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Wednesday, September 3, 2008
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25 comments:
I put an offer on a short-sale property a month or so ago. The seller signed off on the offer and gave it to the bank (according to seller's agent). I just found out that the property is being foreclosed and property is reverted back to the bank. Say if the bank is still willing to entertain my offer, how long will the entire process take? According to the public record, the bank "bought" the place for ~$280K and my offer is ~$250K. How likely am I going to get the place? I appreciate any comments
If the bank can get out with an additional $30K loss on the property, they probably will, it beats the $100K average I'm seeing around here. So, I'd guess they'll 'accept' your offer. But it's going to take forever. Basically any time you just spent in the short-sale process is gone, and start the clock again from the date of the foreclosure. Then add 90 days.
Just because they "bought" it for $280k, doesn't mean they won't list it for a "make me whole" price including their foreclosure costs. So, it depends strongly on the loss mitigation strategy at the particular bank. If it's Fannie, expect a long wait before any capitulation towards your price, if it's Freddie, they've been aggressive in their price drops, usually every two weeks like clockwork. Other smaller entities, I wouldn't know, but a good real estate agent should. You will have to place a new bid in any case to the new owner, since the bank was formerly just the mortgage holder on which the property was collateral, and now they're the owner.
I made an offer on a Foreclosure & the Bank only came down 2K from their List Price
15 Days later, they reduced the list price 25K
Anyone care to 'splain that one?
Oh yeah, they can keep it
I've seen a bunch of homes that say "Bank Owned" and then when I look up the tax record, a person is still listed as the owner, not a bank. To me, this means either the tax assessment site has not been updated yet or it means the listing is false. Is there a quicker way to find out whether the bank actually owns the property rather than going back a few weeks/months later to see? I have no idea what bank held their mortgage, and I find the Trustee sale page of the WaPo difficult to maneuver.
xxxI've seen a bunch of homes that say "Bank Owned" and then when I look up the tax record, a person is still listed as the owner, not a bank.xxxx
What you are seeing here is the result of banks holding back from having to post bad loans on their profit and loss statements. I have been monitoring this activity for the last year because I believe banks are in a very fragile condition -- more so than they have declared. The bank auditors and the SEC are looking the other way on what amounts to the old fashioned three-card monte street corner fraud. Basically, if the leave the former owner on the record, they don't have to report it. It's not right, but it is one of those things keeping banks from collapsing right now.
MJC,
I don't know, if it's just a couple of properties and you're actually seriously interested, I'd say go old school and call the listing agent?? One would think that would work...
Here's one of those strange bank transactions involving NoVa properties banks are holding:
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/02/AR2008090202626.html
cara,
Thanks. My agent just found out the bank is Fannie. He is also going to find out who is the asset manager. I guess it will be a long wait.
That's okay - the longer they wait, the lower my offering will be...
LW,
in the last rounds of "what's up with Fannie and Freddie" there was an article in the Post which quoted from their policies. To paraphrase from memory, Fannie's modus operandi was to not bring property values down. I.e. They don't want to be the house that sets the new comp lower, thereby endangering any more mortgage holders. Freddie on the other hand, was going for getting the bad loans and properties off the books ASAP, to move forward towards better performing loans and assets. So. If it's Fannie you have two options, look elsewhere yourself, or wait until another comparable sale happens at or below the price you're willing to pay, such that Fannie might be convinced to see reason and not "feel" any "guilt" about bringing property values down in the neighborhood.
I'm personally all for letting other people do the price discovery for me.
26k hardship loan..isn't that taxed at normal income + 10%?.. is she going to be ready to pay the IRS come next year?
http://www.usatoday.com/money/economy/housing/2008-09-02-foreclosure-keep-home_N.htm
At night, Margaret Jones would lie in bed, unable to sleep, her heart galloping.
Each time she came home, she feared the worst: a padlock on her door and a sign declaring her home in foreclosure. She was months behind on her adjustable-rate mortgage, which she'd become unable to pay as the rate climbed from 7% in 2004 to 12% this year. Her three-bedroom house, she was told, would be auctioned on July 1.
"My blood pressure was through the roof," says Jones, 45, a nurse in North Lauderdale, Fla. "I can see why some people commit suicide. You just want it to go away."
But the worst never happened. Rescued by a hardship loan and a mortgage-modification plan, Jones managed to stave off foreclosure and save her house.
Though the number of homeowners facing or going through foreclosure has surged — filings rose 55% from July 2007 to July this year — thousands of other homeowners on the verge of losing their homes are finding last-minute ways to ward off foreclosure. These tales have become the little-known success stories of the worst housing slump in decades. For a smattering of today's distressed homeowners, last-ditch remedies intended to stem the damage have saved the day.
Jones took out a $26,000 hardship loan from her 401(k) to pay off much of what she owed. She also managed to get her mortgage modified by calling a hotline for a credit-counseling organization, Money Management International. (The agency is part of the Homeownership Preservation Foundation, which oversees counselors and runs a hotline with Hope Now, an industry-sponsored alliance to help troubled homeowners.)
