purchasing in a distressed market · 2012-02-28 · highlights & tips highlights • it is the...

Purchasing in a Purchasing in a Purchasing in a Purchasing in a Distressed MarketDistressed Market

March March 23, 201123, 2011

Presented by: Hosted by:Presented by: Hosted by:

John HughesJohn Hughes Peggy NaultPeggy NaultGuidant RealtyGuidant Realty First Tech FCUFirst Tech FCU

Overview

• About the SpeakerAbout the Speaker

• Market Overview

• Courthouse Auctions• Courthouse Auctions

• Retail Auctions

• Foreclosed Listings

• Short Sales

• Available Tools

About Peggy

• Over 20 years of lending experience with Addison Avenue with over 10 years in residential lendingAvenue, with over 10 years in residential lending.

• Personal mission is to develop and maintain long term relationships with each client by providing highest level of personal and exceptional customer experience.

• I passionately believe in the Credit Union’s philosophy I passionately believe in the Credit Union s philosophy of “People Helping People”. I love to inform and educate my clients so they can make the best financial decision for their home loan needs, whether it’s to buy their first home, buy an investment property or refinancing their current mortgage.”

Peggy Nault Phone:M bil

916-746-6906916 317 5476

ggyMortgage Consultant Mobile:

Fax:E-Mail:

[email protected]

About John

PRIMARY GOAL: Representing clients best interests at all times with professional habits value-added tools all times with professional habits, value-added tools, and strong contractual expertise

HIGHLIGHTS: • Director, Placer County Association of Realtors

• Broker, Guidant Realty

• 2008/2009/2010 Masters Club – Top Performing Realtors

• Founding member - HP Customer Experience Initiative

• Largest deal – Bid Mgr on $3 Billion Svcs. Contract

• Contracts Mgmt – Managed up to $460 Million Contract

• Strategic Planning - Competitive Market Gathering and Services Improvement

• Now applying big business skills to properly represent you!

John Hughes Phone: 916 663 5959John HughesBroker / OwnerDRE License # 01726716

Phone:Fax:E-Mail:

[email protected]

Market OverviewThere Is Always Humor Somewhere

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© 2011 Guidant Realty

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Market OverviewHome Sales vs. Consumer Confidence

Sales Consumer Confidence

600 000

700,000

140

160

Sales Consumer Confidence

500,000

600,000

100

120

140

300,000

400,000

60

80

100,000

200,000

20

40

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SOURCE: California Association of REALTORS®

Market OverviewMedian Sales Price: California

P: May-07$700,000 P: May-07$594,530

$600,000

T: Feb-09$245,230

-59% frompeak

$400,000

$500,000

peak

$

$300,000

$100,000

$200,000

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Market OverviewUnsold Inventory Index, CA: Dec ’09 – 3.8 Months

20

16

18

20

12

14

6

8

10

2

4

6

0

an-8

8

an-8

9

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Market OverviewFirst-Time Buyer Housing Affordability Index

100% CA US

80%

90%

50%

60%

70%

30%

40%

50%

10%

20%

0%

000

Q1

000

Q3

001

Q1

001

Q3

002

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002

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006

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20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20


Market OverviewProportion of First Time Home Buyers - California

51%60% 6% with M ult iple Offers

# of M ult iple offers (Average)

4 140%

50%

4

5

4.1

30% 3

10%

20%

1

2

0%

10%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010



Market Overview

6 0 %

Proportion of First Time Home Buyers - California

44%5 0 %

% First-Time Home Buyers Long Run Average

39%4 0 %

3 0 %

1 0 %

2 0 %

0 %

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20102000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010



Foreclosure ProcessClasses of Sales and Trade-Offs

Standard Sale REOAuctionShort Sale

+90 Notice of Default

+90 Notice of Sale

+16 Point of No Return

5 Days min. fromPoint of No Return

~ 10 Days min. fromAuction Date

ForeclosureProgression

MissedPayment

Auction

+16 Point of No Return

~ 7 Months

PROPERTY

IDENTIFICATIONMLS / Drive-By

MLS Comments

Bank List

N Di l

Bank List

Title Reports

N Di l

MLS

TRANSACTION

RISKS

or

* PROTECTIONS

*Standard Contracts

*Set Timing

*Motivated Sellers

*C R

No Disclosure

Bank Contracts

Passive Property Damage

No Disclosure

Full Cash Pmnt. at Auction

No Property Inspection

Frequently Rescheduled

Unstable Sellers

Bank Indifference

Unpredictable Process

Uninformed Agents

OPPORTUNITY

*Consumer Recourse

+5% => +10% MARKET PRICE!-20% => -30%

Uninformed Agents

-5% => -10%

PRICE

TRADE-OFFS

CHOICEPREDICTABILITY

PROPERTY CONDITIONCOMPETITION

PROPERTY CONDITIONLIENS!

