patrick.net

eburbed,

Are you kidding me? That's long-term bear-talk coming from a *gasp* real CA agent and broker. Partially hedged or not (and note Casey spelling of "loose"), she at least deserves credit for trying to break bad news to the flock.

KT Says:
I’m still trying to grasp some of this stuff. Can someone please explain this article to me. http://tinyurl.com/224kfb

IMHO, they don't want to go through a sale of FNMA securities because they don't want to receive low-bids in the current environment. You can look at it as their way of avoiding (or at least delaying) a mark-to-market.

SP

eburbed,
Notice the first sale was from a couple, and the second to a single man (if your report is correct). Maybe this was a divorce-laundry sale?

After reading the posts on transparency, particularly from OO, I think total transparency is the way to go. A buyer should be able to do a background check on the seller, see their present loan status, their marital status and all other private information. In return, the seller should get to know the buyer's total net worth, their asset distribution, their marital status and whether the wife is pregnant, their religion, their complete background check, whether or not they have rich parents, their credit score and any blemishes on their criminal or credit record.

You know what? All of this privacy invasion is just buyers trying to create information asymmetry so they have an advantage over the sellers. Isn't that the exact damned thing you're allegedly complaining about? Information asymmetry is the total 100% opposite intention of voluntary transparency. Transparency is to allow both parties to enter a negotiation in good faith with all cards on the table. It isn't a tool via which buyers screw sellers.

People have stated the following premise in various forms, notably Randy in his Bubblizer. You should have a target price for any given property you wish to purchase. Your target price should be based on well-researched comps, taking into account future price appreciation or depreciation and the prevailing local rents, and then incorporating your own personal utility value for the property. All the rigamarole about knowing the seller's financial situation and previous purchase price is bullshit. That information might be useful, or it might be patently misleading, and people have no idea which one it is.

You could have a seller who has 50% equity but it's their only earthly asset and they would take 25% below asking. Maybe a seller is leveraged 105% because they just did a cash-out refi with a jerkwad mortgage broker, but they have $5M in other assets that you don't know about. Maybe the neighborhood has experienced huge growth or depreciation since the last price baseline was established. Why do neighborhoods two blocks down the street from each other with similar homes and identical schools sell for a 15% differential? Because people fixate on the original price, estimated appreciation and spoon-fed data. None of that crap matters.

Offer what you think a house is worth; if the seller thinks it's a fair offer, they will accept. All other information is secondary if it does not lead to a good transaction for both parties.

Mortgage rates will probably be higher over the next few years and to compare apple to apple you will have to payoff your mortgage in 25 years,

TOS,

Since you have not been willing to divulge more personal info despite Randy and others' requests, I'll venture a guess - based on your grammar - where in Asia were you born?

If you don’t mind 3-5 additional years of renting, you should hold off until 2009-2011 (I have made this point many times before). The disagreement I have with randy H

You forget to mention that you came to this "conclusion" after many, many posts stating that it was a good time to buy; ie, it's always a good time to buy (and/or sell) a home.

I bet that you are a young (matcho) male, with an oversized ego, a very high level of testosterone and a very limited amount of financial knowledge…

Again, what non-English speaking country were you born in?

keep dreaming, stop worshiping on bubble sites and go analyze the S&L crisis, after reading Ben Stein essay

What's up with your bizarre worship of Ben Stein's opinion? He's nothing more than a second-rate economist and third-rate actor.

Can't someone please shoot the fucking troll already?
SP

<bangs head on keyboard> skibum... IT'S. A. TROLL.

>> Can’t someone please shoot the fucking troll already?

Chant with me ...

TOS is POS
TOS is POS
TOS is POS
TOS is POS
TOS is POS
TOS is POS
TOS is POS
TOS is POS
TOS is POS
TOS is POS
TOS is POS

For me transparency is knowing above suggestions from others above
plus ... what are the other bids, if any. What are the bids? Are they real?
I would prefer seeing all the bidding at an informal auction. Say have the parties meet at common area on the weekend. Maybe at the actual property. Then and only then we talk and no room to wiggle by the seller or any realtor. But we know realtors would not allow losing any advantage to the buyer. Fake bids by realtors ! Yea there out there.

