Bank Owned

Simi Valley September 2011 Home Sales Volume at 2008 Levels

October 10, 2011 By Ted Mackel Leave a Comment

Do Simi Valley September Homes Sales show another false positive for the real estate market? In 2009 and 2010 September sales volume for single family detached homes tailed off after a 2008 rebound over a record low in 2007. Fast forward to today and low interest rates are enticing investors and home buyers to enter the market, however pricing is still flat. The market for homes below $400,00 is still leading the way with 53% of the sales for the month. 57% of those sales are dominated by Short Sales and Bank Owned homes. 25% of all the Simi Valley SFD homes sold were snapped up by all cash buyers and 40% with conventional financing. This high percentage of Cash and Conventional buyers shows that low interest rates combined with attractive pricing is bringing savvy real estate buyers to the table.

Pricing is in a low trough at this point and has remained in this trend for most of 2011. The mid to high $200k price point has solidified a low for Simi Valley Single Family Detached Housing and only dips below this range if the properties have significant damage. A recent article from CoreLogic^® (NYSE: CLGX) stated:

“Even with low interest rates, demand for houses remains muted. Home sales are down in September and the inventory of homes for sale remains elevated. Home prices are adjusting to correct for the supply-demand imbalance and we expect declines to continue through the winter. Distressed sales remain a significant share of homes that do sell and are driving home prices overall,” said Mark Fleming, chief economist for CoreLogic.“

What does this mean for housing above the $500k price point? Those homes have trended selling at 8%-10% below the original list price showing the the market absorption rate for these houses is still dictated by buyer mood. The homes between $400k to $500k experience on average only a 3%-4% drop in price from List to Sell.

We can take away the following five points

Low interest rates are bringing buyers out.
Buyers refuse to bid up pricing and remain patient.
Homes in well maintained condition are seeing short market times when price matches buyer sentiment.
Investors are out accumulating rental property.
Distressed property still make up over 50% of the inventory.

Filed Under: Market Updates Tagged With: Bank Owned, Buyers, homes, homes sales, investors, real estate, Sellers, Short Sale, Simi Valley

12 Tips To Make Your REO Offer More Attractive (Bank Owned Homes)

October 22, 2010 By Ted Mackel 27 Comments

12 Tips To Make Your REO Offer More Attractive (Bank Owned Homes)

Simi Valley Bank Owned Homes. REOs and Foreclosures

Currently I represent a local Southern California Bank with their REO (Bank Owned) properties in Simi Valley, Moorpark, Camarillo, the Conejo Valley and West San Fernando Valley. I have also represented buyers on other bank owned homes. Below are 12 tips to help move your offer to the top of the stack for consideration.

