From a future buyer, who simply wants to buy a house to actually live in, and who has no interest in purchasing foreclosures, I say a hearty thanks to these people for driving the comps into the ground all around town. I love hearing about a house that sold for $800K in 2005 that sells for $450K last month. Let’s give this another 12-18 months, and I wish all the best to this talented group of people dropping the floor on prices all over town!

Yes it is true..Lenders in time, drop the opening bid hoping someone takes the property at the sale..Most of the time it is down around the number they have that is the lowest price number..

Figure if the bank sold that bad loan off now they would only get about 60% of the note rate on the loan..So if they lower the bid they probably get the same money in cash right away

I have been doing this for over 25 years..

Its not the buyers at the trustee sales who are lowering prices it is the lenders..

What do you people think is going to happen when all these bad toxic loans go to the RTC type of gov’t agency to buy all the bad loans out there????

Inclinejj can you clarify, are you saying that when the RTC or whatever its called takes over - all sales will start at a 60% discount?

The TD on 18th Hole is Recorder’s Document 3359955, and the lender was First Horizon. You can just run the names I mentioned for the other and additional transactions (the Recorder had a typo of the 18th Hole buyer).

With all due respect, smarten, how many Trustee’s Sales have you been to LATELY? The rules have changed. Many, if not most, TDs are bought back by the bank today for less than what is owed on the loan. It saves on Transfer Tax if there are no other bidders, and if the opening bid is low enough, the banks may find a bidder to take the property of their hands. If you are starving to death and someone who owes you $100 offers you $50 in cash right now, what are your alternatives?

I suspect that these deals have had a lot of communication between the lenders and the buyers prior to the showdown on the courthouse steps. As Guy and I found out on our negotiations on Interlaken, this is probably illegal. Doesn’t mean it isn’t happening.

I think, and someone correct me if I am wrong, the lender can recoup the loss through the mortgage insurance after the foreclosure sale if the original defaulter had purchased mortgage insurance. I read somwhere that was part of AIG’s problem. AIG is one of the largest insurers of mortgage notes and the banks want those insurance policies paid.

El Diablo: The loan to AIG was largely based on AIG’s Credit Default Swap exposure.

A CDS is an instrument of, in simple terms, insurance of bond defaults where a speculator doesn’t have to necessarily own the bond they are insuring.

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

This is the underlying problem, and the largest portion, of the derivatives market. Which, IMHO, needs a boatload of regulation… you shouldn’t be able to buy a CDS unless you hold a stake in the bond.

It is like taking insurance out on your neighbor’s car and hoping he totals the thing so you get paid.

Bernankes’ latest:

“I believe that under the Treasury program, auctions and other mechanisms could be designed that will give the market good information on what the hold to maturity price is for a large class of mortgage-related assets. If the Treasury bids for and then buys assets at a price close to the hold to maturity price, there will be substantial benefits,” said Bernanke.

In plain English-The treasury will bail out the toxic loans at taypayer expense, and hold them for
thirty years if necessary.

A call-out to our investors. 8672 18th Hole just listed for $294,500. It was purchased 2 years ago for $783,638. The bank just repurchased the home for $367K on their original $635K first, and wrote off the 10% second. This may be a ruse to initiate a bidding war, but if not, it is more than a 60% decline in value in 2 years.

If more of these keep showing up and selling for asking, the rules are going to have to be rewritten. It true market value is 40-50-60% under peak purchase price, who is going to hang around for the last dance?

Let me say it again. I love this! A house bought for $784K in 2006 now listed for $295K. Even if it does engender a bit of a bidding war, if it still sells for a 50% haircut from two years ago, GREAT!

Y’all keep driving the comps into ground now, ya hear?

BB’s knowledge about real estate investing is really beginning to show [this isn’t a personality observation - it’s based upon fact].

SFR purchases rarely cash flow with 20% cash down, especially in major metropolitan areas. That’s because of the vast disparity between rents and the cost to own.

In the San Francisco Bay Area where I thought BB now resides, it’s IMPOSSIBLE to find anything that “cash flows” unless one puts considerably more than 20% down. But that fact of life doesn’t mean a purchase doesn’t make sense as an investment.

