I am a Fannie Mae direct broker.   And a HUD listing broker. They send me a lot of business.  And I sell a lot of homes for them.   

My team and I also represent a lot of buyers who buy REO listings from Fannie and HUD and Freddie that OTHER brokers have listed.

So I see the velocity and behavior of the local market from both sides.

Some thoughts for you if you want to be a buyer of the “great REO wave”:

1. Know what you want to pay – for a particular house – and no matter what happens or who says what, stick with that price/offer/valuation.

2. Be prepared to be disappointed.   The best houses in REO Land get multiple offers.   Some of my best assets get 3 or 5 or even 7 offers.   One family is happy.   The others are crestfallen.   Be prepared to be disappointed.

3. Know in advance the newest tactic that banks are using.  It’s simply called “highest and best offer”.   You are told there are multiple offers.   You are given a deadline.   You have one chance to put in your offer, your “highest and best” offer.   Why do the banks do this?   It gets them higher sales prices, obviously.   And paradoxically it flushes investors out of the pipleline.

4. Investors beware. Fannie, Freddie, and HUD all actively discriminate against . . . investors.  It’s the only type of legal housing discrimination that I know of.   It’s designed to penalize investors who often just “flip” a house after making cosmetic changes or rent out a nice house and often contribute to a decline in housing values in a specific area.

5.  Beware that some banks are artificially, and on purpose . . . deliberately underpricing some assets. By many thousands of dollars.   That helps the banks often get many thousands of dollars more than their list price.  And that’s why you and your agent (hopefully me and my team!) have done our homework up front.   Because it may be wise and financially smart to spend $5k MORE on a house than list price (if, for example, it was underpriced by $30k as I have just seen . . . ).

The rules are different in REO Land.

But the results and the home you can buy . . . they can be spectacular!

The owner lost his job.

The mortgage went unpaid.

Everything started being delayed – repairs, etc.

The bank foreclosed.

The house went for sale.

I sold it.

A local family bought it  . . . because they cared about the street/neighborhood/city.

They have repaired and renovated it . . .

Here is the “before and after” shot . . .

Do you think that the neighbors are happy?

I recently sent an email out about a new listing.  I used the hook “everybody asks me when are going to hit the bottom of the market”?

I don’t know.

2012?  2011?  2021?

No one does.

We are in need of a new model now.

A new model of buyer behavior.  Lender response to buyer default.  And seller behavior.   The old models are no longer working.  The chart has flaws.  Case-Shiller numbers are the best we have, but still flawed.  The new model of tactical defaults, bank “unforeclosures” to get TARP rebates, buyers who are REO’d or BK’d and have huge monthly incomes – they are all helping to rewrite the rule book.

‘Double-Dip’ in Housing Prices Even Worse Than Expected

U.S. single-family home prices dropped in March, dipping below their 2009 low, as the housing market remained bogged down by inventory and weak demand, a closely watched survey said Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in March from February on a seasonally adjusted basis, in line with economists’ expectations.

The price index was below the low seen in April 2009 during the financial crisis. The glut of houses for sale, foreclosures, tight credit and weak demand have kept the housing market on the ropes even as other areas of the economy start to recover.

The 20-city composite index was at 138.16, falling below the 2009 low of 139.26.

“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” David Blitzer, chairman of the index committee at S&P Indices, said in a statement. “Home prices continue on their downward spiral with no relief in sight.”

You can read about it here . . . . but this is what I have feared and been warning about.

Out and about in Perrysburg today.   Foreclosing and securing new bank owned properties in the city and township.

Then out to Toledo and Rossford – to snap some photos on a rare sun-shiney day of some new listings.

Then back to work on offers and new listings.

And everywhere I go . . . . “is the market getting better?” is the question.

Not based on what I am seeing.

Then I read this from Marketwatch.com

BOSTON (MarketWatch) — If you thought the housing crisis was bad, think again.

It’s worse.

New data just out from Zillow, the real-estate information company, show house prices are falling at their fastest rate since the Lehman collapse.

Average home prices are down 8% from a year ago, 3% over the quarter, and are falling at about 1% every month, according to Zillow.

