find home in 70-150k range in my 3 to 4 aforementioned non-bubblezones. Look it over and make sure there aren't major foundation and rot problems. Write a check to the owner/bank/ property owner. Move in. Done. No loans.
Sound crazy? well that's my plan.

hey newsfreak- we both used "Dickering" what are the chances? weird huh?

@newsfreak,

I gather that at some point in the past, you were in the unpleasant position of being a seller in the midst of picky buyers. I sympathize. However, while the "as is - no contingencies, please" approach might have worked just fine for the last 5-6 years, it will NOT be the new paradigm going forward.

Expect to see increasingly picky and emboldened buyers with "unreasonable" demands --like inspection contingencies-- become the norm for years to come.

The next seller who bases his asking price on "need/greed"-based pricing or demands that I submit a family biography, photos or feed the squirrels is going to get my biography, photo --and squirrel-- shoved right up his ass.

I'm not saying there aren't any values to be had among the "class of 03-05" crowd but for most of us it just isn't worth it. They don't have to be in pre-foreclosure to be a pain. These people HAVE to believe! At this point momentum is their only salvation. And they need for you to believe too. It may be why we're seeing listings at 810K pulled and after all of a week (without 1 single offer) they re-list at a HIGHER price! Who needs these people? It's like oops, forgot about the realtors comm., our moving expenses and our well earned vacation. Better re-list higher.

But many are in pre/foreclosure or are only 29 days from being 2 or 3 payments in arrears. It may not have been the general practice in the past but buyers may begin to ask the sellers realtor if the buyer is current. If they're not honest it's easy enough to check. I say if you're a bottom feeder the next few years will be as good as it gets. If you prefer a straight laced transaction this could be a difficult time to be a buyer (even w/falling prices) as sophisticated debtors learn to work the system.

Thanks HARM!

Forget about foreclosures, there isn't enough equity in them to buy at phase one (from the buyer) which is usually the best way to buy. Why bother to buy REO's right now, buying now will only buffer the crash. For gods sake we waited long enough for the crash to begin, why not wait for the end. So take your shoes off, kick back in that nice comfortable sofa and watch "As the market crashes" on the tube and thank god you weren't one of the poor statistics that will be taking the biggest finacial asskicking of their pitiful life!

Why bother to buy REO’s right now, buying now will only buffer the crash.

allah,

This is a "forward-looking" thread. Note the term "POST-Bubble". I agree we're only in the beginning phases of the crash and we have a loooong ride down to the bottom.

I have a thought. Bare with me, I might be off the wall, but how about this:

If the market gets anywhere near as bad as many of you think it will, and it becomes an exaggerated buyer's market, then would there be an opportunity to create some kind of buyer's aggregate?

Essentially, a reverse on the multiple bids of the past. Instead of one ASK and multiple BIDS, how about one BID and multiple ASKS.

With a little bit of cleverly designed web thisandthat, we could create a buyers auction tool. As a buyer, you would offer up a BID of what you want to pay, and then tick off a bunch of common attributes that you demand for that bid. Obvious things like school district, BR, BA, all the normal MLS listed stuff. You can be as narrow or as wide as you want.

Then sellers throw in ASKing prices, and describe their properties according to your search attributes. Of course, you'd have to visit each property, but the sellers would be trying to entice you to come to their property with everything they can fit into your demanded attributes, most obviously being price.

The most attractive part is that the way transaction custom and law works, there is nothing preventing you the buyer from being as discriminatory as you want, or selecting any ASK you want for any price, even if you choose to raise or lower it without telling other sellers.

Also, you could sit there as a buyer without an agent, just a RE attorney, and put a lot of pressure on the sell-agent or seller to give on commission in terms of price you pay. The seller will be pissed about paying commission anyway because their agent won't have done much of anything to sell the home in this scenario...the seller will have to do the active ASK offers (I doubt agents would comply).

-- OK, maybe this is fundamentally flawed, but I'd love to hear if there's anything here. And, it would require a substantial BUYER'S market to work, otherwise sellers just ignore the whole shebang.

