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Monday, August 10, 2009
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38 comments:
Thanks to dgg and va_investor for piping in with their short sale success stories this weekend. I'm feeling a little more hopeful that this will actually happen.
In case anyone missed it though, scroll back through Calculated Risk to the list of "problem banks" it's sortable by every field. This is what contrarian's been warning us about in terms of the capabilities of the FDIC. I'm still optimistic that between self-curing and FDIC arranged take-overs, that total losses to the insurance fund will be manageable, but it is an eye-opening list, given that it's just those banks that have recieved warnings to date (and haven't gone under yet). It's a pretty scary snap-shot.
CR's unofficial problem bank list
Absolutely no action on the sell-side. After a walk through with a contractor I know and trust this weekend, I'm even more convinced than I was before that our only options are rent or tear it down.
Just because I trust the contractor doesn't mean I don't want second opinions, though. Anyone here have any experience with razing residential properties in the area? MD specifically, but VA for pricing comparisons should be pretty close.
xpovos,
How would tearing it down help you?
Would you then sell thereafter? Or are you just trying to minimize carrying costs? Have you compared how well land is selling in the area? Or would one of the family members be in a position to buy out the others and build to suit if it were razed?
Long time lurker, first time commenter, but I thought I'd pipe up with another short sale data point. I'm currently in-progress, so keep that in mind.
Made an offer on a townhouse on May 1, sellers accepted it on May 7, the BPO was done somewhere around May 18-21, and the appraisal on June 9. Bank of America/Countrywide (ugh, I know) countered a little above my offer on July 28. I agreed to the purchase price the bank wanted with the list agent negotiating for a higher seller subsidy (my original offer had asked for a little money back). Received the final approval letter last Monday with a target closing date for the end of the month.
So don't lose hope. It takes longer than a regular sale but if both the buyer's agent (if there is one) and the list agent are experienced with short sales, it will happen.
And as another data point, if I'm not mistaken, I'm in the same market (both in price range and location) as Cara. Well, Springfield rather than Burke but I tend to lump Springfield and Burke together into the same location when talking about properties.
Cara,
A combination of multiple points, actually. The houses main drawbacks are shoddy construction technique utilizing substantive materials. If you go back to the link I put up a while back (a lot of work, so I may repost in a bit) you can look at some of the basement shots and see the main support beam for the house.
1) That's the only support beam for the house, and as a result the house is settling in odd ways.
2) The support beam is wooden, not exactly modern-code compliant.
3) Worse, it's not even a solid beam. It's a series of 2x10s nailed together.
Short cuts like those allowed the house to be put together quickly and cheaply in the past, but need to be remedied before the house can be expanded or substantially remodeled--which any modern buyer would probably want to do.
The end result is that the renovations cost so much that a tear down makes more sense, grabbing any of the materials desired from the structure first, like the hardwood flooring, for recycling and reuse, either in a new structure, or someone else's. Contractor indicated we might be able to get $5000 for that square footage of 'antique' hardwood flooring.
Then the lot's position and size, being zoned for residential, with utilities laid in would fetch a pretty decent price. I think the price I heard was overly optimistic for the market, but if you take the low end of that and subtract the high end of the quoted cost for razing, you still end up with a price higher than our ask. Given the natural inefficiencies of a real estate market, I can believe the disparity, even if the size of it seems too large for me to believe.
Renting is to reduce/eliminate carrying costs, yes. The taxes are starting to get annoying, and a tree on the property was struck by lightning. Time to call an arborist and there goes another chunk of money.
Thanks inkstone,
When you say appraisal, do you mean one done by the selling bank or your future mortgage bank?
That's a pretty painful timeline, almost 7 weeks between them knowing the appraisal amount and them making an offer.
This is supposedly also Countrywide. Our buyer's agent has some successful experience with short sales, the listing agent has none, but that office of that realty has a SS specialist who's closed many, so one hopes he's taking her advice...
4 months total. Could be worse, that would put us with a close at the end of November, which seems a tad unlikely because I expect November to be a mad house for closings if the 8k doesn't get extended. We shall see.
Best of luck on the rest being smooth sailing. (agreed on Burke, West Springfield, Springfield, Fairfax Station, all being one big swath) Thanks for sharing your timeline. I have seen SS's close on the MLS, but it's different hearing someone's actual story.