WASTED TIME


Market OverviewForeclosure Leading Indicators

Counties: Placer, Sacramento, El Dorado, Yolo

4500

5000

Foreclosure Pipeline

3500

4000

4500

2000

2500

3000

500

1000

1500

0

Notice of Default Notice of Sale Sold at Auction MLS Market Sales

Data: ForeclosureRadar.com


Market OverviewInventory Split vs. Actual Sales Split

Counties: Placer, Sacramento, El Dorado, Yolo

Sales Split February 2011 Inventory Split March 2011

Standard, 566, 32%

REO 791 45%

Sales Split, February 2011

Active Standard, 3307, 23%Pending REO, 1505,

11%

Active REO, 1490, 10%

Inventory Split, March 2011

Short Sales, 405, %

REO, 791, 45%

Pending Standard, 1315, 9%

Pending Short Sale, 879, 6%

23%

Active Short Sale, 2817, 20%

Short Sale Contingent, 2970,

21%

Source: Metrolist MLS© 2011 Guidant Realty

Courthouse Auctions (Trustee Sales)Transaction Risks & Exposure

Inspections• No access to property before auction

• Stepping onto property is trespassing and subject to criminal prosecution • Stepping onto property is trespassing and subject to criminal prosecution

Title Issues• Break in Title Insurance history

• Only mortgage and mechanics liens are cleared, county & state liens remain

Eviction• Previous owner may block access

• Must follow unlawful detainer processes• Must follow unlawful detainer processes

• Risk additional damage/theft by previous owner


Courthouse Auctions (Trustee Sales)Purchasing Process

PreparationPreparation• Use foreclosure reporting service (Foreclosure Radar, RealtyTrac)

• Review county records

• Conduct drive-by

• Call trustee to verify auction & opening bid

PProcess• Bring cashier checks payable to yourself (no loans!)

• Bring large check for your base bid & incremental checks to your max bidBring large check for your base bid & incremental checks to your max bid

• Listen closely, auctioneer goes through properties quickly

• Do not play bidding games, bid quickly – auctioneer will close auction as quickly as 3 seconds after the last bid made3 seconds after the last bid made

• Sign over checks

• Go view property – initiate contact with occupant if not vacant


Public Auctions (REDC/CalExpo)Transaction Risks & Exposure

InspectionsInspections• Limited access to property before auction

• Must conduct inspection at designated and limited availability times BEFORE auction

Funds at Auction• Must bring $5000 cashier’s check to participateg p p

• Must provide check for any remaining balance to bring total deposit to 5% on winning bid

GotchasGotchas• Actual Purchase Price = Your winning bid + 5% bidding premium

• If you do not qualify with their on-site lender, you waive your loan contingency

• If you cancel for any reason other than not receiving a loan you forfeit 3% of the purchase price

• Even as the winning bidder, your contract may be refused


Public Auctions (REDC/CalExpo)Purchasing Process

Process• Bring cashier’s check for $5000

Ch k i d i biddi b• Check in and receive bidding number

• Bid when your property comes up

• Winners are escorted to the “documentation area”

• Even if you are using a different lender qualify with theirs – there is buried language in the purchase contract that there is no loan contingency if you do not

• Sign contract and provide additional check if necessarySign contract and provide additional check if necessary

• Bank delivers counter-signed contract 10 – 14 days later through title company

• Escrow with loan contingency ensues

• You have NO ACCESS to property until escrow closes


Foreclosed Properties (REO)Highlights & Tips

HighlightsHighlights• Foreclosures ARE the market price

• Expect the property to close above list price

• Most REO properties are in contract for almost 5 days before it is reflected in MLS

• If an REO property has been listed for over 21 days, then it may go for less

• Some REO properties have minimum listing periods (e.g. Wells Fargo – 7 days) or staggered p p g p ( g g y ) ggpriority (e.g. Fannie Mae – 1st time buyers for the 1st 15 days)

• Offers are prioritized by financing as well – Cash is king, then conventional, then all else

Write an Attractive Offer• Deposit matters, minimum 1% or $2500, whichever is higher

• Pay for the pest inspection yourself, leave it out of the offer altogethery p p y , g

• Do not ask for a home warranty

• Reduce inspection period to 10 days or less

Reduce escrow period to 21 days if possible• Reduce escrow period to 21 days if possible


Foreclosed Properties (REO)Purchasing Process

PProcess• Make your written offer

• Bank counters with their addendum

• Terms agreed and bank verbally accepts

• Bank formalizes contract with their signatures 2-10 days later

• Standard escrow ensues (although it might be pathetic with the company they choose)