Kind of interesting to see prices fall in the best of towns in SCC.
The article was from May 2002 in the aftermath of 2000 to 2001 NASD
crash.

http://www.community-newspapers.com/archives/lgwt/05.22.02/propertyvalues-0221.html

The Santa Clara County Assessor's Office on May 13 announced that, because of the local economic downturn, it has temporarily reduced the assessed values of nearly 29,000 properties, about 28,000 of them single-family homes, throughout the county. The reductions total about $3.7 billion dollars and a 15 percent decline from last year.

However, the assessed value of all the county's properties actually grew by 6.27 percent, down from the 13.75 percent growth of last year and the 11.09 percent growth the year before that. This year's number of property devaluations is the highest since 1998, when there were about 30,000 devalued properties, but pales in comparison to the nearly 100,000 properties devalued in 1995.

In Los Gatos, 730 properties declined a total of about $143 million, or 18.6 percent. In Saratoga, 695 properties declined a total of about $278 million, or 22.4 percent. Those two communities are among the county's top five to have the highest percentages of decline.

Jimbo, I need a few oldish articles, still good for the graphs and analysis tho, including international comparisons. I will send you the direct URLs, and you can simply paste them into an HTML email and send them wholesale, I guess. I've sent you an internal message on the phpbb part of the site. I notice there's quite a lot of thread creation going on over there these days, it's almost a separate blog with a life of its own...

http://patrick.net/phpbb2/

"In return, the seller should get to know the buyer’s total net worth, their asset distribution, their marital status and whether the wife is pregnant, their religion, their complete background check, whether or not they have rich parents, their credit score and any blemishes on their criminal or credit record."

Bad idea.. I hardly want the seller to know my net worth. That exposes and targets the buyer for fraud. Consider back in 1999 when some were swimming in cash to to high cash out of stock options. They were easy targets for fake bids. Some may recall how buyers were going with stock options statments in hand spending like drunken sailors thinking its all free money anyway. Didnt matter if they blew another 100K on a 500K home. I seen how a couple purchased a Saratoga home in 2000 only to sell in 2003 at $1million loss.

You got to be transparent about the deal and the property in question.
How I pay is not the issue, or how i finance it the deal.

LOL. I was being sarcastic.

The seller and buyer should exchange information only as it pertains to: 1. the property in question, and 2. the financing of the deal. That information must be fully transparent and independently verified. The rest of the "data" is nobody's business.

By the say.. did anyone catch the San Jose Merc Sat Edition RE Section.
There was a graph on page 4 ....
For July 07 it shows 36 percent of homes are selling above asking....
the peak in 2005 showed nealy 60 perc selling above asking.

Hum... makes you think twice regarding the the Multiple offers the realtors are crowing about. .... yet the med is still screwed up.

OK I understand Brand...

StuckInBA- I like to buy the lady a drink... she is actually advocating putting more inventory on the market. If 8% of x is selling .... hardly think more homes will help prices...

Oh well ... we all know realtors arent that bright anyway.

"How serious am I? From 2005 to 2006 we lost 13% value. From August 2006 until now we’ve lost another 18%! Many of you have lost more than $100,000 and it’s getting worse."

Turn on evil Buyer mode....well honey someone will save 100K... and if they wait and see say 20% decline... that makes my day... but hey...
we saw prices increase 3-4x over 9 years so why not another double digit ..... bahahahahah!

I feel so much like Smiley Whip Lash!

How you finance the deal is always available to the Seller. In fact, after you close it is available as a matter of public record. Of course your own personal financial position isn't, but the transaction is.

As a Seller I can reject you (or select a different bid in a multiple situation) purely based upon your financing. It is relevant to the risk of failing to close, and unless you are willing to mitigate that risk by providing more information, I can discriminate based upon how you structure your purchase.

I have been on both sides of this. We selected 2nd highest bid on our 2002 sale because they had a conforming loan with 35% some percent down. We had a Seller renege on our contract because he got a late all-cash offer for almost $100K less than our offer, but he wanted out fast (he was a builder/renovator). We had a jumbo with only about 40% down.

I'm with svcausguy in agreeing that the perhaps most important and currently lacking aspect of transparency is related to the closed and non-public nature of the bidding process.

Overall, I think the most important aspects of transparency are

1. listing transparency
2. bidding transparency
3. sale transparency
4. financing transparency (information about the seller)
5. related-party transactions disclosure (in roughly the Sarb-Ox sense)

If the data pertaining to the above items are openly available in a timely fashion, it goes a long way to take the guesswork and intentional misrepresentations out of the housing transactions. It should of course be a federal crime to submit fake bids or forged data. Non-arms-length bids by associates or industry insiders must be disclosed.