Even if BB’s cash flow and rent figures are accurate, they do not take into consideration the income tax effects of depreciation and passive loss which end up offsetting other ordinary income [which in his example more than offset the monthly negative cash flow]. Also, they don’t take into consideration that part of a purchaser’s P&I payment that actually reduces outstanding principal indebtedness [i.e., pays for the investment just like a cash downpayment]. Then presumably over time, mortgage costs will go down [as interest rates fall]; rents will go up; the portion of the purchaser’s mortgage which goes to principal will increase; and, heaven forbid appreciation may actually return which ends up healing all wounds.

While naysayers sit on the sidelines taking pot shots at everything, anything and everyone, I agree with Mike that at least on paper [because I haven’t seen the home], this looks like a decent investment play. Good job!

There you go BB, attack, attack, attack.

You don’t know everything about everything and please don’t take this statement as an insinuation. And you don’t know much about investing in SFRs. If you’re going to buy a SFR ANYWHERE with 20% down; as an investor; and expect it to cash flow from day one; you’re not going to be making too many purchases because the animal you describe doesn’t exist. Nor did it exist in Reno/Sparks in 2002! SFRs that sell for $185K [assuming you can find them] simply don’t rent for $1,400/month. They probably don’t rent for $850/month [and they certainly didn’t rent for $850/month (let alone $1,400/month) back in 2002. Yet according to you, “the AVERAGE Reno 3/2/2 SFR EASILY cash flowed with 20% down prior to this bubble.”

I don’t know what 2002 Reno/Sparks SFR examples to the contrary you can point to [if any], but this is 2008; not 1955.

Separating wheat from chaffe, what you’re really saying is that anyone who purchases a SFR as an investor is a fool because his/her investment cannot cash flow [and thus to you, it makes no sense]; and, that once the average Reno/Sparks SFR drops another $75K or so in price [assuming this comes to pass and rents don’t drop in tandem], only then it will cash flow and according to you make sense to purchase as an investor.

If this is your idea of “investing,” then IMO [which BTW requires no “grasping”] you’re dreaming. So be my guest and dream away!

BB is right. A good rental investment should cash flow against PITI from Day 1.

Remember, in addition to PITI, there’s an assumed vacancy rate (5-10%) and maintenance/repairs, which will run the owner 1%-1.5% of the home value per year.

I’ve been a landlord. Trust me, it’s no picnic. Renters are amazingly brutal on walls, appliances, floors, plumbing, doors, etc. And those are the good tenants!

8648 18th Hole Trail just listed for $399,900. It will be interesting to see how the Investor makes out on this one.

I think the banks are operating backwards and these so called investors taint the market.

My house was in foreclosure and my wife and I did what the bank and everyone said on all those TV ads. We contacted the bank from the day we noticed we were going to be in trouble. So we started talking to the bank before we were late on any house payments. Our payment went from 1200 a month to 3200 a month.

Month 1 (Bank is IndyMac): Called the bank and representative on the phone. We were told there was nothing they could do for us. I asked for any programs they have to help they said they have nothing. Requested a supervisor and they took my phone number to call them back.

Month 2: I had heard nothing so I called them back. I again was told the same thing. They again could not put a supervisor on the phone and took my phone number for a supervisor to call back.

Month 3: Received notice of default and still no call back. Called and demanded a supervisor and talked to a Floor Supervisor. He was worse than the first three people and when I asked about a program I had seen advertized call “Loan Modification” he told me they don’t do that. I argued for several minutes before being hung up on.

Month 4: Desperate for help I called Krch Realty to see how short sales work. A rep from Krch Realty arrived at my house and we signed a contract. The agent shook our hand told us not to worry and left our house. We NEVER HEARD FROM HIM AGAIN! He never called us back or even posted our house up for sale. Not even a sign.

Month 5: Heard of an organization called Hope Now on a TV ad. Called Hope Now and they conference called IndyMac Bank. They brought up all these programs that other banks were doing but our wonderful bank shot us down every time telling us the famous response, “Sorry there is nothing we can do for you.” They did have one program for us. They wanted $8,000 within two days and then $5,600 a month until we are caught up. Now I’m not a math wizard but I do have some good common sense and if we can’t afford $3,200 a month then what in god’s name would make them think I could afford 8K down and $5600 a month. So we got nowhere with this phone call.