And the percentage of homeowners in negative-equity positions — with a home worth less than its mortgage — has rocketed to 28%, a new crisis high.

Zillow now predicts prices will fall about 8% this year and says it no longer expects the market to bottom before 2012.

“There’s no way we can get to flat, from these depreciation levels, in the last nine months of the year,” says Zillow economist Stan Humphries. “Demand is a lot more anemic than we had previously thought.”

Just lovely.

See that cute brick house in the picture – with the big back yard, all brick construction, a full basement, shed, garage?

In Perrysburg?

On 795/Avenue Road?  Right across from Valley Stream?

That one – this one here: 

It’s for sale.  Bank owned.  $56,700.

FIFTY SIX THOUSAND SEVEN HUNDRED and NO cents.

You interested?  Better call me FAST.

I just got a message from my REO asset managers at Fannie Mae:

They are having another “Spring/Summer” REO sale.

Wow!

Picture the scene:

A great 3000++ sq. foot brick 2 story.

A great location hard by Ft. Meigs, River Road, the Maumee, the Y, and the great Rivercrest Subdivision.

And . . . the foreclosed seller decides to “send a message” to the bank.

So he removes all the light fixtures.

And he removes and discards all the cabinet doors.   In every room.

And the doors.

He even takes the toilet seats.

THE TOILET SEATS!

So . . . . the bank gets the message.

The $350,000 two story brick home with a finished basement, sideload 3 car garage, deck, and more . . . . has become a $212,500 house.

And if you think about it, the next owner is going to be able to do the work, make the repairs, put some sweat-equity into his new home . . . and laugh all the way to the bank.

So the story will at least have a happy ending.

You want to get inside 1400 Rivercrest – call or email me today!

And you know, if you have ever come back home to Perrysburg in the Winter from Florida, you just know what I am going to write about:

1. The blast of cold at the jetway at DTW – I mean the sobering, shocking blast of cold air INSIDE the Jetway.

2. The trek to your car in or out of the garage.  Blue Lot.  Off site.  Inside.  It doesn’t matter – your car is frozen cold. And takes time to warm up.

3. The drive back to Northwest Ohio.  Cloudy.  Frigid.  Freezing.

So, from the 79 degree sun of yesterday to the ice and blizzard of today.

And while it does make you wonder just exactly why you live here (because its’ home and because in July the tables are turned – trust me, I used to live in Florida).

S0 – I get back from Orlando . . . .

Today.

And I get to list/market a new property!

YEAH!

We Realtors love new listings.

This one is on the water.

This one has a dock!

This is a vacation home!

In Ohio!

And because it is a foreclosure I do not have any “summer” pictures.  I have one photo of the dock.

I just got back from Florida.

How sad is that?

What was the REAL effect of the following:

HAMP/the foreclosure moratorium/the robo signer moratorium/”Making Home Affordable”/and HopeNow?

(these were all roadblocks to market clearing foreclosure activity or government sponsored mortgage crisis programs for homeowners in distress)

The considered net effect?

Some economists are saying it was ZERO.   It just pushed foreclosures ahead to the future.

Like this guy . . .

“It is pretty clear, however, that overall foreclosure moratoria, foreclosure delays, modifications, and other workout activity continued to keep the number of homeowners who “lost” their homes to foreclosure massively lower than one would have expected given the delinquency/in foreclosure numbers.” (Quote from economist Tom Lawler in Calculated Risk blog.)

Here is my take “from the street”.  From Main Street USA.

I just met a guy today.

Foreclosed.

I was helping him move out and securing the asset for my client.

The city/house/street do not matter – because this is happening all over Northwest Ohio.

What did he tell me?

What is the street effect of this crisis?

He has lived in the house for 4 years without making one single mortgage payment.

And with no property taxes paid by him either . . . . that equals a lot of money.

In fact it is “worth” over $50,000.

$50,000 of imputed savings/benefits/gain that he has accrued to him.

While he was being foreclosed.

I am not an economist.

But this is being repeated all over the country.  The effect is real.  The bills are going to come due.   The merry go round will stop.

“3 or 4 times MORE foreclosures”???

Hard to think about that . . .