I'm not real keen on the use or dissemination of personal financial data. And I don't think it is really needed to create an orderly market. On the other hand, such data is often available to industry insiders and would create an unfair advantage if not publicized.

Having said all this, I still cannot help but feel that we should perhaps be careful what we wish for. I can only imagine how the exploitation-crazed Palo Alto soccer moms would go wild with all the data and create a new bubble all by themselves (1/2 ;)).

Was not the stock market bubble in the late 90s fueled in part by online brokering and online instant data availability? And is not the internet access to MLS data partly to blame for turning real-estate speculation into a national pasttime?

Hate to be the bearer of bad rumours, but the jungle telegraph is saying Bernanke is going to do something more tomorrow to prop up the financial sector. The banks have served notice that they can't keep up with the maturing repo obligations.

Exactly what he will do is the subject of much speculation. Monkeys on tv are chattering about a rate cut, others are saying it will be less public than that.

SP

Needless to say, none of that was investment advice. Just rumours.

SP

Brand,

buying and selling a house is a business, and as in all business matters, you dig up as much information as possible on the other party to up your leverage. As long as the information is obtained and passed around legally, whoever that has his research skills sharpened the best will have an upper hand. Why do we need store ratings? Why do we need user ratings on ebay? How a store treats its other customers doesn't necessarily translates into the way that it treats you. If all the potential buyers know that the seller took on a suicide loan which is about to reset in 3 months, why would anyone make an offer now? Buyers should all hold off until 3 months later. However, if all the buyers can take advantage of the seller like such, the seller should have never bitten off more than he can chew to begin with, and we would all be living in a better world.

I am for all the transparency that an aggregator can offer, for a fee.

Mjdundon,

I liked also your idea on reporting requirements and procedures. But again, it could add fuel to the fire. I can see the ECPASM (loc cit) going wild with it.

hmm, interesting:

http://en.wikipedia.org/wiki/Panic_of_1837

The banking panic of 1837 was followed by exceedingly disturbed economic conditions and a long contraction to 1843 that was interrupted only by a brief recovery from 1838 to 1839. This Great Depression is particularly interesting for our purposes. It is the only depression on record comparable in severity and scope to the Great Depression of the 1930's, and its monetary concomitants largely duplicate those of its later mate. In both, a substantial fraction of the banks in the United States went out of existence through suspension or merger --around one quarter in the earlier and over one-third in the later contraction--and the stock of money fell by about one-third. There is no other contraction that even closely approaches this dismal record. In both cases, erratic or unwise governmental policy with respect to money played an important part.

(Much as I hate quoting) Milton Friedman

Thanks SP.

I don't really support the reporting scheme I mentioned at present. I, too, would have to be convinced that lack of accurate sales information was a substantial cause of bad market behavior before I would like to see a big new regulation imposed -- and as I suggested I think rather the contrary is true. People had a correct knowledge of, but unwise interpretation of, market conditions, and an unrealistic projections as to future market trends (in both credit and home prices).

As much as I'd love to take credit for "re-buying your house" I know for a fact that little gem was Surfer X's. However... it's a concept I hardily endorse! I agree with SP that in effect if you haven't taken cash out, yes, it is just sound financial planning in a decreasing int. rate environment. I will go on to say though (as long as you haven't re-set the term). If you've set the clock back to a NEW 30 year obligation... "I" believe you have in effect "re-purchased" your home. That's just me.

"buying and selling a house is a business"

With the "high stakes" in play these days I can see how people would get that impression. Perhaps that's what this thread is more about? Not so much about transparency, but IS... selling "your private single family primary residence" a business? When we break down each word within the quotation marks individually most of us would answer with an emphatic NO!

But that isn't the reality.

Peter P,

I wish! I leave for Iceland on Wednesday, but a month long visit to Scandinavia would be nice!

AP
U.S. Foreclosures Rise Sharply in July
Tuesday August 21, 8:19 am ET
By Alex Veiga, AP Business Writer
U.S. Foreclosures Rise Sharply in July With Nev., Ga. and Mich. Accounting for Highest Rates

LOS ANGELES (AP) -- Foreclosure filings rose 9 percent from June to July and surged 93 percent over the same period last year, with Nevada, Georgia and Michigan accounting for the highest foreclosure rates nationwide, a research firm said Tuesday.

