Yesterday, the Arizona Republic ran a story about Real Estate "Flopping" in Arizona. Basically, the story relayed that "flopping" is when a buyer purchases a foreclosed or short sale property and then immediately lines up another buyer to purchase the property at a higher price. Apparently, it is big news because banks are crying "Foul!" Banks are saying that if they knew that another buyer would pay a higher price, they would have sold directly to that party...or would they?
Banks call this flopping. I call it capitalism. Show me a business that does not have a middleman that gets paid for his knowledge and service. If the buyer of the foreclosed home is cunning enough to line up another buyer who is willing to pay more, so what? Personally, I would never go to the court house steps to purchase a foreclosed property because I don't know all of the intricacies of purchasing a foreclosed property. I am too afraid that I would purchase a house with a huge tax lien or structural or environmental defects. Would I purchase a house from an experienced court house step buyer? Yes. And I realize I would have to pay more for the house for utilizing his expertise.
Some buyers right now want to purchase properties but cannot get financing using traditional lending companies because of increased loan requirements. Are these buyers willing to pay more for a home that offers seller financing? Absolutely. Should those sellers who are carrying the note and the financial risk receive more for these homes? Yes!
The lenders are crying Foul. But is the average Joe feeling sorry for the lenders? Please note that if a house forecloses or is short saled and has a loan that is government insured, the lender is handsomely financially rewarded after the transaction closes. This is where the billions of dollars to solve the housing crisis is going. It is not going directly into the hands of any homeowners. Ultimately, we will all contribute to these billions by paying taxes. So, in the end, the banks win again...and again...and again.
Monday, November 15, 2010
Thursday, November 4, 2010
PHOENIX AREA REAL ESTATE MARKET FORECAST
It has now been two and a half years since we started to see a marked increase in foreclosures in Maricopa County. Since April 2008, there have been 232,456 Notices of Trustee's Sale filed in Maricopa County. 115,214 of those homes have actually ended with a recorded trustee's deed indicating foreclosure. The other homeowners have either gotten current on their loan, successfully sold the house as a short sale or are attempting loan modification. Since January 1, 2010, the number of notices filed in Maricopa County stands at 87,747. However, while fewer properties are entering into the foreclosure process, the banks have picked up the pace at which they are foreclosing.
It has now been two and a half years since we started to see a marked increase in foreclosures in Maricopa County. Since April 2008, there have been 232,456 Notices of Trustee's Sale filed in Maricopa County. 115,214 of those homes have actually ended with a recorded trustee's deed indicating foreclosure. The other homeowners have either gotten current on their loan, successfully sold the house as a short sale or are attempting loan modification. Since January 1, 2010, the number of notices filed in Maricopa County stands at 87,747. However, while fewer properties are entering into the foreclosure process, the banks have picked up the pace at which they are foreclosing.
In October, due to legal pressure, several of the big lenders placed moratoriums on their foreclosures. Bank of America, GMAC, and Wells Fargo were several lenders who stopped foreclosures. Now, Wells Fargo has quickly ended their moratorium and is back to foreclosing. The court system did have testimony from several bank employees who stated that they had given their approval on directives to foreclose without actually reviewing the files. This was due to the overwhelming number of files the employees were assigned. Fearing more lawsuits, the lenders ordered the moratoriums.
Currently, the bank owned inventory of homes for sale is rising. Of the approximate 4,800 homes auctioned at the trustee sales, approximately only 1,000 are being purchased by investors. This means approx. 3,800 are returned to the banks for them to sell. Of these returned homes, approx. 2,600 are actually being purchased thru the MLS. This means the REO or lender owned properties inventory for sale is increasing by approx. 1,200 homes per month. Excess inventory means lower prices. All of this inventory needs to be absorbed, or purchased, for us to see prices rise again.
At this time, experts are predicting the next big wave of foreclosures to hit just after the first of the year. In the meantime, mortgage interest rates are remaining low and lenders are reporting that refinanced loans are up.
Need to sell or looking to purchase?? Give us a call. We can help you make sense out of the current market and choose the path that is best for you.
It has now been two and a half years since we started to see a marked increase in foreclosures in Maricopa County. Since April 2008, there have been 232,456 Notices of Trustee's Sale filed in Maricopa County. 115,214 of those homes have actually ended with a recorded trustee's deed indicating foreclosure. The other homeowners have either gotten current on their loan, successfully sold the house as a short sale or are attempting loan modification. Since January 1, 2010, the number of notices filed in Maricopa County stands at 87,747. However, while fewer properties are entering into the foreclosure process, the banks have picked up the pace at which they are foreclosing.
In October, due to legal pressure, several of the big lenders placed moratoriums on their foreclosures. Bank of America, GMAC, and Wells Fargo were several lenders who stopped foreclosures. Now, Wells Fargo has quickly ended their moratorium and is back to foreclosing. The court system did have testimony from several bank employees who stated that they had given their approval on directives to foreclose without actually reviewing the files. This was due to the overwhelming number of files the employees were assigned. Fearing more lawsuits, the lenders ordered the moratoriums.
Currently, the bank owned inventory of homes for sale is rising. Of the approximate 4,800 homes auctioned at the trustee sales, approximately only 1,000 are being purchased by investors. This means approx. 3,800 are returned to the banks for them to sell. Of these returned homes, approx. 2,600 are actually being purchased thru the MLS. This means the REO or lender owned properties inventory for sale is increasing by approx. 1,200 homes per month. Excess inventory means lower prices. All of this inventory needs to be absorbed, or purchased, for us to see prices rise again.
At this time, experts are predicting the next big wave of foreclosures to hit just after the first of the year. In the meantime, mortgage interest rates are remaining low and lenders are reporting that refinanced loans are up.
Need to sell or looking to purchase?? Give us a call. We can help you make sense out of the current market and choose the path that is best for you.
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