But then I always aspired to be a Good Witch.

I just wanted to be a good astrologer and/or feng shui master. :)

We will all soon be buying from our friendly neighborhood RTC (Resolution Trust Corporation that is). I remember the last time they were around I was very young and had no money and they were giving houses away for pennies on the dollar. Now my pockets are loaded and I'm waiting for their arrival which I predict will be here before the end of 2007. Look at this 31% of the people who took this poll are either realthors or speculators.

"FB" = "F@cked Borrower".
Term originally coined by SoCalMortgageGuy from the Ben Jones blog. He now has his own RE Bubble blog: http://anotherfuckedborrower.blogspot.com/

And btw, DL = David LIAR-eah
BB = Ben Bernanke, aka "Heli-Ben"

@skibum,

Can you still receive mail sent to your old email address? If so, I'll send you my email address, you reply with your new one & I'll do it for you.

OT, but just another point on the whole "properties are still going over asking" crap that Trolls and Newsletter authors are pushing.

I looked at and followed the home below, which is now in escrow for the 3rd time, and then tracked it for many months.

If it closes, it will show that it sold for 100% of list, at $1,395K in their "data".

I know for a fact that this home was listed for a maximum of $1,495K, because this buyer kept RAISING his price in successive relistings when it didn't sell. Each time he did some minor improvement, like re-sodding the yard, then relisted at a higher price.

I am encouraged to see that he finally has had to DROP from ORIGINAL LIST to get a firm offer.

BTW, this should go in their "data" as sold for 93% of list. (IMO it should have sold for about 65% of list, but that's another story).

--data--

Original Price: $1,395,000
Current Price: $1,399,000
City: Corte Madera
Address: 61 Granada Dr

MLS#20606266
Type: Single Family Home

Cross St.: El Camino
Directions: Paradise Dr., R. El Camino, L. Granada
Bedrooms: 5
Full Bathrooms: 3
Partial Bathrooms: 1
Listing Date: 02/28/2006
Yr Built: 1958

Interior Square Footage: 2462
Lot Square Footage: 6316
View: Yes
Fireplace: Yes
Pool: Yes
Garage: Yes

BTW, this should go in their “data” as sold for 93% of list. (IMO it should have sold for about 65% of list, but that’s another story).

IMO it shouldn't have sold at all!

Talked to a guy that just sold his house. He said that the houses that are nearby for sale are asking $828,000, and they are sitting, so he decided to ask $779,000. He got 2 offers for $785,000 the next day, then they both came back with offfers of $792,000, he just picked one. Now it will look like it sold for overs asking, but really he dropped the price by $49,000. This is in the 95124 area.

I went to UT Austin (McCombs) - Austin is a great city, just not quite as multicultural as SF or NYC yet, and still feels like a small place. Enchanted Rock a fun place to go, so is lake austin and i love Trudi's! But the heat...

but really he dropped the price by $49,000.

Actually, he dropped it by $36k

Going to foreclosure auctions is a bad idea if you are not doing it for living.

You have no idea what the true value of the house is, know little about the legal pitfalls and paperwork, and the disgruntled homedebtor may decide to sarbotage the home just before they leave, or you may get competitive at the court house subsiding to the adrenaline rush...

When the market tanks, you will have plenty of chances to pick and choose. Leave the foreclosure stuff to the professionals.

I think just as a rule of thumb, don't buy any subdivision built after 2003, and particularly those built AFTER the market turns.

This has happened multiple times overseas, and I don't see why US will be an exception. What typically happens elsewhere is, after the market turns, the developers have to cut back significantly on areas that you don't see to make up for the price reductions. So they may substitute lower grade water pipes for more durable ones, cut corners on insulation, basically anything that you cannot inspect with naked eyes during a walk-through.

Those built in the most bubblish times are of inferior quality because they are hurried to the market.

