Thanks to NAS, a longtime reader and commenter of the Reno Realty Blog, for forwarding a link to the Countrywide Foreclosures Blog. In addition to tracking the increase in Countrywide’s foreclosures (see graph to the left), this site’s latest post: 11,462 Homes Offered For Sale on Countrywide Financial’s Website breaks out Countrywide Financial’s current REO properties by state.
With 455 properties listed in Nevada, our state is home to roughly 4% of Countrywide Financial’s total portfolio of REO properties. However, upon closer inspection I counted only 19 listings in Reno and another dozen in Sparks. So the Reno Sparks market accounts for less than 7% of Countrywide’s REOs in Nevada.
Can we apply Countrywide’s ratios to the total number of foreclosures reported nationwide, regardless of lender? I don’t see why not. In doing so, all those ominous ratios we’ve been seeing recently, like: "Nevada had one foreclosure filing for every 175 households to lead the nation for the sixth-consecutive month, according to RealtyTrac," equate to more like one foreclosure filing for every 2,500 households for Reno Sparks.
So, although the headlines that state Nevada Continues to Lead Nation in foreclosure rates may sound dire, the vast majority of those Nevada foreclosures are located in our neighbors to the south; i.e. Henderson and North Las Vegas.
On a different note, the quick random sampling I performed using the Zillow.com link contained for each of the REO listings [click on the house icon to the right of each listing] showed that the current asking price was at or below Zillow’s current Zestimate™, FWIW.
16 comments
I work for http://www.CurrentForeclosures.com, a foreclosures site and have seen a huge increase in the number of foreclosures in the past 9 months. I believe it is a combination of not only sub-prime and ARM mortgages, but also the high number of people who have gotten loans with interest rates at an all time low… in addition to the rapid depreciation in some areas and the difficulty some are experiencing in selling their homes.
There is no question that the Las Vegas housing market is going to experience one of the biggest meltdowns in the entire US. LV is one of four or five cities vying for designation as Ground Zero for the housing bubbble. For decades, LV housing prices were about 20-25% lower than Reno. Starting in about 2003-2004, LV caught up with Reno. LV house prices went up 65% just in 2004 alone. Perhaps no city in America became more infested with Voodoo money juiced flippers. I believe that LV is a city that could see 60-70% price declines from top to bottom. I predict that when this whole mess is said and done, LV prices will be back to their historical norm of about 20-25% below Reno prices.
Foreclosure.com is showing 373 Foreclosures and 897 Preforeclosures in Washoe County.
Are sites like foreclosures.com useful/accurate/real? I don’t know much about how to deal with that sort of stuff and my real estate agent says he can’t help me (broker’s rules). I see several homes listed in my watch area, but I’m a little concerned about sending the site my credit card info without knowing what I’m doing.
There wouldn’t happen to be a service or an enterprising/experienced Realtor available to help me work through the process is there?
Faust wrote: “are sites like foreclosures.com useful/accurate/real?”
I think this site is the brainchild of the lady from Sacramento. If it is, her philosophy is NOT to purchase at sale but rather, to be compassionate and ethical by striking a deal with the debtor prior to sale.
I’ve purchased at foreclosure sale and personally would not recommend trying to deal with the debtor pre-foreclosure unless the property is being marketed by an agent. If not, you must realize these people are being bombarded by all sorts of sleazy characters trying to “steal” their property - not only will be placed into this category, but doesn’t this really describe you; preying off of the less fortunate? Further, these people are going through very tough personal issues and you won’t be welcomed as a savior.
Even if you get accurate information from a source such as foreclosures.com, purchasing at foreclosure sale can be very, very risky. Besides the fact you have no idea of the physical condition of the property, you really won’t know the true state of title and no third party can accurately provide that information [other than the mortgagor(s) who have a disincentive to be up front and honest]. This means you may be in for a very unpleasant surprise if the successful bidder.
Even if you were to pay for a pre-foreclosure title report [which is not inexpensive and must be paid for whether/not there is an actual sale, and whether/not you actually are the successful bidder (what happens if you’re outbid?)], I’m not aware of a product which guarantees the potential purchaser at a foreclsoure sale [the closest product is a “litigation guaranty” and really, that doesn’t describe you]. Further, there are so many exclusions it may offer very little protection in the real world.
