Pending home problems

[Greed is Good]

Keep dreaming for the bottom bulls:lol:

Pending home sales at all-time low

http://money.cnn.com/2008/04/08/real_estate/pending_home_sales/index.htm?postversion=2008040811

NEW YORK (CNNMoney.com) -- An index of homes under contract for sale fell more than expected in February, reaching the lowest level since the index's 2001 debut, according to a report released Tuesday.

The National Association of Realtors' (NAR) Pending Home Sales Index fell to 84.6 in February, down 1.9% from a revised reading of 86.2 in January and down 21.4% versus the same period last year.

Economists were expecting the index to decline to 85.2 for the month, according to a consensus estimate compiled by Briefing.com.

"The slip in pending home sales implies we're not out of the woods yet," said Lawrence Yun, NAR chief economist, in a statement.

The Pending Home Sales Index is considered a more forward-looking indicator of home sales than the NAR's more closely watched existing home sales report, which tracks sales at the time of closing, typically a month or two after a sales contract is signed.

The Pending Home Sales index was launched in 2001, and a reading of 100 is equal to results that first year. Before the housing market began to deteriorate last summer, the steepest decline in the index's history came in September 2001, when the 9/11 terrorist attack sent the index down to 89.8.

The Realtors revised their forecast slightly for existing home sales, projecting first-quarter existing home sales to decline 23.1% versus the same period last year after saying in March they would decline 23.2%.

For the full year, the NAR predicted existing home sales to be 4.7% lower than in 2007, after saying in March they would be down 4.8%.

Existing home sales for March will be released April 22.

"February was another poor month for housing, with pending sales down in most of the country," said Mike Larson, a real estate analyst at Weiss Research.

Larson thinks tight lending standards and the absence of speculative buying are to blame for the weakness in the housing market.

The NAR also lowered its forecasts for first-quarter and full-year real GDP growth, the broadest measure of the nation's economic strength. It also cut its expectations for nonfarm job growth in the first-quarter and full-year periods.

Yun thinks that the economy will not grow in first half of the year, but he is optimistic about the second half.

"The combination of recent fiscal stimulus enactment and the lagged impact of monetary policy will help jump start the economy in the second half."

[MianoSM]

I'm surprised people are still trying to sell their homes. If I were a seller I'd think that I'd just hold onto my home, rent it out, or slash the price.

It really would hurt to be on the selling side at the moment.

[slowdx]

If you can find a bank that is willing to lend. this is a great time to buy. These banks are making it damn near imposible

[Strangeholliday]

If you can find a bank that is willing to lend. this is a great time to buy. These banks are making it damn near imposible

if you're above 580. and can show full income and assets.. you're good.

no more 580, Stated income stated assets 100%'s.. thats asking for trouble..

On another note.. Wamu exits wholesale business a couple days ago.

[Strangeholliday]

I'm surprised people are still trying to sell their homes. If I were a seller I'd think that I'd just hold onto my home, rent it out, or slash the price.

It really would hurt to be on the selling side at the moment.

Alot of these people HAVE to sell. They dont have room to slash the price because they bought it about 3 years ago.. when prices we're high.
They could rent it out, but they would likely still go negative on their mortgage every month, and then they would also have the expense of their new home or apt.

[Joe]

Wamu exits wholesale business a couple days ago.

I think this will be the trend for banks...

I think wholesale lending is on it's way out the door. Banks will go back to their roots for mortgages, direct lending with using their own people (appraisals, underwriters, etc).

To many banks have been screwed by "trusting" others to do those things and buying the loans from the wholesalers... I bet one could say that MOST of the subprime ARM shit came from wholesale cesspools.... (not saying all wholesalers are like that, but there were a big majority of them)

Opinions?

[Strangeholliday]

I think this will be the trend for banks...

I think wholesale lending is on it's way out the door. Banks will go back to their roots for mortgages, direct lending with using their own people (appraisals, underwriters, etc).

To many banks have been screwed by "trusting" others to do those things and buying the loans from the wholesalers... I bet one could say that MOST of the subprime ARM shit came from wholesale cesspools.... (not saying all wholesalers are like that, but there were a big majority of them)

Opinions?