Month 6: Our house is in foreclosure and we have a sale date the following month with less than thirty days to save our house. I then call again and talk to another supervisor. She then tells me she would send a Modification package but I did not have enough time to get it done before the sale date. I argued and told her that I asked to do this at the beginning months ago and it was their fault and due to this mistake they should give me the time needed to get this done. The rep said no she couldn’t do this so I demanded to talk to someone that could with no luck. I sent an email to all the Chairman on IndyMacs board telling our story. The day before the sale date of our house I got a call from the Vice President of IndyMac telling us they were going to give us an extension and send out a modification package to us to complete and send back.

We were full of hope for the first time in months. We received the package in the mail with contact phone numbers to call. One week later IndyMac was taken by the US Government and all transactions and foreclosures were put on a hold.

I immediately called the number on our contact sheet with no luck and we were unable to contact them at all. I then called the number the website had on it to call and we talked to a representative and he advised us a new Modification package was going to be sent in thirty to sixty days with instructions.

Twenty Five days later my wife arrived home to find a note taped to our door that said, “Your house has been sold in a private auction and if you want to reside in your house call ASAP.” I called the bank immediately but it was after hours. I then checked public record and ownership had not changed.

The next day we called IndyMac (Government Managed) and found out they did sell our house and we no longer had a home and were homeless.

IndyMac said nothing but maybe we were lost in the shuffle of things. Of course they said sorry and they thought all should be ok.

This was wrong and what I don’t understand is that the bank does not want to negotiate with the owner in trouble and in our case they were going to do a 400,000 dollar loan fixed for five years at 5.9% with a payment of $2100 a month. It was tight but we would be able to pull it off. They would not budge on that offer and refused to go any lower. But sold our house in an auction for 230,000 dollars and that was ok. They would have been able to make a hell of allot more money with our modification loan they offered us. It sickens me that we lost our home and memories to one of these so called investors that care about nothing but the next home they are going to take or the next dollar they are going to make. They don’t care about anything or anyone.

Greed is an evil and very controlling thing. The investors that took our house called the cops because we took our stove with us and tried to get us for grand larceny. WOW they are standing to make over 100K in profits off of other people’s memories and they complained about a simple stove. Something my wife and I got as a wedding present. The investor even walked in our house with us still living there and before the sale was even closed and started going through our house. When he was confronted he began to curse at me and my wife in front of our three small children who were crying asking me why I was a dead beat and couldn’t pay my mortgage. Then yelling outside my house (Was still my house at the time because it was not closed yet) and cursing at my wife and I “You can’t even pay your garbage bill”. This so happened to be a day after my wife’s first Kemo treatment and she was already sick but emotional from the treatment and from what the bank had done to us, Krch Realty and the stress of getting a place to live before this house closes.

We had no money to move and got nothing from the investor or bank to help. We had no money because we had just sent a certified check with the modification package to the bank to seal the deal and used every dime we had. This investor still was ready to put us on the street and did not care one bit. He even went as far as to look my name up on public record and found what he thought was my address but due to the fact I’m a Jr. I had the same name as my dad and he stalked my parents house looking for the stove. Stood outside the house until my dad confronted him then he turned his tail and ran. The investor called and threatened us over the phone several times. Come to find out all of his comments about my lack of paying bills were nothing to his lack of not being able to move out of his mom’s house and stop getting an allowance from his mother who is in her 90’s. You would think a man in his mid 40’s to early 50’s would be able to get a job on his own and earn his own money instead of living off of mommy.

All banks need to be held accountable for these bad ethical and business decisions. Investors need stricter laws placed on them and the auctions need to be watched carefully due to the fact that there currently is some major influence at these auctions that are getting these banks to lose homeowners modifications packages in the shuffle.

PS…..Cut the cord Peter……

Signed……….A Concerned Homeowner……..

[…] when the music stopped. The home was bought on the courthouse steps for $535,500 by one of the Investors Club members.  Amount owing at sale was $1,016,000, and I think their were second loans involved […]