Home Buying: Best way to find foreclosers and best prices

Searched around this forum and haven't found anything closely related. So if this is a repost, please forgive me.
There are a lot of us first time home buyers now looking for a good deal. Where have you homeowners found your deal? How did you search; through the internet, or realtor?
What strategies do you know of or did you use that worked? Failed? I have read recently that many banks put foreclosures on the market for market price, which doesnt make sense to me. However, they may accept offers of 20% less than asking price. Obviously have the property inspected and if its a foreclosed property, find a good contractor to give you an estimate of needed repairs. That will prove to be a good bargaining chip.
Below are a couple links that I have found helpful. Hopefully this can become a thread that will help a lot of people.

RealtyTrac.com
Trulia.com
foreclosurepoint.com

If you want the BEST prices, wait until capitulation.

Banks are still holding onto foreclosures not wanting to flood the market.

When they give in, and the current knifecatchers are screwed then we will really see the bottom.

Wait. When noone wants to buy, then its the time to buy.

Went to see a foreclosure house at noon today. Price is at 2003 levels, maybe even a little less. There were 7 offers as I spoke to the bank's agent. I keep waiting for the flood of foreclosures. Any guesses as to when it will be unleashed upon us?

Given the results of the stress test, and the eagerness with which the government has given loans to banks ... we may very well never hit capitulation. I'm concerned that even the current stock rally may be a result of the inflated money supply, especially with it concentrated in the financial sector. Have you heard that some of the government loans are actually being converted into equities? So much for paying back the Fed or the Government. We may be starting to live with the inflated money supply right now.

for fort bend county which is on the outskirt of Houston, tx
fort bend county
go to document type select "foreclosure" click "search"
this will list all the homes that is going to be auctioned on certain dates
grantors are listed alphabetically to find the deed of trust so that you can find the bank/trustee.

patch96 said: Banks are still holding onto foreclosures not wanting to flood the market.lol, I have no idea how urban myths are created but they are certainly very persistent. Where on god's green earth are you getting your information?

Banks are not intentionally holding onto REO inventory to prevent it from flooding the market. It just sometimes takes a while for banks to list a foreclosed property, since they have to determine its market value, decide whether repairs are needed, assign an asset officer, etc...

Green for starting this thread OP. Now i am eager to listen from pros like SIS

Does RealtryTrac have properties listed that aren't in MLS? Is there any point to signing up for their service?

geo123 said: patch96 said: Banks are still holding onto foreclosures not wanting to flood the market.lol, I have no idea how urban myths are created but they are certainly very persistent. Where on god's green earth are you getting your information?

Banks are not intentionally holding onto REO inventory to prevent it from flooding the market. It just sometimes takes a while for banks to list a foreclosed property, since they have to determine its market value, decide whether repairs are needed, assign an asset officer, etc...

(My response in the other thread)

kmsandrbs said: geo123 said: patch96 said: Banks are still holding onto foreclosures not wanting to flood the market.lol, I have no idea how urban myths are created but they are certainly very persistent. Where on god's green earth are you getting your information?

Banks are not intentionally holding onto REO inventory to prevent it from flooding the market. It just sometimes takes a while for banks to list a foreclosed property, since they have to determine its market value, decide whether repairs are needed, assign an asset officer, etc...

(My response in the other thread)My firm has represented just about every bank and every financial institution in the country and I can unequivocally tell you that it is an absolute urban myth that banks are intentionally holding back inventory. The article to which you linked references correct facts but then comes up with the wrong conclusion. The reason that only a relatively small percentage of foreclosed properties is currently on MLS has nothing to do with the conspiracy theories. In fact, because there are so many banks out there, without coordinating with each other to limit inventory on the market, banks that would try this would get burned by others. In other words, if a couple of banks attempted to hold back inventory in an effort to prop up prices, it wouldn't help them at all since they simply don't have enough market power.