For instance, title reports only guaranty matters of public record affecting a property. You receive NO GUARANTY against unrecorded matters [such as family mortgages] which are effective upon execution even though not recorded. And even if a senior unrecorded mortgage is fraudulent, you have no standing to complain because you are not a “bona fide purchaser” of the property. You only receive the former lienholder’s interest in the property, whatever that interest may be [and which oftentimes requires litigation to determine].
Furthermore, you need all cash up front [i.e., you don’t have time to secure new financing]. Do you have hundreds of thousands to put up at sale knowing these risks?
And then if you’re the winning bidder, it’s likely you won’t be able to secure new financing from an institutional lender unless as an owner-occupant.
There are a number of other potential pitfalls as well but suffice it to say, in my opinion, it’s no place for the novice.
Believe me, if a property is listed for sale with a broker and it’s in foreclosure, the listing will clearly tell you [correct me if I’m wrong Diane/Guy]. And it should be priced accordingly [if not, then what is the relevance of the fact it is in foreclosure?]. REOs typically listed with brokers are no bargain even though technically the product of foreclosures. Once an institution takes back a property, it typically secures a CMA and then the property is listed for sale at retail [notwithstanding the speculation on this Board of being blown out at fire sale].
I think your best bet is to find a source for REOs taken back by institutional lenders BEFORE the properties are listed for sale with an agent. I’m not sure this post’s Countrywide source fits into the category I describe but if it does, you will be protected against many of the pitfalls I have described.
I doubt you can find an agent to assist you in your endeavors because unless a sales commission is being offered or you’re willing to pay the agent on a time and materials basis [with no guaranty of success], there’s nothing in it for the agent. Hope this helps!
Faust:
Foreclosure.com is fairly accurate as a fact-gathering resource. The info provided, which you have to pay for, is usually reliable. This is useful info about the location of properties in foreclosure, and the amount of debt owed against the properties.
As far as actually buying properties in foreclosure, that’s another matter all together. Sites like Foreclosure.com are not very helpful beyond the fact gathering stage. Buying properties in foreclosure is for skilled folks, not amateurs. My .02 is that there are no deals to be had by showing up at a foreclosure sale and bidding against the lender. The lender will bid in the amount of its unpaid principal balance, plus accrued interest, plus its costs associated with the foreclosure. The accrued interest and costs can add several thousand more dollars on to the unpaid principle. In today’s market, the total the lender will bid in will often be more than the house is now worth. Especially if it is a foreclosure where the debtowner used a nothing down I/O loan and didn’t ever pay .01 toward the principle amount of the loan.
The deals will come after the lenders have taken all these properties into REO. Eventually the lenders will recognize that they will never get what they are owed and they will offer them for more realistic prices through a realtor on the MLS. This will add to the deteriorating values in Reno-Sparks. We have recently been talking about seller denial and realtor denial. At some point the lenders will also move out of denial.
Lindie, do you know how Foreclosure.com defines Preforeclosure, Foreclosure, Active and Inactive? The process usually takes 4 months and there were 72 Trustee’s deeds in Washoe in August, so there are probably at least 300 TDs in the pipeline. Since about half of NODs are going through to TDs, I would guess that there are at least 600 in the pipeline. Probably quite a few more given the “momentum” of the market.
I agree whole heartedly with the comments on the perils of buying at a foreclosure sale. For a house bought in 2005 with an 80/20 loan, the bank will (usually) bid to the full amount of the first, plus the costs RI identified. And if you believe the market is down 15-20% from the peak, where’s the deal?
The chances of getting a deal on a foreclosure with a loan from 2005 on are long at best. You might find deals with earlier loans, but that will draw the sharks like chum on the water.
According to this and other recent articles:
http://www.lvrj.com/business/9491727.html
investor/flippers were about 30% of all prime mortgage holders in Nevada in 2005, and now these are defaulting at the same rate.
On a recent looky-loo trip out from SoCal last weekend, I saw empty For Sale homes on every street I looked. On zillow and realtor.com I’m finally seeing a dribble of homes priced AT or BELOW the last sold price.