Well my fiancee and I gave up on looking this week. We decided it would be a good idea to make sure we like living in the Dunn Loring/Vienna area before we buy out there. So we just signed a 1 year lease of someones condo. It is right off the Dunn Loring metro, so not as ideal of a location as Ballston was, but it is cheaper nearly double to size and will let us experience the area. It will also let us save significantly more and not have to worry about whether to skimp on wedding costs or house repairs in the next year.
We are also hopeful that the TH market in this area may come down some in the next year. Condos in this area have fallen 30-40% but TH have only fallen 10-15% so who knows...
I've been watching this property for well over a year. It's in -terrible- condition, and they keep the asking price way above anything else in the area for some reason. It's bank owned too (and has been since I started watching) so it doesn't even make sense.
The house was taken off but is relisted now: http://www.redfin.com/VA/Woodbridge/1403-Devils-Reach-Rd-22192/home/9161328 or MLS# PW7097877
Look at those photos (and then remember what I said about this place being in worse shape than it looks, particularly after being vacant for I'd wager better than two years.
Why bother with the fish eye for a tear-down?
At least they didn't bother trying to hide the fact that it's a fish eye.
xpovos,
That's pretty convincing. But as you said, it all depends on the estimates for ths cost of razing, and the reasonableness of the selling price. One thing you could do easily is check for "land" sales in frankly in the area. While I don't dispute that a large, already ready to build lot is more desirable than a run-down shoddily constructed house, and that there's likely to be less supply of ready-to-build lots than there is of dime-a-dozen old houses, there's still a question of demand. Or in this case, predicting future demand...
But as something to constructively do while waiting out this ridiculously slow period in PG County, and ending up with something way more limited in supply and more desireable, it sounds in principle like a great idea...
You could also research the permitting costs, and whether the new build would need to use the same footprint as the original house or anything like that in the zoning regulations.
housebuyer, I have middle-aged friends who own a SFH in Dunn Loring and they love it. He avoids the 66 commute parking lot by leaving really early (5:00-5:30 AM) for his job in the District.
housebuyer,
Sounds like a good plan to me. Good luck with the move.
Robert's comment on another thread about lower-end inventory is absolutely correct. Many shorts are coming up as active. It is true that a decent percentage "fall-out", but I am seeing them come back on with a higher list and going back uc quickly.
I have even seen true reo's showing active a full two weeks after receiving 10+ offers and having bidding cut-off. I can't understand what is up with that. I may have my agent follow up with one that I was "too late" to write a contract on but is still showing active. You never know.
I have two more shorts to close. I've been told 4-6 wks. I'll let everyone know if they try to jack the price. After that, I am done buying - except maybe to flip (don't hate!).
I put in an offer this weekend on a place that I intend to flip. I doubt I will get it as there are 9 offers and only moderate fix-up required.
This is an reo and there is no fridge and many light fixtures are missing (just wires sticking out). I doubt it would pass for FHA; does anyone know if Conventional would have a problem? Obviously, this would help me.
btw - I did have a back-up on a short that came through. I decided not to go with it afterall. It came back on 2 days later at a higher price and immediately went uc.
Also wanted to ask if anyone has looked into the FHA arm. It used to be (as I recall from the '80's) a pretty decent deal - not that I would take an arm at current rates. You would start out about 3% undermarket and go up 1% per year for 5yrs, ending up about 2% over for the remaining 25yrs. Also, anyone seeing "buy-downs"? 3-2-1 used to be offered by alot of builders.
VA_Investor -
Those "Active" listings that really aren't for sale was a small percentage of houses in the "reverse shadow inventory.'
Those houses had real estate agents that at least took the courtesy to update the Remarks section. Most DON'T.
Robert,
I agree with you. This greatly offsets the perceived amount of shadow coming on.
Robert,
When you move from entertaining speculation on market direction to unsubstantiated accusations on the veracity of realtors on something thats (a) easy, almost instantaneous to do, and (b) that they have zero vested interest in not doing, you may want to take a step back.
I've seen one, one listing that was active with no remarks change that was actually under contract. Both the listing agent and the selling agent have the opportunity to notice this oversight and get the LA to correct it. In what way would a realtor benefit from a false inflation of the available market?