Your offer must be in writing, include a financing pre approval, FICO scores and proof of funds to close (i.e. a bank statement that shows you have the money)
The Seller is a financial institution or sometimes a government agency. They work 9-5, Monday through Friday. Offers are sent to the asset managers during these times. Response times are at the discretion of the Seller and could take several days to a week. If your offer is reasonable then a time response is likely.
Currently Simi Valley Bank Owned (REO) properties are selling at 105% of list price. You will have competition from other buyers.
The Bank is looking for the HIGHEST AND BEST OFFER. Sometimes the Best Offer is not always the highest. Offers that are very straight forward with the fewest conditions, reasonably close to list price are attractive. Use of “Shill Buyers”, are easy for banks to spot, better to be straight forward than to use a shill. Your offer will look weak if it is assignable. The bank wants to sell the property, they do not want to be tied up with a property flipper who is going to drop out of escrow. The bank runs a spread sheet similar to the investor buyer, the bank has a formula for how much they will give on price and terms.
Don’t expect a counter, response or even a rejection. You may be granted an opportunity to submit your highest and best offer.
If your offer is accepted, it may take several days to a week for the Seller to put together their Addendum to the purchase agreement. Expect that many of the terms you have in your original purchase agreement will be eliminated in this addendum. Once the buyer receives this addendum, the buyer will have 24-48 hours to accept the addendum or back out of the purchase.
The bank is exempt from most property disclosures since the bank has never occupied the property. Many times the bank and it’s employees are located very far from the property; their knowledge of the property condition is very limited. Buyers are advised to conduct their own inspections. Do not expect the Seller to agree to any repairs.
Be prepared to operate with email and PDF documents. Fax machines are notorious in degrading the quality of documents. More and more REO agents are now requiring email only; if you agent is not familiar with PDF, Scanning and good with email, your offer could be jeopardized. Try to get all your information in a PDF digital format with a scanner. When you submit your offer to the listing agent, make sure it is complete with all supporting documents together in one PDF file. You offer will need to be transmitted through Real Estate agents and the management at the bank. Email is the preferred way to transmit all communication.
If you need to reach the listing agent. Email is the best vehicle. Email will provide you with a contact log. Many REO agents have staff that will probably be your main point of contact. Those REO agents that provide cell phone numbers can be contacted through text and you will probably receive a quicker response.
If you plan to use FHA financing, the FHA appraisal may reveal required repairs. The bank may not be agreeable to repairs and may not even consider any offers that have FHA financing. Seller paid closing costs is not unusual, but don’t plan on more than 3%.
All properties are sold AS IS, with no guarantees. Home warranties sometimes may be included.
I can’t stress enough….the bank has sent out appraisers and hired out local real estate agents to give “Broker Price Opinions” (BPO). The listing agent has already given an opinion of value to the bank. The bank is educated on the area market conditions and is not going to give away property. Unreasonable offers get little attention.

Stealing as a strategy cannot be duplicated. There is a great opportunity to pick up good solid value in REO purchases. Do your homework, be reasonable, write your Highest and Best offer. The listing agent wants to sell the property too, so make sure your offer is complete, easy to read, easy to transmit and easy to understand.

For more information see:

Search for Homes in Simi Valley California

Thanks for reading Simi Valley’s Premiere Real Estate Blog!

Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty

Ted Mackel is a top producer at Keller Williams Realty Simi Valley,

specializing in Simi Valley Real Estate

(805) 432-7705

Filed Under: Buyers, Foreclosures Tagged With: 12 tips, Bank Owned, fha, offer, real estate, REO, Simi Valley

Simi Valley Home Sales Report YTD – January 31, 2010

February 15, 2010 By Ted Mackel 1 Comment

Simi Valley Home Sales Report YTD – January 31, 2010

Simi Valley Housing Report Simi Valley home sales for the first month of 2010 trended back to average levels seen through 2009. While December 2009 showed the strongest sales for the year, my hunch was that many Short Sale lenders trying to close their books for the fiscal year increased the sales totals.

The new trend appearing in all this is, fewer and fewer bank owned properties showing up on the open market. In January a total of 74 single-family detached Simi Valley homes sold. They broke down as follows:

45 properties were non-distressed sales (60%)
17 properties were short sales (23%)
12 properties were bank owned (17%)

These properties were primarily financed with conventional loans (20% down). 25% of the properties were financed with FHA and we even saw a few VA’s. Cash offers rounded out about 11% of all the sales.

In December we saw a big jump in average sales price which was due to two factors; And the first being a larger volume of total sales and the second factor was the increase in the number of closings over $800,000.

Another number to look at is the ratio between the original listing price and the final sales price. In the entry-level price range for single-family homes up to 400,000 homes sold for approximately 4.2% below the original list price. In the mid-level price range for single-family homes between 400,000 and 700,000, homes sold for approximately 3% below the original list price. In the upper level price range for single-family homes over $700,000, homes sold for approximately 7.6% below the original list price. I like to break out these ranges because sometimes an average of all will skew what’s really happening.