Jones' monthly mortgage bill dropped from $3,000 to about $1,800, and her interest rate is down to a fixed rate of 7.4%. She'll pay her first lower monthly payment in October.
Curiosity makes me look at listings with have been unsold for long periods of time.
http://www.redfin.com/VA/CENTREVILLE/5632-SHEALS-Ln-20120/home/9853014
Highlights:
Days on market: 683!
Last Sold: Aug1, 2005 $763,000
Asking Price: $499,000(-34%)
Price History:
Date Price
Jul 11, 2007 $825,990
Jul 13, 2007 $790,990
Oct 20, 2007 $692,990
Dec 19, 2007 $600,990
Mar 04, 2008 $710,000
Jul 06, 2008 $580,000
Aug 19, 2008 $499,999
shamrock:
This place is now listed for what 3br 1-car garage townhomes were selling for back when it was purchased in 2005! On the other hand, those townhomes were selling for < $200k only a few years earlier...
On the other hand, the lot is so small, it might as well be a townhome.
"Dec 19, 2007 $600,990
Mar 04, 2008 $710,000"
was that a creative marketing move by a different agent?
seriously, at $499K and still sitting? this listing is not making any sense! why isn't there a contract yet? this is the doomsday scenario for No Arl buyers.
Contrarian,tedk & Novawatcher,
Thanks for your advice on yesterday's post. I read all of them.
Leo
>>26k hardship loan..isn't that taxed at normal income + 10%?.. is she going to be ready to pay the IRS come next year?<<
It's not clear whether it is a loan or a hardship withdrawal. The reporter jumbled it. If it's the latter, then you are right. If it's a loan, she has five years to pay it back, I believe.
Assuming a withdrawal, I have to believe that the 26K was calculated to settle the mortgage issue and the IRS demand to make a clean sweep of it.
kob,
You are correct. Loans from a 401(k) are not currently taxed, whereas withdrawals are. IIRC, the 10% penalty applies to withdrawals (with some very limited exceptions) if the recipient is under age 59.5.
I've been reading in the press about people making increased withdrawals from retirement plans in order to pay off debts. This is typically a bad idea, since assets in IRAs and 401(k)s are protected from bankruptcy creditors. Retirement assets should only be tapped in the most urgent of circumstances, e.g., health-related emergency.
LW, No Way.
Banks have a process and a system.
They will get a BPO (Broker Price Opinion) and they will put it back on the MLS with a Realtor. At that time they will unload it quickly.
It can take 1-2 months to get back on the market.
Also believe it or not, the banks don't care about the transfer price. They focus on what the market will bear. So that number can be $50k in either direction.
Good luck
Frank
Broker FranklyRealty.com
FranklyMLScom
MJC,
About Bank Owned, yes the tax records are oftentimes behind, but sometimes there is a trick where the bank can hold off on recording the home, in order to save on recordation taxes (or some fees) and they can sell it to you without being listed on the Tax records.
But if it says "bank owned" it is. A Realtor would lose their license if they lied or used that as a marketing trick.
Frank
FRANK LL0SA Va Broker- BLOG.FranklyRealty.com said...
MJC,
A Realtor would lose their license if they lied or used that as a marketing trick.
Tricks? Lies? Lose their license? If that were the case, we’d see a lot fewer realtors
Robert,
Totally agree with you. I am kind of unhappy about my realtor right now. Can't figure out what added value does he actually bring...other than unlock the front door and show me the house.
It's always me finding the property and he can't seem to negotiate for the price I want to pay for.....
I wish there are more strict standards for being a realtor.
"lw said...
Robert,
Totally agree with you. I am kind of unhappy about my realtor right now. Can't figure out what added value does he actually bring...other than unlock the front door and show me the house.
It's always me finding the property and he can't seem to negotiate for the price I want to pay for....."
LW - if your realtor is that innefective, may I suggest (assuming you dont have an exclusive listing agreement) striking out on your own (i.e. no realtor)???
The reason I ask is this, as part of their agreement with the seller, the seller's realtor gets 5 or 6% commmission - but agrees to split that with the buyers realtor if they have one.
So assume 2 buyers come in, both are qualified, offers are similar, but one represented by an agent and the other is not...who do you think the realtor will recommend to the seller???
Thats right - they will almost always recommend the buyer without representation (I mean why not take that additional 3% right). Thus, all things being equal, I have seen many cases where the seller's agent has sold their client UP THE RIVER in order to get that additional 3%.
This is something you can use to your advantage if you are unrepresented. Rest assured when I buy, I (as an attorney) will not have representation. In fact I am highly likely to take the classes and become a realtor(TM) myself prior to looking so I can capture that additional 3%. Something to think about.
Anonymous,
Why not just use Refin and get 2/3rds back?
Frank
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