I dont necessarily think they're going back to their roots. I think they're going to the future of banking, Applying for a mortgage will be like applying for a credit card. You can do it all in minutes. They use automated value modules, or AVM's.. to do the appraisals instead of having an appraiser come to your house and looking around, they will issue automated approvals through their banking system's software.

This will eliminate wholesale brokers doing prime loans.. I do think that with every change comes an opportunity, I think you'll see a few banks bump up and start to do what fannie mae won't.. even if its by 5 % LTV or 5 pts under the lowest credit score. This bank will capture all that business, I think wholesale brokers will continue to struggle, quit or join forces with retail banks. which kind of sucks.. retail loan officer makes ? what 40 - 50 k? while a good broker makes well over 100k.

[TampaDude]

If your credit is halfway decent (no lates in the past 12 months), you can go FHA with Ameridream and get a house with zero down. Not that I would want to buy right now with prices still falling.

[Strangeholliday]

If your credit is halfway decent (no lates in the past 12 months), you can go FHA with Ameridream and get a house with zero down. Not that I would want to buy right now with prices still falling.

absolutely, but how long before FHA tightens up their guidelines like fannie mae?

FhA has been the new Subprime.. especially with these streamline refis..

[TampaDude]

absolutely, but how long before FHA tightens up their guidelines like fannie mae?

FhA has been the new Subprime.. especially with these streamline refis..

It's the gub'mint...that shit will always be around...

[TNathe]

if you ahve the means necessary to fund the buying sort sales are prob VERY easy to obtain.

[Strangeholliday]

if you ahve the means necessary to fund the buying sort sales are prob VERY easy to obtain.

Actually they take forever to close.. even when the loan is no problem. Its hell to deal with..

[MiDiablo]

My office closes foreclosures, preforeclosures and short sales within 14-28 days all the time :dunno:

But it does take a considerable amount of time to negotiate the short sale deal(s) prior to marketing the home for sale; so that's a hassle.

-Jo$h

[Country Boy]

The only thing I will say about the housing market is this... We have more than doubled our work in the last month. Feb we had 40 houses, Mar was 80 and now we are at over 120 or the month... I see much more work goin on than I used to and theyre actually haveing a bunch of new starts...

Think what you want....

[BAMF]

if you ahve the means necessary to fund the buying sort sales are prob VERY easy to obtain.

I've looked at a few short sales. They're slow to close on, and more often than not the hosue is FUCKED UP. They aren't as great as everyone thinks. Neither are foreclosures. You gotta get lucky.

[Greed is Good]

The only thing I will say about the housing market is this... We have more than doubled our work in the last month. Feb we had 40 houses, Mar was 80 and now we are at over 120 or the month... I see much more work goin on than I used to and theyre actually haveing a bunch of new starts...

Think what you want....

That's funny with even New home construction at 17-year low on starts:lol:

Where's all this building going on at? I don't see anything in hills or pasco everything i see has come to a stop

[Country Boy]

That's funny with even New home construction at 17-year low on starts:lol:

Where's all this building going on at? I don't see anything in hills or pasco everything i see has come to a stop

Remember, that stat is also nationwide. Obviously you cant see everything... but hell, what do I know, right? Just listen to some guy that sits behind a desk and guesses.

[MiDiablo]

I've looked at a few short sales. They're slow to close on, and more often than not the hosue is FUCKED UP. They aren't as great as everyone thinks. Neither are foreclosures. You gotta get lucky.

Short Sales definitely suck. They are turning a lead-time of up to 6 months in some banks right now. Loss-Profit Litigation departments = teh suck.

As for Foreclosures, we are buying/selling them each and every day. Some with as good as 40 cents on the dollar. Some with as high as 65 cents on the dollar. Some are good cash-flow opportunities, while others are just good if the Investor is seasoned in the rehab/flip method. We've also done some lease-option exit strategies for some of our Investors, but few and far between.

-Jo$h

[BAMF]

Short Sales definitely suck. They are turning a lead-time of up to 6 months in some banks right now. Loss-Profit Litigation departments = teh suck.

As for Foreclosures, we are buying/selling them each and every day. Some with as good as 40 cents on the dollar. Some with as high as 65 cents on the dollar. Some are good cash-flow opportunities, while others are just good if the Investor is seasoned in the rehab/flip method. We've also done some lease-option exit strategies for some of our Investors, but few and far between.