The Simi Valley condominium/ townhouse market showed 19 properties sold for January. They broke down as follows:

3 properties were non-distressed sales (16%)
13 properties were short sales (68%)
3 properties were bank owned (16%)

Dissecting condominium and town home sales has its own set of challenges. As these are more entry-level properties in the likely buyers with low down payments needing FHA or VA assistance, some of the HOA’s are not approved for these types of financing vehicles and when there’s fewer financing options, prices are impacted negatively. If you own a town home or condo in Simi Valley, please give me a call and I can check to see if your HOA is FHA and VA approved.

Significant factors that will impact the short-term real estate market in Simi Valley are the federal tax credit, interest rates, the economy, inventory levels and employment. The deadline to identify a purchase for the federal tax credit expires April 30. This means a home buyer who would like to take advantage of this tax credit must have a property in escrow by April 30 and close that escrow prior to June 30, 2010.

Inflation, interest rates, any increases in on employment will impact buyers negatively, as long as government and the banking system can hold some of this in check, than the current market activity will most likely continue.

The housing market cycle in Simi Valley follows a predictable trend. Sales volume slow and new listings volume decrease between Halloween and just after the Super Bowl. However, inventory levels have increased somewhat over last year’s averages and sales volumes have picked up a little, these are not reliable figures to predict a whole year. Considering affordability at the recent highs we have been experiencing, significant declines in pricing do not seem likely.

Non-investor buyer’s considering a purchase at this time should still plan on a 10 year hold position the minimum, while investors can pick up bargains through purchases at the Trustee sales, Auctions and other Pre open market venues.. Quite a few of the homes scheduled for sale have been regularly postponed, but some deals can still be found.

As a recap summary. Affordability is at the best levels it has been at in 40 years. The general public still refuses to understand that normal appreciation in housing historically is 4%-6% annually. Any unrealistic expectations that home appreciation needs to go above the historical norms will continue the prolonged recovery. The delicate balance of interest rates, tax credits and inventory levels could create another set back if upset, however looking at the activity over the last year and who the buyers are, that set back will probably be minor compared to what we saw in 2007-2008.

December 2009 Report

November 2009 Report

October 2009 Report

Thanks for reading Simi Valley’s Premiere Real Estate Blog!

Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty

Ted Mackel is a top producer at Keller Williams Realty Simi Valley,

specializing in Simi Valley Real Estate

(805) 432-7705

Filed Under: Market Updates Tagged With: Bank Owned, fha, Home Sales, Short Sale, Simi Valley, VA

Foreclosure Pitfalls – Buying Bank Owned Properties Part II

March 23, 2009 By Ted Mackel 1 Comment

Foreclosure Pitfalls – Buying Banked Owned Properties Part II

The following photos really illustrate how tricky the foreclosure market can be. The damage in this property pretty much eliminates 75% of all qualified buyers as only very particular financing is available for this type of property. What I could not capture in the photos is that this home is built on a hill and the whole front of this house is failing and sitting on unstable soil. Prior Seller repairs cosmetically covered some of the evidence; unfortunately the next owner of this property will need to fix the hill, repair the foundation and the front walkways on this home.

The numbered list corresponds with the pictures. The condition of Bank Owned – REO – Foreclosure properties is very uncertain and if you plan to write offers on these properties, it is important that you take the right people with you. Even more important you need to work with a real estate agent that can help pre screen these properties for serious issues. There is no need to tie a property up into escrow only to cancel that escrow after spending money on inspections when many of these problems can be identified early. Additionally, because lending is very tricky for these properties, your real estate agent can waste your time with these properties if your financing requirements do not match the property.

The photos below show a home that was looted by the prior owner before leaving.

1. Master Bath Vanity and sink Removed.

2. Recessed Lighting Removed.

3. Stove Removed.

4. Dishwasher Removed.

5. Master Bath tub Removed.

6. Air Conditioning Removed.

7. More evidence on Air Conditioning Removed.

Foreclosure purchasing pitfalls