The scenario I infer from your comment would be one where multiple offers have been recieved but the bank is too swamped to review them in a timely manner, and hence there is no contract yet. Given the speed at which I've seen REO's go under contract in general, I find this hard to believe. I haven't seen an REO sit more than 2 weeks without going U/C since June. (except for major major fixer-uppers)
Thanks for the comments all. Also the commutes should be pretty good we work in Tysons and Rosslyn both are very manageable. Basically in our current place my fiancee has a 5 minute commute and I have a 20-30 minute commute. In the new place I think our commutes will switch. But either way for the DC area these are great commutes.
Cara - I meant the appraisal by the selling bank. That period between the appraisal and them coming back was pretty painful, I'll definitely agree. Especially when we (me, my agent, list agent) all knew that the appraisal came in much higher than my offer so tbh, I did kind of start losing hope mid-July. Hopefully you'll have better luck with the negotiator telling you what their appraisal came in at because the one for this townhouse wouldn't budge, no matter how many times the agents pestered them.
inkstone,
Did the listing agent let you know when each process has been started/completed? BPO, appraisal, and what they came in at?
"Hopefully you'll have better luck with the negotiator telling you what their appraisal came in at because the one for this townhouse wouldn't budge, no matter how many times the agents pestered them. "
So, you guys all knew that the appraisal was above the offer, but not by how much? That is painful. Glad that time has passed for you. Hopefully we will be similarly lucky that the selling bank can see our offer (or something close to it) as the best they are going to get, regardless of what an appraiser thinks the normal market value of this place should be.
Cara - You know, now that I think about it, I never asked what the BPO came in at. Whoops. Otherwise, the list agent was pretty good about keeping my agent informed. They were pretty much having weekly phone calls up until the dead zone period between appraisal and counter. To be fair, I went on vacation during that period for two and a half weeks which helped with the waiting but the time eventually passed.
By an odd twist of fate, my agent is also the list agent for another townhouse in the same neighborhood. Short sale with BoA/Countrywide also. That one had been put on the market before mine so when BoA/Countrywide countered the offer on that one, we knew they'd be countering my offer on this one. The good thing is that it gave us an idea of what their counter would be so I had less reason to think they'd come back 25K above what I'd offered or something, which was what I was initially fearing.
Knock on wood that the rest proceeds smoothly.
housebuyer,
I think that's a good move. I was about to ask if you were the only one on this blog buying who was not looking at foreclosures/short sales. Sounds like to me that no one here looking to buy is buying anything but foreclosures/short sales.
Of my friends who have recently bought (or are in Cara's limbo situation) all bought foreclosures/short sales. I just can't imagine we are anywhere close to bottom when that's such a large segment of the homebuyer market.
I just hope it's not at this condo: Bubblicious Bench
Of course that picture is from 2006. I'm sure whatever condo you are at has nothing like that anymore. Or at least most condos realized showing all that inventory only further hurt sales.
Robert,
Back to the stock market if I can. Most bears say the stock market peak was in March/April 2000. That the rally from 2002 to 2007 was actually a five-year bear market rally.
So let's suppose the housing market peak was 2006/2007, what if this current move in 2009 is really a bear market rally and that it has a similar lifespan of 6 years before breaking through the old lows of late 2008/early 2009?
Do not conflate housing bears with stock market bears. There are some who are both (contrarian) but I've never been a market bear. The Dow will hit 14,000 again WAY before an $800k home in the area hits $1M.
Remember that many of us agree that this area has a strong economy. We just feel that has been priced into the market for decades. So that cannot explain higher prices in the 2000s.
inkstone,
Crossing fingers for you!!!
Thanks so much for sharing. Yeah, my biggest fear is exactly the same, that they'll come back 25k higher than we offered. Good to know that in two Countrywide/BofA cases in my general neighborhood, they've come back with a counter, but still something within reason.
Glad our initial contract was ~5% under list. I'd hate to have already given up that bargaining room.
Ace
TBW, maybe you discussed this before and I overlooked it - sorry if so. How open are you to living in parts of Arlington OTHER than the prime school areas and/or close to metro?
There are other nice neighborhoods with a good mix of ages/lifestyles. And if you are adventurous, there are parts of 22204 and 22206 that might turn out to have the price (and quality of neighborhood) appreciation that Robert forecasts.
