Foreclosure Archives - Page 13 of 13 - The Phoenix Real Estate Guy

Presidential Candidates’ Plans to Fix the “Subprime Crisis”

January 27, 2008 By Jay Thompson

I really only have one rule on this blog, and that’s to not discuss politics. But when politics and real estate collide, that rule goes out the window.

In case you hadn’t heard, there is a Presidential election this year. (I know, it seems like the campaigning started two years ago…)

Forbes.com published an article Wednesday (sorry, I’m behind in my feed reader) that briefly outlines what each major candidate plans to do about the sub-prime lending crisis. I’ll give you their thoughts, then you get mine…

Republicans:

Mitt Romney, John McCain and Mike Huckabee haven’t announced formal plans. They support the current “Bush-Paulson” plan that calls for a short-term freeze in some rates and deferring much to local government.

Rudy Giuliani wants “kid gloves” when it comes to government regulation.

Democrats:

Barack Obama wants to create a “universal mortgage credit” giving homeowners making under $50K that don’t itemize a 10% tax credit. He also proposes a government fund to help some avoid foreclosure. He has other plans for government oversight and regulation as well.

Hillary Clinton wants a 90–day moratorium on foreclosure proceedings, a five-year freeze on interest rates and a $5 billion government sponsored fund to help out borrowers with negative equity. She also wants to increase the size of the Federal Housing Authority.

John Edwards supports current freeze plans and wants to add halting of foreclosures until lenders provide assistance to borrowers such as reducing interest rates, converting loans or forgiving parts of a loan. He also wants increased government tracking and oversight.

The Phoenix Real Estate Guy:

I don’t know where Hillary is getting her $5 billion from. The last thing the tax code needs is to be added to. Personally, I wish government would just stay the hell out of the real estate market. “Markets”, be they stock, real estate or pork bellies tend to reach equilibrium on their own. More government intervention is just likely to chase the problem, and much like a dog chasing its tail, it’ll never catch it and wouldn’t know what to do with it if it did.

Let the markets adjust as they will. Fundamental economic laws of supply and demand will play out and things will eventually settle down.

[tags]Presidential race, subprime crisis, talking heads[/tags]

Redfin Turns Conventional Wisdom on its Head

December 14, 2007 By Jay Thompson

The PR machine that is Redfin is rolling again.

Redfin CEO Glenn Kelman appeared on the Today show this morning and he and co-host Meredith Viera proceeded to engage in a conversation jammed full of startling revelations the computer scientists /sleuths at Redfin have uncovered using “The Science of Real Estate”.

Brace yourself folks — this stuff is going to change the way real estate is done.

I’ll just highlight a few things that, according to Redfin, are “based on the best academic research” and will get your home sold faster and for more money.

Are you ready? Here you go …. don’t overprice your property. Be a motivated seller. Market your property online. Foreclosures impact pricing.

Wow! Un-freaking believable! How have we managed to survive this long without this contribution from academia?

You can get all the details and all seven super-saver steps here. Why you can even get a condensed version straight from the National Association of Realtors (NAR) here. And if you want a report with academic-like footnotes, charts and even an appendix, go here!

Better yet, read Greg’s take at Bloodhound.

In the segment on Today, you can hear all of the following pearls of wisdom, and more!

Viera: “The folks at one online brokerage say forget everything your real estate agent has told you” [Not denied in the least by Kelman, naturally.]

Viera: “It (the Redfin study) turns conventional wisdom on its head.” [Boy howdy! Repeat after me… motivated sellers of properly priced homes marketed online do better. It’s mind-boggling.]

Viera: “Your company believes that buyers and sellers should be proactive and rely less on the real estate agent – that middle man.” [Not denied — which is interesting given Kelman’s company relies on listing agents to do their buyer agent’s jobs. Cut out the “middle man” and Redfin would fall apart at the seams.]

Kelman: “We are computer scientists, we are not salespeople.” [no comment]

Kelman: “There are other places to promote your home outside of the MLS, and often your real estate agent isn’t going to do that.” [but what will your computer scientist do?]

You can’t make this stuff up folks. But you can watch it here.

In Redfin’s blog on this subject, Kelman says:

Consumers who have read early drafts of the report overwhelmingly found our recommendations useful and effective. The industry reaction will likely be different. Some will argue that the report substantiates already well-understood tactics, while others will take the exact opposite position, refuting our points one by one.

But the truth is that a discussion of how real estate brokerages can deliver better results, based on data rather than just opinion, is in everyone’s best interests.

I think it would be difficult to refute the stunningly obvious. I’ve got no problem with using empirical data to support already well-understood tactics. But proclaiming once again that you are the first to do something, or going on national television yet again and implying that real estate agents in general are buffoons is just getting tiresome.

[tags]Redfin, the Science of Real Estate, it’s madness I tell you![/tags]

The Short Sale From Hell

November 12, 2007 By Jay Thompson

Several words come to my mind when I hear the words “short sale”.

Several aren’t fit for print… others include headache, excruciating, and “I quit”.