The filings include default notices, auction sale notices and bank repossessions. The figures are the latest measure of the ailing housing market, which has seen defaults and foreclosures soar as financially strapped borrowers have failed to make payments or find buyers.

In all, 179,599 foreclosure filings were reported during July, up from 92,845 in the year-ago month, according to Irvine-based RealtyTrac Inc.

A total of 164,644 foreclosure filings were reported in June.

The national foreclosure rate in July was one filing for every 693 households, the firm said.

What asset class will perform best over the next 12 months?

Cash 20%
Stocks 50%
Bonds 13%
Commodities 13%

REITs 6%

54529 Votes to date

Patrick posted a great article by Barbara Ehrenreich (author of "Nickel'd and Dimed") called "Smashing Capitalism" that really hits home. Of course she puts her focus on the min. wage crowd but it's not a stretch to see the same impacts on middle class people.

Most FB's we know that are facing down some pretty ugly financial circumstances aren't there b/c of pay-day loans and "Rent2Own" schemes, but the principles are the same. We couldn't afford our living expenses... so we financed them! The difference is though (and I wish she would amplify on this) is that as long as our homes were "appreciating" we were o.k with stagnant wages and eroding benefits.

SP, could this be what you were referring to?

Effective immediately, the Federal Reserve Bank of New York’s Open Market Trading Desk is making the following temporary change to the System Open Market Account (“SOMA”) securities lending program:

The minimum fee rate is decreased to 0.50 percent from 1.00 percent. All other program terms remain unchanged.

OO had a brilliant point in that these are the critical things to know about the seller:

1) Owner loan terms (toxic loan? When is the reset date?)
2) Owner name (so that I can do a background check on him)

Owner name should be public record, but how can anyone legally find out the loan terms for a given property?

It would be great to know who's swimming naked even before the tide goes out completely.

Patrick

We need transparency via a free and independent and functioning media to be an actual democracy and functioning capitalist society. Obviously we didn't have that in the past six or so years with regard to either politics or the real estate market.

Interestingly, this was from Saturday:
http://youtube.com/watch?v=D1R3ztkL5-c
Apparently, if you are concerned about the US economy you are a 'lefty' and 'anti-American'.

Monday I was driving back to SF from Oregon listening to Sirius radio. Literally every news or talk channel except Fox was talking about the liquidity and mortgage meltdown in the US and the coming repercussions in the real estate market. I finally turned to an alternative/punk station and sang along to the Ramones back to the city.

"great to know who's swimming naked"

Not surprisingly this information is traded like a commodity amongst REIC insiders. Mortgage brokers get "comp'd" for throwing business at title companies in exchange for loan information. "Give me all your 2/28 ARM's from 2005 for Zip Code 97XXX and I'll throw the closes your way!"

Just another "perk" for the cartel.

You can see everything you need about loan terms in PropertyShark, etc. Brokers can do title searches if you can find one who has access. I don't think you can get the specifics of the loan like the rate. But you can see the amount, if there are additional loans, and whether the rate is fixed or variable, whether the loan is standard, and if the loan is conforming.

Why do you need anything else beyond that? Like someone else pointed out earlier, you can make a lot of guesses about the seller. But in the end you don't really know what their situation is financially. I have a friend who lives in Strawberry. Their title documents will show you they are major league FBs with a couple million in debt on multiple variable loans. If you were buying their listing you'd be tempted to think they'll cave once their ARMs reset. What you don't know about them is that the husband father is a very wealthy retired law partner of some dated notoriety back east, and there is effectively 0% chance they'll default -- they'll just keep taking daddy money.

SFWoman

I finally turned to an alternative/punk station and sang along to the Ramones back to the city.

Hopefully not on 1st Wave. I hate that station (except on Sunday nights).

Patrick,

I just looked up a neighbor a few blocks away on PropertyShark (I signed up for the free service) and found that he bought his place in 1995 for $1.3 million, his wife is not on the deed, and has a $1,040,000 loan though Citibank that is listed as variable and as conventional.

It seems like a fair amount of information.

Randy,

I think that was it. I had never heard that station before and was actually delighted to hear songs I hadn't heard in 20 years! I guess you won't want to be taking road trips with me? I do sing out loud.