Once again, I have represented banks taking down the entire subdivisions (and, often, several subdivisions at the same time) and then, when the time came to release the properties on the open market, releasing all the collateral on the open market all at once. I already mentioned a number of reasons that foreclosed properties are slow to make it back on the market. Did you know, by the way, that a HUGE percentage of foreclosed properties never end up on the open market not because banks are holding on to them in an effort to limit the inventory but because they are sold to investors/developers without ever showing up on MLS? It is very common for vulture funds/investors/developers to purchase both individual properties as well as large pools of properties shortly after the foreclosure, so they simply never show up on the MLS.

geo123 said: patch96 said: Banks are still holding onto foreclosures not wanting to flood the market.lol, I have no idea how urban myths are created but they are certainly very persistent. Where on god's green earth are you getting your information?

Banks are not intentionally holding onto REO inventory to prevent it from flooding the market. It just sometimes takes a while for banks to list a foreclosed property, since they have to determine its market value, decide whether repairs are needed, assign an asset officer, etc...

Dead Wrong

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/07/MNL5... April 8, 2009

A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.

Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."

In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory."

"There is a real danger that there is much more (foreclosure) inventory than we are measuring," said Celia Chen, director of housing economics at Moody's Economy.com in Pennsylvania. "Eventually those homes will have to be dealt with. If they're all put on the market, that will add more inventory to an already bloated market and drive down home prices even more."
More than one-third locally

In the Bay Area, a Chronicle analysis of data from San Diego's MDA DataQuick shows that more than one-third of foreclosures are in shadow territory - that is, they are not registering in county records as having been resold.

For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.
Turnaround usually quick

Realtors say foreclosures generally go on the market a month or two after the bank takes title and then sell fairly quickly, often getting an accepted offer within a week or two of being listed and then closing escrow within 30 days. That means that foreclosures should register as being resold within three months.

But taking the foreclosures in any given month or selection of months and looking at what happened three months later also reveals a big gap between what banks took back and what they resold.

Tom Kelly, a spokesman for banking giant Chase in Chicago, said the bank sells foreclosed homes in a timely fashion.

"We try not to be in the business of owning homes," he said. "Our goal is to get them back on the market as quickly as possible. We want to maximize what we sell them for and yet do it quickly."

Kelly was at a loss to explain the shadow inventory phenomenon other than the quantities involved.

"The inventory might be growing because there is just a lot of volume coming in. That would not surprise me," he said.

Locally, the monthly number of foreclosures has decreased since peaking at 4,321 in August 2007. That has allowed foreclosure resales to start closing the gap.

Most observers say the recent fall-off in foreclosures came because California and many banks implemented foreclosure moratoriums in the fall, not because the problem has diminished.
Only 65.5 percent resold

A second DataQuick study of all Bay Area homes repossessed by banks in the 18 months ending January 2009 tracked how many of those homes had resold by mid-March. It found that 65.5 percent had resold. Discovery Bay's ForeclosureRadar.com compared its database of Bay Area foreclosures to MLS listings for the past 120 days and found that fewer than one-fifth of the foreclosures showed up as for-sale listings.

"Foreclosure numbers are artificially depressed," said CEO Sean O'Toole. He puts California's shadow inventory at about 100,000 homes.

So why aren't banks selling off their foreclosures?

Observers say several factors are at work.

-- The "pig in the python": Digesting all those foreclosures takes awhile. It's time-consuming to get a home vacant, clean and ready for sale. "The system is overwhelmed by the volume," Sharga said. "In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month."

-- Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. "With banks in the stress they're in, I don't think they're anxious to show losses in assets on their balance sheets," O'Toole said.

-- Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don't fall as fast. "They want to be careful about not releasing them too quickly so they don't drive prices down and hurt the values," O'Toole said.

Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they're negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.

"The problem is that no one knows how extensive (the shadow inventory) is," said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. "It's a wild card. If it's a really big number, you'll see prices drop a lot more and deeper problems for the financial system."

Only 65.5 percent of all Bay Area homes repossessed by banks in the 18 months ended January 2009 had been resold by mid-March. This study looked at the same homes over time, not an aggregate of all foreclosures.

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For those of us investors who participated, the similarities in the run-up in the dot com bubble/bust and the housing bubble/bust are striking.

And, it will end the same. Real estate will take decades to ever build wealth in the same fashion as before.

And, geo123 this is one of many articles i could post. Its not just San Fran.