But frustratingly, most of the homes are still being offered at prices which are $100k-$200k above their last sold price (within 1-3 years). Wishing and hoping for that profitable flip till the bitter end.
Gina, I hear you. While I can point out a lot of individual houses that have sold for 15% under their peak prices, it is not the norm (yet). Also a lot that are asking below their original sale prices, but not selling.
I looked at houses constructed between 2004 and 2006 that had a resale in August. Of the 17 results, 3 were at losses of about 10%, 3 were at or near breakeven, and 11 were above their first sale during the peak. Generally way above, 20-35%. Its hard to believe that people are still in August 2007 scoring big off the purchase agreement-to-close lag - it was Russian Roulette betting on which development you bought in to. But when the general selling public sees gains like this, they believe the magic wand will touch them, too.
GreenNV posted:
“The chances of getting a deal on a foreclosure with a loan from 2005 on are long at best. You might find deals with earlier loans, but that will draw the sharks like chum on the water.”
You’re generally on top of things, but you’ve missed the boat with this statement. While a “deal” is certainly subjective, check out MLS# 70014931. This is a house around the corner from the home I grew up in. It sold in 2006 for $530k. The bank was in denial for about six months, trying to recoup their entire investment, then started slashing the price. While the asking price of $375k is still too high, one should be able to pick it up for more than $200k below the 2006 sale price. With a Zestimate of $516k, that’s instant equity baby…NOT! It shows how useless Zillow is. Zestimates = sheeple food.
Sharks, you say? Sorry, there aren’t enough of them to put a dent in all of the foreclosures coming down the pipeline. It’s a great time to become a squatter. Empty homes for everyone.
BB. sorry so see your boyhood neighborhood turn into a debtor’s prison. I am sure that you are appropriately scarred by the loss of your childhood memories.
So 2985 Skyline is listed about 30% under the current loan from 2005. Ugly track record, with deaths and the like. Where do you think I should bid on the court house steps?
There was a time when Skyline Drive was THE primo street to live on in Reno. Things change.
This house at 2785 Skyline Drive appears to be an example of the End of Denial for at least one lender with respect to one house. As I posted above, foreclosures will not become deals until they turn into REO and the lender gets real and recognizes that it will never recover what it is owed. When all the lenders offer their hundreds of REO properties 30% below what they loaned, comps will take a hit all over town. As Diane now acknowledges, how can prices not fall from here?
We are years to the bottom.
Some time after the S&L crisis in 1986, didn’t big cash investors finally come out of the woodwork to scoop up whole portfolios of paper/property for 50-70% off? Perhaps when these guys appear again, the bottom is near.
I had dinner with a friend last night. He is negotiating the purchase of a house in St. Petersburg Florida. Allegedly the buyer got transferred and he, the seller, has already bought another house.
House was bought in early 2006 for $1.5 million and buyer put $100K in improvements.
In 2007 signed a contract to sell for $1.3 million but after two months the deal fell through. The buyer could not get financing.
Price was then dropped to $1,150,000. My friend offered $1,005,000. Buyer refused and was allegedly highly insulted. But he did counter at $1,075,000. My friend walked away.
Last night at dinner, he got a call from his agent saying the seller would now accept $1,0005,000. I told him it was his turn to be highly insulted and offer $800K.
SJ
Diane wrote: “Some time after the S&L crisis in 1986, didn’t big cash investors finally come out of the woodwork to scoop up whole portfolios of paper/property for 50-70% off?”
If memory serves, the S&L crisis had little to do with mortgage defaults and everything to do with Lincoln Savings’ non-FDIC insured paper which wiped out many retirees. The latter 1980s were gang busters for residential real estate, especially in the Bay Area [where Diane was residing at the time].
Prices didn’t start dropping until after 1990 and then, because of a recession fueled by short term interest rates which rose into the stratosphere.
So I don’t know who “these guys” are you’re referring to Diane.
Did you all see where Countrywide has announced the layoff of 12,000 employees? And it has said it anticipates mortgage origination volume in 2008 to be down 25% from 2007.
2007 has not exactly been a banner year. And now, the nation’s largest mortgage originator says it expects 2008 to be down 25% from this year. CFC must be thinking 2008 will bring 25% fewer interested, and qualified, buyer/borrowers.
We are years to the bottom.