-Jo$h


Foreclosures for 45-65 cents on the dollar? Damn, I need to get me some of those.

[MiDiablo]

Foreclosures for 45-65 cents on the dollar? Damn, I need to get me some of those.

Just as an example, this is a home we picked up this week:

6 bedrooms
2 bathrooms
1,872 total s/f
Block Construction
Sitting on 1/2 acre of land
$102k sales price

Approximate Rehab Costs: $25k
Total Investors Investment: $127k (plus closing costs)
After Rehab Value: $195k appraisal
Gross Spread: $68k profit

Now of course we don't base this solely on these numbers. The ARV is an appraisal based value, and not necessarily conducive to the "going rate" as per the market conditions. So we usually base our spreads on an "80% of ARV" value. For instance:

80% ARV on this home would be: $156k --- more of an "actual" market value that one could expect to see/receive on the market if flipping.

That changes the spread from a projected $68k, to actually $29k (again, have to add in your closing costs from the purchase, as these are Net To Seller prices).

Either way; ~$25k profit for a single deal is pretty fair in my opinion. Some people aren't making that in an ANNUAL INCOME from their 9-5's! There are some deals that aren't as lucrative as this, and there are others that are BETTER. Just depends on who we get them from, and how (short-sale vs. bank-owned, etc.).

So in this example, $127k / $195k - you're getting the home at 65 cents on the dollar; fully rehab'd.

-Jo$h

[BAMF]

Damn, now is the time to need to be a handyman to pour 10-20k into a house....Too bad I'm not.

[MiDiablo]

/\ Haha... Well... The good news is that the estimated cost of rehab is with our General Contractor that we have in-house here in our office! :D He's responsible for most of the Rehab's in the area!

Of course depending upon your choice of rehab, you can either spend less, or more. For instance - an investor in the "buy, fix, sell" market - is going to spend more on higher quality materials and fixtures, etc. Whereas an investor in the "buy, fix, rent" market - is going to be able to save money on using linoleum (sp?) versus travertine tile, etc. Because renters are looking for cleanliness more-often than quality of material used.

Additionally, many investors make the mistake of trying to be "the handyman" on their investments. We typically steer our investors away from that as hard as possible. The biggest mistake, we feel, that an investor can make is to become "one of the help" on the jobsite. He needs to be the orchestrator, the manager, the boss. Our investors should be able to accomplish more with their cell phone than with a hammer or a tile saw.

-Jo$h

[BAMF]

Hmm, interesting. So you have people buy these houses (to rent, sell, live in, whatever) dirt cheap and you have an in-house contractor that will do the rehab work needed...and since its so cheap I'm sure a mortgage can cover the expenses. Thats a really awesome deal.

[HerHotRod]

The only thing I will say about the housing market is this... We have more than doubled our work in the last month. Feb we had 40 houses, Mar was 80 and now we are at over 120 or the month... I see much more work goin on than I used to and theyre actually haveing a bunch of new starts...

Think what you want....

I work for a builder and agree with the increase in starts. At least as far as our companies concerened.

[MiDiablo]

BAMF,

To answer you question simply - no.

More in depth: Conventional Mortgages on a home of this nature will not qualify. However, Cash &/or Hard Money Mortgages will. Conventional Mortgages must be able to pass at least a "4-point inspection" to qualify - meaning basically that all items that function must function as designed & that all surfaces must be in servicable conditions according to manufacturer's specifications.

Having said that, these foreclosures are usually stripped/gutted/wrecked up pretty good. No windows, no appliances, etc. When this is the case, conventional mortgages won't fly. HOWEVER, the solution to that (which we offer to non-cash buyers) is to do a short-term, high-interest rate, no prepayment penalty loan (hard money). On these loans, we actually escrow the funds for rehab, pay the monies accordingly to the general contractor's, etc. - and then upon completion of the rehab, we get the home re-appraised (read: After Rehab Value "ARV" appraisal), and then assist the Investor in getting the home refinanced into a conventional mortgage/loan through a "normal" loan.

These can be done for "owner occupied" investors, or also for investors who utilize exit strategies of Rent, Sell (flip), or Lease-Option even.