A “short sale” is one in which the proceeds will not cover the owner’s loan(s). The lender in other words, isn’t going to get paid the full amount they are owed. They are going to be “shorted” on the loan obligation.

One of the short sales we have listed is in Chandler. Nice little home, but the owners mortgaged it to the hilt, pulling out equity multiple times as home values skyrocketed in the Phoenix real estate market. Some refer to this practice as, “using your home as an ATM machine”.

That’s generally a very bad idea.

Especially when combined with sub-prime adjustable rate loans.

Facing foreclosure, we listed the home — well in advance of the Trustee Sale (often erroneously called a foreclosure sale). After much consultation with the lender, it was determined that they likely would accept a sale that netted them 70 cents on the dollar. The math was done to determine a list price of $162K on a home that comped right at $200K. (Note, some lenders won’t even broach the subject of a short sale until an offer is in hand. Others will pre-negotiate, sort of. Every lender is different.)

Now one would think a home listed 20% under market value would be flooded with people clamoring for a great deal.

Not really.

After three months, an offer close to what the lender might accept was received (they swiftly nixed an offer for $75K).

Then came the real negotiations, and the interminable waiting game.

The Arizona Short Sale Addendum states, and I quote:

Buyer and Seller acknowledge that it may take weeks or months to obtain creditor(s) approval of a short sale.

This did not deter the buyer’s agent from calling every third day to see if we had lender approval for the sale. They did finally grow weary and realized we were in for a long wait.

As the seller’s agent though, it was my job to “persuade” the lender to accept the sale. Copious quantities of data were supplied to them, and I talked to 13 different people in the loss mitigation department. Finally, after 10 weeks, we got a verbal acceptance.

Getting that acceptance in writing took another four weeks. And when we finally received the lenders written approval, we had two weeks to close.

Two weeks?!? No way Jose. The buyer was using down payment assistance from the Nehemiah Program on a FHA loan. Two weeks wasn’t going to cut it. We’d be lucky to close in four.

Back to the phones. Back to absurdly long times on hold (at this writing, my phone log shows I’ve spent 516 minutes on hold with this lender — 8.6 hours).

What a pain in the ass this lender has been (Ocwen, for those interested). The biggest crow bar in the negotiating tool box is the fact that while the lender was doing whatever they do while we wait for loan approval, the Notice of Trustee Sale was recorded. In a nutshell this means the home will likely be foreclosed on and returned to the lender 90 days after filing. This generally motivates lenders because they really don’t want to take back a home and have in languish on their books while they attempt to sell it in this market.

This generally motivates the lender. Many (most?) people working in a lenders Loss Mitigation Department have zero clue about local real estate markets. Here we had their approval for a short sale and just needed a couple more weeks to make it happen.

Getting that extra two weeks was like pulling teeth. Again.

As the deal appeared to be unraveling last week, the lender finally snapped into reality and it looks like we are a go for closing early next week.

At least that’s my story for today, and I’m sticking with it.

Looking for more information on short sales? Below is a link to all articles written on this site about short sales:
Phoenix Short Sales

Thinking about short selling your Phoenix home?

Just complete the form below for a no cost, no obligation consultation with one of our experienced short sale experts:

Metro Phoenix Leads Nation in Retail Construction

August 13, 2007 By Jay Thompson

Gilbert, AZ is the fastest growing large suburb in the country.

Maricopa County leads all counties in the nation in population growth.

Arizona is the fastest growing state in the nation according to the Census Bureau.

Given all that, it's really no surprise that the CoStar Group recently published that the Phoenix metro area leads the nation in retail construction:

At the close of second quarter, Phoenix led the nation with the most retail square footage under construction — 13.4 million retail square feet. The fast-growing MSA accounts for 6.4% of the nation's total retail square footage under construction and outranks the next-closest market, California's Inland Empire, by 1.78 million square feet. In addition, Phoenix boasts an impressive overall 82.8% pre-leased rate on these projects; the second highest pre-leased rate nationwide.

Phoenix also enjoys one of the lowest unemployment rates in the country at 2.9% (essentially full employment).

In a far less glamorous postion, Arizona is now one of the top 10 states in the nation for foreclosures. Here's an article quoting the great Russell Shaw.

What does all this mean? Lots of people moving into the area, lots of jobs, and yes — even lots of foreclosures, means lots of activity in the Phoenix real estate market. If the population growth continues, and the unemployment rate stays low (and there are no indications these factors will radically change anytime soon) then the Phoenix real estate market has a lot to look forward to. Foreclosures are nasty nasty things to those involved in them, but for the market as a whole, the future looks bright.

[tags]Phoenix real estate, foreclosures, unemployment, population growth[/tags]

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Presidential Candidates’ Plans to Fix the “Subprime Crisis”

Redfin Turns Conventional Wisdom on its Head

The Short Sale From Hell

Thinking about short selling your Phoenix home?

Metro Phoenix Leads Nation in Retail Construction

Who is The Phoenix Real Estate Guy?

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