LILLL,

In a normal market that is the best way to buy a foreclosure. You find someone in distress and you find out how much equity they have. Then you make a deal with them taking a good part of their equity and leaving them with something so they can start over and not have their credit destroyed....but when they have no (or negative)equity in the house, because they used a no-down-payment-suicide loan, you cannot make a deal with them. In fact, there was an article recently about how these foreclosure tycoons are having to tell most of the people that call them that they cannot help them due to low/no/negative equity. If I come across that article I will post it.

allah,

what I am particularly concerned with is, those who will have to go upside down on their homes in this environment typically don't care about their credit record or future life any more, because there won't be any.

How do you stop the disgruntled home debtors from sarbotaging the home? I mean, if I decide to sarbotage my home before I move out, there are a few things I can do without alerting the inspector.

KurtS,

Most of what lists in that neighborhood are "me too" listings, and way overpriced for the value, even given a bubble mentality. I suspect those older, poorly maintained homes will get hard during the correction.

Then again, when I see one pop on at substantially less than the overpriced me-toos, it sells in days. I guess these are the smart sellers, using the other delusional sellers to anchor their price.

This is actually why I am skeptical of claims that prices will fall in anything other than a slow, jerky, sticky, uneven and unpredictable manner. I wouldn't be surprised to see this particular CM neighborhood go flat for a couple of years before really declining substantially, and maybe only by 15% then.

those who will have to go upside down on their homes in this environment typically don’t care about their credit record

Alot of them had no credit before they purchased the house.

How do you stop the disgruntled home debtors from sarbotaging the home? I mean, if I decide to sarbotage my home before I move out, there are a few things I can do without alerting the inspector.

Houses usually do get sabotaged before they go into foreclosure. Usually it happens when they are struggling to make the payments and they are fighting with each other because one of them regrets letting their spouse buy the house. They fight, kick holes in the walls, break glass....it's not a pretty site. It is not all physical damage though, it is lack of maintainence also. Ever been through some foreclosed houses? The inside of the house tells quite a story!

If you buy from someone before they go into foreclosure, you are helping them. There should be no reason for vindication. One thing you can do though is keep their money in escrow with a contingency until they actually leave.

Randy,

So far, my observation is, school district seems to be the most important support factor for certain neighborhoods.

Lots of inflated homes out there no doubt, but some neighborhoods move much faster than others. Down in South Bay, Palo Alto and Cupertino seem to be the two holding up the best in terms of transaction and price. Saratoga is doing quite ok as well, for the LG-Saratoga Union high school district. There is a big difference between parts of Los Gatos that fall in the LG-Sa school district and the part with Campbell/San Jose. I went to a couple of open houses with better school districts, no shortage of eager parents.

I suspect that up the peninsula, Hillsborough, Marin may be seeing the same thing. It seems that RE these days all boils down to school districts.

Randy,

get hard during the correction and slow, jerky, sticky

Sounds funny.

You don't seem to be much of a bubblehead at all. Why do you believe real estate will be sticky given the enormous runnup with time-bomb loans and an already all-time-high inventory? Remember, sticky can only happen when sellers take their houses off the market because they can't get their price....when people don't have that opportunity, they must sell or foreclose.

allah,

I'd say it depends on the neighborhood. Maybe there are more smart bubblesitters than we realize, or just flat out more wealthy people to go around, for a few select spots in the Bay Area.

I think we discussed this a while back with Fewlish, SP. I still maintain that for certain desirable pockets of South Bay where annual properties on the market may be less than 1,000 combined, I don't see a 2200sf-on-15000sf home dropping below 1.2 or 1.3M. That price point may have turned out to be a permanent plateau for such homes. Now they are asking for 1.5-1.7M, so still a 20% drop, but not much more than that.

So far, my observation is, school district seems to be the most important support factor for certain neighborhoods.

To me, trees are more important.

I went to a couple of open houses with better school districts, no shortage of eager parents.

When is the deadline to register for school this fall?

Any nice neighborhoods with bad school districts? I really do not care much about school. Safety is far more important.

i have a feeling that good school districts will not hold up in the near future without major local tax hikes. Boomers will prevent this from happening.