[BAMF]

Very, very interesting. Let me know if you guys have anything between Carrollwood and Hillsborough/Sheldon with a fair sized backyard, 1100 sq feet+, and at least a 1 car garage, excluding the obvious shithole areas that we all know and love. I'm pre-quald for 150k (want to stay as low as possible, though). and can toss 15k tops down.

[Strangeholliday]

Are you the hard money lender MIDIABLO? Because most hard money lenders are going to want a no less than 30- 35 % down BAMF

[BAMF]

Are you the hard money lender MIDIABLO? Because most hard money lenders are going to want a no less than 30- 35 % down BAMF

Ah. Always a catch. Damn, cash talks right now.

[MiDiablo]

Strange, yes we are the Hard Money Lender as well. Our company is essentially an "all under one roof" or "one stop shop" if you will. What I mean by that is that for a successful investment in real estate, there are four necessities to cover:


Find,
Fund,
Fix,
Exit.


Finding the properties can be very stringent on the end investor. Many of our investors have a full-time job, and being able to scower (sp?) Craigs List, MLS, and Auctions is a full-time job in and of itself. Having said that, we've got a full-time staff of Acquisition Associates that bring us the deals at a pre-negotiated and contracted price with the owner.

Funding the investment can be tricky or difficult as well, because as I previously mentioned, these don't qualify for "Conventional Financing" per se. We offer the Hard Money (H$) Loans in order to overcome that obstacle. Many H$ lenders require (as strange mentioned) an enormous cash amount into the deal upfront. Our requirements are much less. We require $2-5k to contract the deal (consider it sold), and the total contribution is actually credit driven. For instance:

700+ FICO = 80% LTV (based on ARV), and a 3% Investment (based on Loan Amount); with at least 3 months of reserves in liquidity funds.

Whereas someone in the 600's would go.....

600+ FICO = 60% LTV (based on ARV), and a 15% Investment (based on Loan Amount); with at least 6 months of reserves in liquidity funds.

So again, it's credit driven. So I can't say what any ONE person would be required to put into their particular deal(s) without having pulled their credit through our H$ Lender.

Fixing the property can be a problem for many investors, as they're not personally a licensed General Contractor. That's why we've got our OnSite Residential General Contractor's here in our office. He personally inspects each property, giving us an estimate (very generic/general) on rehab costs. Then if the investor(s) want to find out more detailed pricing, he can provide a detailed estimate/quote to the investor prior to their decision to purchase even. This can either be used by the investor in order to base their costs in order to bargain with other G/C's; or flat-out can be utilized in the rehab by going through OnSite Residential.

Exit strategies obvioulsy vary with each investor. Some are okay with Section 8 Rents, while others aren't. Some are okay with Lease-Opting to tennants, while others just want to flip. We offer successful strategies for each of these. We've got an active website for our Investors to post their homes on (for sale, for rent, for lease), and we also refer our incoming leads/referrals that don't qualify for wholesale investing - directly to our wholesale investors. Furthermore, we offer property management for those investors that prefer to be "hands off" even. And of course, no exit strategy is complete without having the home have been rehab'd successfully, timely, and correctly. So the finding, funding, and rehab has been done; then we help the investor(s) refi into a conventional mortgage - and then assist them with use change!

Shew, fingers hurt. :D

[Joe]

So, where does your company profit in those figures?

Obviously this is not a "free" service... ;)

[MiDiablo]

Very, very interesting. Let me know if you guys have anything between Carrollwood and Hillsborough/Sheldon with a fair sized backyard, 1100 sq feet+, and at least a 1 car garage, excluding the obvious shithole areas that we all know and love. I'm pre-quald for 150k (want to stay as low as possible, though). and can toss 15k tops down.

FWIW, we got a home in the Town & Country area just yesterday. It's just South of Waters on Sheldon. Timberlane Neighborhood. Here are the brief stats:

3 Bedrooms
2 Bathrooms
1 Car Garage
Block Construction
1,155 heated s/f
Sale Price: $92,500
Rehab: $16k
ARV: $160k

And for the investor side of the 411...