Bank Addendumsa dde du s• It’s longer than your offer – and rewrites most of it

• Check the inspection period

• Check for passive/automatic contingency removal

• Be aware of per-diem fees for missing the closing date


Short SalesHighlights & Tips

HighlightsHighlights• It is the most misunderstood and improperly conducted transaction on the market

• They can be interminably long and frustrating, just to blow up in the end

• These are often one of the safest and best deals on the market

• The owner is still involved and available to provide full disclosure

• Best opportunities are short sales that have lost their original buyerspp g y

Write an Attractive Offer• Offer to put deposit in escrow while waiting for bank answer• Offer to put deposit in escrow while waiting for bank answer

• Pay for the pest inspection yourself, leave it out of the offer altogether

• Do not ask for a home warranty

• Reduce escrow period to 21 days if possible

• Allow “Seller Choice” for title and escrow (but make them pay 100%)

• Offer to over-pay for some item on the property


Short SalesPurchasing Process & Gotchas

ProcessProcess• Make your written offer

• Counter and final agreement in writing (the short sale is a seller contingency)

• Contract & seller hardship package go to bank for review

• 2-6 months for a bank approval

• Standard escrow ensues once approval is delivered to buyerpp y

Watch Out For• Listing agents that do not know what they are doing• Listing agents that do not know what they are doing

• Sellers that intend to send all offers to the bank

• 2 loans with different banks

• Loans in “charge-off” status (3rd party collector involved)

• Being asked to proceed with escrow on approval letters requiring close dates sooner than contract allows – extensions are not guaranteed and often not free


Available ToolsProperty Alerts

Radius Searches from a Radius Searches from a single midpoint address (ie., .75 miles around your current home)

Area Searches for a basic Area Searches for a basic neighborhood search

Polygon Searches for complex searches of several neighborhoods, or those bordering unusual land features

Deeper in the Search Criteria: Single Family, Multiple Units, Income Property, Commercial Property, REO, Short-Sale,Marketing Comments, etc.

Searches also available at www.GuidantRealty.com


Available ToolsPending Foreclosures

• Upcoming F lForeclosures

• Trustee Contact InfoInfo

• Timing of Auction

• Opening Bid• Opening Bid

• Delayed Auctions & ReasonReason

• Auction Sale Amounts

• Bank Properties© 2011 Guidant Realty

Available ToolsCounty Records

• Owner of Record

• Ownership Chain

• Mortgage HiHistory

• Registered Home StatsHome Stats


Available ToolsProperty Tax Records


Available ToolsForeclosure Lists

El Dorado CountyPlacer County - The Valley South: Roseville, Rocklin, Granite Bay

Updated daily at www.GuidantRealty.com:

y y , , yPlacer County - The Valley Southwest: Lincoln, Wheatland, Pleasant GrovePlacer County - The Valley Foothills: Loomis, Newcastle, PenrynPlacer County - Gold Country: Auburn to ColfaxPlacer Co nt High Country Gold R n to the Ne ada Border incl ding Tahoe and DonnerPlacer County - High Country: Gold Run to the Nevada Border, including Tahoe and DonnerSacramento County North: Antelope, Citrus HeightsSacramento County North: Orangevale, Fair Oaks, FolsomSacramento County North: Elverta, North Highlands, McClellan, Rio Linday gSacramento County North: NatomasSacramento County North: Carmichael, Arden-ArcadeSacramento County: Downtown and Close-BySacramento County South: Pocket Mack Florin ExcelsiorSacramento County South: Pocket, Mack, Florin, ExcelsiorSacramento County South: Rancho Cordova, Gold River, Rosemont, MatherSacramento County South: Elk Grove, Hood, Courtland, Walnut Grove, Delta/IsletonSacramento County South: Galt, Wilton, Sloughhouse, Herald


Noteworthy Websiteswww.GuidantRealty.com / www.GuidantShortSales.com

G id t R lt h b ilt it t Guidant Realty has built a site to help YOU learn more• Listing searchesListing searches

• Property Alerts – Enter your criteria and be emailed listings when they hit the market! No more searching MLS every day to find No more searching MLS every day to find the new ones before they are gone.

• One-click lists of active Foreclosure/REO propertiesproperties.

• Investigate properties in the foreclosure process.

• Explanation of a short sale.

• A myriad of reports and advice for prospective Buyers and Sellersprospective Buyers and Sellers.

• Local community and schools information.© 2011 Guidant Realty

Experienced Professionals

Addison Avenue currently lends in 26 states. Contact Peggy Nault our mortgage consultant Contact Peggy Nault, our mortgage consultant, to assist you with your home loan needs.

purchasing in a distressed market · 2012-02-28 · highlights & tips highlights • it is the...

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