Oh I agree that once you get away from the Metro lines there's a bigger mix of ages/lifestyles. I think there are a lot of really nice SFH neighborhoods in Arlington. Most I'm priced out of and those I'm not priced out of I'd prefer to move further west to get a larger lot and/or house.
Many of the homes in Arlington are on tiny lots which I don't like. Many are on streets that are pretty heavily used and I'm too big of a worrywort to ever feel safe leaving my car there (I feel like inevitably some bad driver will hit one of my side mirrors). I also am not crazy about all the homes that are converted to group homes. I have visited friends who live in SFH that the owner rents out to four people. I know that situation is less common the further you get from the Metro but it still seems to occur at homes a decent walk to the Metro.
Obviously the pluses are the short commute to DC and usually being in walking distance of more things than in Fairfax. It's a personal taste thing. I think as I age I want more of the proverbial quiet, leafy suburb and less of the urban suburb or urban lifestyle.
Cara - I think your chances are good that if BoA/CW counters, it'll be within reason. IIRC, the condo you have a contract on had been on the market for a while? They might not even counter at all because the market has spoken in a sense. But we all know banks don't follow reason a lot of the time.
TBW-
We are renting from the newer of the two buildings you posted about. So yes basically every owner is heavily underwater, but it did not appear to impact the building or people there. Everyone was friendly and the bench no longer looks like that. There are currently 15 places for sale between the two buildings, which isn't that bad considering there are 400 condos between them.
It really is going to kill comps on this building though that every or at least nearly every sale is a short sale or a foreclosure.
housebuyer, tbw,
That bench represented a ton of would-be investor/flipper's running for their lives.
inkstone,
IIRC? (sorry, my acronym speak is weak)
72 days at 264k
70 days at 239k
30? days at 224k before someone else put in a bid
20 days more after that fell through (due to buyer losing job) that we put in our offer.
So I would say the market has spoken pretty decisively that nothing over $224k will bring offers.
In addition, there are 2 other SSs in the complex listed at 239 and 244 both for long chunks of time, neither under contract. And one real sale (that's in very questionable upkeep IMO) at 259k and another with a junky location at 229k (more recently listed but no contract in 11 days).
So, yeah, if only I could reason with them, I'd have no worries, but that's not part of the process.
Harriet's posted the July housing sales numbers in a new bucket.
housebuyer,
I don't think vacant condos will make a difference if there are any. If anything it could be nice for you as a renter as it means less competition for the building amenities (roof, gym, or whatever they have there).
Cara - Sorry, I'm fond of the acronyms. IIRC = if I recall correctly.
Well, hopefully the BPO will take that into account and the negotiator assigned to the case will be able to work with it.
TBW-
Yeah thats what I was thinking. On the other hand I sure would not want to be a seller right now. Nearly every sale for the foreseeable future will be a foreclosure or short sale. The places are selling for ~150K less than they did when the building was opened in 2006.
There are also a lot of people trying to rent the building out on craigslist. So I am sure rental prices are not great because there is a lot of competition for the same renters.
IIRC = If I Recall Correctly
We got take out from the new Lost Dog Cafe at the Halstead on Saturday. They still have the giant "Mom always said: It's what's on the inside that counts" banner up on the outside of the building. I love that banner.
Concerning group houses in N Arlington - I knew a group of 4 girls that rented out a house near the intersection of 10th and Washington Blvd. Slightly shoddy old house but a great location. They had friends of the same age renting another house in that neighborhood. This was during the boom so there were teardowns happening pretty much all the time on their street. It was owned by Clark Simpson and I believe he always had plans to demo it but it's still there. They were on friendly terms with him so maybe he felt bad about kicking them out.
I was surprised by the number of group houses around there though considering the value of that neighborhood.
I'm thinking that people who care about their credit are just locked into those condo's for the next 5 yrs. Same as the early to mid-late '90's.
Jeff B.,
Much depends on what the carrying costs are. Long term investors probably don't care about 5, 10, 15 yr fluctuations. There are other considerations. If the cash flow is there, and other uncertainties exist, they will sit tight. I know I would. If you want to know how to invest in the stock market, just ask me - and do the opposite!
whoops, I was thinking of the other Halstead (the one on Columbia Pike), the one posted is in Dunn Loring.
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