Total Investment: $108.5k (plus closing costs)
"Realistic Market Value" (80% of ARV): $128k
Estimated Net Profit: $19.5k (minus closing costs)

Additionally, the area rents are bringing between $950-$1,200 for those that seek cash-flowing properties.

[MiDiablo]

So, where does your company profit in those figures?

Obviously this is not a "free" service... ;)

Nothing in life is free. True $tory.

We profit by pre-negotiating our prices/fees with the home-owner prior to contracting the home(s) from them. For instance, there will be no hidden fees that "pop-up" at closing time. Our fee(s) include a $295 admin fee, listed in the sales contracts, to cover obvious office related fees, and then a commission based percentage from the seller. On average, a typical retail commission to a realtor is between 6-7%, and as high as 10% on commercial deals. Our commission is a 5-7% generally speaking, and again - this isn't something that is "tacked on" - however, it's INCLUDED in our listed Sales Prices.

We're governed by the National Association of Realtors code of ethics, so we're as upfront and honest about our fees/monies as possible. Additionally, our H$ lender is governed by the banking federalis (lol), so there again we maintain strict ethics and integrity!

[MiDiablo]

And, for complete and utter honesty - there's not much money in each deal that we do INDIVIDUALLY (a couple grand generally).

Our goal, as an Investor Network Firm, is to make long-term relationships with Investors. If I sell one home/deal to an Investor, I may be able to feed my family for a week or two. Whereas if we build a quality relationship with an investor, and help him/her create a solid investment portfolio with reoccuring profitable investments - each of us (myself and the investor) stand to feed our families indefinitely.

This is how we make the majority of our profits, is by repeat business. Less expenses incurred, less overhead = increased profits. If I've got an investor that I *know* will buy a 3/2/1 home in the 33615 zip code, then I am usually able to negotiate the price lower from the owner/seller because I'm able to guarantee a quicker cash sale.

[MiDiablo]

Sale Price: $92,500
Rehab: $16k
ARV: $160k

Total Investment: $108.5k (plus closing costs)
"Realistic Market Value" (80% of ARV): $128k
Estimated Net Profit: $19.5k (minus closing costs)


Oh, and just an FYI - This particular home scenario equates to a 17.9% rate of return on your money :naughty:

[BAMF]

Oh, and just an FYI - This particular home scenario equates to a 17.9% rate of return on your money :naughty:

Yeah, only problem is its in Timberlane. :lol: Man, that area went downhill. Too bad I don't have the cash down for a deal like you guys offer, though.

[MiDiablo]

Timberlane has its pitfalls, surely. As do many areas in Tampa. However, the property values given is based off of current home sales, not off of "before going downhill" values. ;)

It's actually not a terrible neighborhood. It's being worked on getting cleaned up at least! It's a start, :lol:

[Greed is Good]

Yeah, only problem is its in Timberlane. :lol: Man, that area went downhill. Too bad I don't have the cash down for a deal like you guys offer, though.

hope you got some gunz for that hood:lol:

[BAMF]

hope you got some gunz for that hood:lol:

6 of 'em. And two cans of ammo. But that ain't enough for Timberlane, yo. Cuz I ain't got a Glock I shoot sidewayz. With a z, nigga.

[BAMF]

Timberlane has its pitfalls, surely. As do many areas in Tampa. However, the property values given is based off of current home sales, not off of "before going downhill" values. ;)

It's actually not a terrible neighborhood. It's being worked on getting cleaned up at least! It's a start, :lol:

Yeah, now throw out half of the residents, incarcirate 3/4 of the remaining residents, and you'll have a respectable place. :lol:

[Strangeholliday]

beggars can't be choosers..

[MiDiablo]

Haha, I think what is being failed to be realized is this isn't a place that YOU'RE going to live.

It's simpy an investment opportunity.

You'll either rent it out via Section 8, or try and find a good, respectable, credit-worthy tenant, or you'll fix it up and sell it to someone - each of which, would need to obviously fit into that area's genre.

[BAMF]

beggars can't be choosers..

Choosing not to live in Timberlane isn't being picky, man. Have you driven through there in the past few years?

[MiDiablo]

You've gotta drive slow in there... Tons to see! :D Plus, they put an ass-load of speed humps in there... My lowered truck hates it in there! :mullet: