Perrysburg Blog

It’s secret.

It’s above top secret.

But if you are doing a short sale you need to change where your checking and savings accounts are.  Banks are now using language in their checking and savings policies that you have agreed to when you opened your account to PULL MONEY OUT of accounts that are not linked to your mortgage.

Now, in polite society, this is called STEALING.

Or THEFT.

In bank terms it is called the “Right of Offset”.  You can go here and do a search for that term if you want to get real mad.

But the average consumer does not have a copy of what they signed, can’t remember, and probably can’t hire a lawyer to look at all their agreements.

So – the simple solution that I am telling ALL my short selling clients is this:  MOVE YOUR MONEY TO A TOTALLY DIFFERENT BANK.

Simple.

Sweet.

Ends the drama.

I won’t name any banks – I am assuming some are not doing this.  But some are.  And the solution to protect you is as simple as the pain of the unauthorized monetary removal is great if it happens to you!

I was talking this week with a fellow Realtor.

About the dearth of new REO orders.

In the face of hundreds of empty houses.

“What is going on in your business?” I asked . . .

He is seeing the same thing that I am.

The REO pipeline has been shut down.

It started 3 or 4 weeks ago.

Someone “of a higher paygrade” decided to slow down the marketing of new foreclosed homes.  The news is grim – at least in the headlines.  Then you read the reassuring copy – “nothing to worry about”, “move on . . . nothing to see here”.  Let’s say I agree.  There is no wave of new REO coming.    Then the tactic of the lenders to hold off inventory now is a premeditated attempt to firm up prices and values for today’s buyers and to protect their asset values.

The houses that are foreclosed and not available?

Oh – they are still there.  They are just sitting empty.  Waiting.  Marinating.

Does this make sense?  Does this make money?  Does this “help” the housing market?  Does this increase prices?

Like “Rosebud” in Citizen Kane . . . NO MAN KNOWS.

There really was one a couple of weeks ago . . . although I did not feel it.

But there has been an ongoing one . . . for the past 3 or 4 or 5 years.

The “mortgage implosion”.  Which is really the “people who have lost their jobs can’t pay their mortgages implosion”.

Excerpting from today’s Toledo Blade:

Metro area 52nd highest in ’10 foreclosure filings

Metro Toledo ranks 52nd highest in foreclosure-related filings in the first half of the year among the nation’s top 200 metro areas, a new study shows. The ranking, the worst among the metro areas in Ohio, is based on the number of filings of default and auction notices and repossessions per households. RealtyTrac Inc., a national real-estate data tracking firm, says in a report released today the Toledo area has one such filing for every 65 houses.

#52.  Of the top 200 foreclosure towns.

Not.  Good.  At.  All.

You can argue about school funding, TARTA leaving, and the constant I-75/475 construction projects all you want to.

But when 1 out of 65 houses in T Town has JUST GONE UNDER THE GAVEL in 2010 . . . . the other problems are not that important.

My advice?  No need for a Foreclosure Czar.  No need for a conference.  No need for a telethon.

People in Toledo need J.O.B.S.

That is the only thing that is going to bring housing back, equity back, and end the misery and physical destruction of real estate in Northwest Ohio.

Just so you can identify what they are doing . . .

And just as a public service . . .

IF you reply to one of these incredible rental deals in Perrysburg or Sylvania here is the first letter you get.   Note how they suck you in and how later you will have to give them more info.  These Nigerian Scammers and very good – they bait the hook and play the fish:

Hello,
I did get your response concerning the AD I posted on craigslist. The house is still available but I’m not in the state. I did bid for a portion of Gas(popularly known to be  the oil and gas sector) in west africa and fortunately I won the bidding,so I had to move quickly down to west africa to set up my own company. because I will have to rebid for it in the next 10 years. I came over here with my wife, we both built the house when we got married. As soon as we settle down here I had  thought of selling the house, so I had an agent who had wanted to help me in that regards,not until my wife had advised against such plans;she gave reasons that we will definitely be in search of a new home when  coming back to the state and that a nice home might not be as easy to get.I gave it a second thought and decided is best I have someone take very good care of the house while I’m away… So I contacted the agent back and requested for my keys and documents(you will get to see in the front yard, the ”for sale sign” which will be no problem handling cause I will take it off as soon as I can find the right person to occupy the house) Later we decided to have the house leased out,I personally would have given the same agent this task to carry out,but the extra charges these agents get for carrying out thier chores,we belive might scare those seeking to rent our home.Some people are not aware that you get to pay more in rent when an agent is involve,and get to pay less when renting from the owner directly(so the agent is not invlove in this).If you have taken notice you will discover that the price we are offering is far below the market price,it’s for a fact that we are not after the money but the very upkeep and proper care that our new tenant can offer in regards to the house.The house is completely empty now(the refrigerator,washer,dryer,stove and some more that are just what we have left in the house)so, you can get to move into the house with your furnitures cause the rooms are big enough for them.I will be providing my new tenant with a local account where the monthly rent can be paid into.I will be providing my address over here where my new tenant can always write me..I will have to go through the information that I had requested to help me with having the right person occupy the house, and also would like to discuss things over on phone( my cell phone number is right below) so that I can be pretty sure of a true screening before giving out any form of approval…The keys and paper works will be forwarded to the current address via DHL or FEDEX upon approval.I will be coming back from time to time to check on the house and to see in what condition it has been kept.The lease term will be for a maximum of four years.

Please if you are ready now to occupy the house kindly provide the information below for record purpose

PLEASE TELL US ABOUT YOURSELF
Full Name__________________________________________________ Home Phone (        ) ________________________
Date of Birth_________________________________
Other Phone (       ) ___________________
Current Address_______________________________Apt#________ City__________________ State______ Zip________
Reasons for Leaving____________________________Rent $__________Phone (       ) ____________________________
Are you married____________________________
How many people will be living in the house__________________________
Do you have a pet____________________________
Do you have a car____________________________
Occupation____________________________
Move In Date____________________________
House Address:
XXXXX XXXXX XXXXXXXXX

P.S.;YOU WILL NOT BE ABLE TO VIEW THE INTERIOR PART OF THE PROPERTY,BECAUSE I HAVE THE KEYS AND DOCUMENTS HERE WITH WITH ME.

Regard’s Mr.Peter Fox
Phone…+234-80226310
011-234-8022631

“It can’t happen here!”

“This is an unsinkable ship!”

“The Maginot Line will protect France!”

Umm.  Might want to check your assumptions.

Sellers in Perrysburg need to check theirs too.  RIGHT NOW.

I wrote on this before and told you

If your assumption is “The Lender Will NEVER Come After Me!!”  you may be embarking on a financial voyage of Titanic consequences.

I just put a house on the market today – $120k area in Toledo.

The owner thought he would be smart and TOTALLY REMOVE his updated kitchen.

The home is going on market for . . . $44,900.

And there is a good chance that the banks that are forced into those situations are going to challenge your assumptions.

Read all about this ACCELERATING trend in the Washington Post ….. HERE.

What Palacios did not see coming was the letter from his lender demanding that he pay the shortfall: $148,064.02. “I really thought I was through with this house,” said Palacios, who fell behind on payments when the economy soured and his cleaning business stumbled.

Some consequences:

-Short selling?  Make sure you do it right.  Hire an expert.

-Foreclosed?  Don’t have a trash out the house party.   Keep the “asset” (that’s what it is to the bank) in good condition.  They are going to run a tab on your decisions.

-Facing foreclosure?  There are plenty of options and decisions you have.  Make smart ones.

They need the work.

They are hungry.

They can be there 24/7 for you . . .

There are so many reasons to hire the financially destitute Realtor.  It’s just that none of them accrue to your benefit.

And, seriously, there is just a little bit of downside risk.

From my observations this week, talking to dissatisfied former clients of broke Realtors, and Realtors who are unable to sell real estate today:

A. The Financially Challenged Realtor is not going to be there.  They are not going to return your call.  Or have staff and support to do so.   You are going to be on your own.

B.  The Financially Challenged Realtor is not going to invest much money in marketing your house.  They don’t have any money to invest.  And if they did they need it for themselves and their survival.

C.  The Financially Challenged Realtor is going to be distracted.   Seriously distracted.  With a new job.  With court problems.   With other career issues.   Think that won’t hurt the sale and marketing of your listing?  Sure.

D.  The Financially Challenged Realtor is not going to have the best and most up to date technology and software.   No office to take an interested potential buyer to.   No color printer to make brochures for you with.  No scanner to digitize paperwork with.   No wide angle lens for the camera that makes your home more attractive on line.  No . . . you get the picture.

E. The Financially Challenged Realtor is not going to do the right thing when they should.  They may be desperate.  And the blood of desperation in the pool with your equity is not a good mixture.

F.  The Financially Challenged Realtor is not going to have the judgment needed to effectively protect you from scams and scammers.  They will instead try to sell you on uplines, travel deals, pills and potions, and magic software that will help you pay off your mortgage early (for an investment of $3000 up front for the magic program).

Help yourself . . . if you feel sorry for a broken real estate agent, give them a donation.  Don’t donate your home’s value.

Buyers like a process.

Their process may be different from mine.

This buyers process in buying a home may be different from that buyer.

But they all like a process.

And one thing that absolutely NO buyer likes is to hear “give us your highest and best offer.”

That means that the house in question is wanted.

By other buyers.

Sometimes lots of other buyers.

Sometimes only one other buyer.

I have 2 or 3 of these “highest and best” offer negotiations going on today.

Here are a few buyer responses and results:

A. One possible response from a buyer is “I want to see the other offers!”

- No.  You can’t.  If I tell you or your agent that there is another offer – there is.  Anything else is fraud and we don’t do that.  We say it is true and it is.

B. Another possible response from a buyer is “I don’t want to bid on that house anymore – pull my offer!”

- Will do.  You can.  But then you won’t be purchasing that house.   And you may facilitate the other buyer getting it at a price much lower than you would have paid.    I try to explain to my buyers that if a multiple offer situation is occurring on a bank owned property that bank does not care about WHO or WHAT they just want to close the sale.  You can pull out but you won’t hurt their feelings or teach them anything.

C. You can do your research.  And bid accordingly.  Then you get the house or investment you want at the price you can afford.   One of the best and sneakiest tactics is real simple – offer, in writing, to bid $1000 HIGHER than any other competing written offer.   Sometimes, again in a bank owned situation, they won’t let you do this.  But other owners will, and it gets you back in control, with an effective “veto” over the final price if you write the counter offer properly.

No one likes unwanted competition.

It disrupts the buying process.

But for the BEST HOUSE at a GREAT PRICE you must be prepared for a “Highest and Best” offer scenario.

In all their gory glory . . .

In their totality . . .

Median price change in Northwest Ohio over 36 months is -$30k.

Median price change in Northwest Ohio of closed single family homes is -$31.5k over 36 months.

EVERY house on average lost 20% to 30% in value.

My observations -

1. Ranches in the suburbs have resisted this trend more than anything else.

2. 80% of the “active” real estate agents have an idea this has happened, but are in “pricing denial”.   They eventually seem to be running out of money after 3 years of not selling any houses they have listed.

3. We really did not destroy 30% of the housing stock in either Afghanistan or Iraq.   But we managed to do it here.   Thanks!

4.  Toledo now has some of the cheapest housing prices in America, for what that is worth.

5.  This has caused some of the strongest and most well capitalized builder/developers to throw in the towel.   I have developed land, sold land, marketed new subdivisions, and done market research for new projects . . . . and I no longer can tell you who is going to do future non-condo/villa development in the suburban market.

Foreclosed?

Short-sale complete?

As I wrote earlier, Ohio has a 2 year time frame for mortgage holders jilted by borrowers to come and try and collect.

My supposition after attending a couple of national REO meetings is that the banks are planning on using this power to get more money from former homeowners.

Unless, of course, you are sick with cancer.

And suing your former borrower generates a lot of bad press.

Remember – if you are in a short sale situation make ABSOLUTELY SURE you are not responsible for any money owed.  In writing.  With your attorney approving.

If you are in a foreclosure situation . . . know your rights and your obligations.  Try to short sell it and use the negotiations in that process as a lever to get the bank to release your contingent liability.

Or else you have to develop cancer to get the bank to be nice.

Details?

Can’t give them to you.

But in a recent meeting with a Perrysburg homeowner, I realized that they were in denial.

Which can be a serious emotional state that is impervious to reason, evidence, and logic.

These potential clients want their 2005 price.

They “NEED” it as an old mentor, Howard Brinton, used to say.

But it is 2010.

Chrysler is BK.   Toledo, City of, is BK.   Ohio, State of, is broke.   GM has filed for BK.  The entire giant mortgage brokerage that loaned them their money . . . BK and gone.

2005 is long gone.   What you or I paid is immaterial.  What you or I “NEED” is not important.

We should be moving beyond denial to truth.

In fact, we actually have more practice and experience at distressed markets than anyone else in America.

Seriously.

We (Northwest Ohio) went into this market first – along with Cleveland and Detroit.    (“Why?”, o student of history, you ask.  I will tell you:  we shipped our manufacturing jobs over to China first.  Before we shipped our tech jobs and info jobs and pharma jobs.  We – first!, but I digress.)

So – no excuses.   We are experienced in these matters.   Or we should be.

Nationally, 30% of the ENTIRE U.S. market is distressed.

Perhaps 50% of the total market activity in Toledo is now “distressed”.   That means short sales, REO, foreclosures, deed in lieu, and upside down, underwater sellers who have to bring cash to the table just to close.

Half.

One out of two.

We have to move beyond denial now.

There are some very good Realtors that I know that have not closed a single deal yet this year.

They are in denial.

There are some very good homes that will not sell for their owners.

Denial.

“But . . . the tax credit!”

“But . . . ”

Denial.

It hurts.

But you have to move on.

If you want closure.