And its a vicious cycle, once these hit othere will bail. Especially all the knife catchers who bought hoping to hold and resale.

I personally know people who used to be angry that they bought, then they were angry that they did not sell at the peak, and now they are angry that they were not savvy enought to stop paying on the mortgage years ago.

Let go of your old-school belief that homes (real estate) are somehow sacrosanct and "different" from other assets. All the people walking away are not.

I recently saw a home (midwest) that hit $3.5 million at the peak recently sell for $1.2 mill. This was in an subdivision on a world class (jack nicklaus designed) golf course that they had to have a lottery to sell (award) lots in 2002 due to rapid demand from the rich dying to get in.

In the Northern Virginia area, specifically, Arlington, Fairfax, and Prince William counties, things to my knowledge has settled down quite a bit from 6-9 months ago. IMO I think prices have become stable for houses less than $500k. Houses that were listed to sell, sell quickly and many with multiple offers. 2-4 years ago, there were would be 10-20 offers on almost any property.

Houses listed under $500k are selling well. Houses over $500k are currently being hardest hit, and just sitting there.
I feel soooo bad for them, awwww, sniff, sniff.
It'll be interesting to see how far and fast/slow those prices fall. Got love seller denial.

People are downgrading moreso than upgrading.

As for time to buy? IMO I think so, for a first time home buyer in this market.
That $8k is a nice lil bonus, not that everyone will get that, but for a first time house buyer, it's a nice chunk of change.
If there are foreclosures being held back in this area, it doesn't make logical sense. I see foreclosures and short sales, but they are the 'no love' homes, that will likely go for 20% to 40% off the amount if they were bought after 2002. Some of bare bones, some are stripped, some are full of kids with no parents in the house, which is downright sad. The whole process is interesting on many levels.

Redfin-like the search citeria, and map vision details.

Yeah,
For the past 6 months there was not a single foreclosure property in a good area like walnut creek.
Walnut creek still the median price is 600K. I can assure this is not the bottom.

YonlyME said: hope to see some nice answers in this thread...and green to all of them and thanks in advance
btw green to the OP too
Edit:
I live in the bay area and currently live in a rented apt...i am interested to buy a house if i get a good deal..not in bay are though...

It would be hard to prove any banks withholding foreclosed properties from market (that would be market manipulation, anti-trust issues). No banks or government agencies will ever admit to this. Plus banks have no incentives to sell cheap, not when government is hoping to get hedge funds to buy bad assets/debts with government money.

What would be easier to prove (but not likely because it makes economy look bad), is how many properties nationwide should be foreclosed (many months of no payment) but aren't because of moratorium on foreclosures. If these houses join the market then we will get a much accurate picture/prices. But you think our government (regardless of parties) and economy can handle this reality? SO government keeps pumping money to banks, to hold off foreclosures, hoping home owners in trouble can either refi or sell (on their own instead of getting repo'd and let banks do it) at decent price. And as long as banks are profitable (guaranteed by the government), they are not going to foreclose on any homes.

Will this soft landing work? Hard to say, considering housing prices are still way above common salaries (going down due to high unemployment). All they are risking is future taxpayers' money, but not doing it is political suicide.

I am in Los Angeles, but looking to buy in Northern VA area (bi-coastal living). Looking at both markets, I think houses below the FHA loan limit of $729,750 are still moving briskly, because banks can easily resell these loans to Fannie or Freddie (with guaranteed government money), and they can quickly pocket not only the closing fees but a few months of interests with zero risks. But on anything above $729K banks (Fannie and Freddie won't touch them) are risking their own money, so they charge jumbo rates (2-3% higher) plus higher closing costs and loan requirements.

This is why banks are the most profitable biz right now (replacing oil companies just as our presidents changed). Don't want to start a political debate so I will stop here.

Nice, I am looking for these information. Thanks OP

lgyeresi said: Does RealtryTrac have properties listed that aren't in MLS? Is there any point to signing up for their service?

No and no. The only thing I have seen about them is that by paying their fee, you are keeping someone off welfare.

The sites I have seen that are worth looking at are: reotrans.com and the specific REO pages of the individual banks. If you are looking for a home where 5thTurd is big, go to their web-site and look at the REOs there. Same for any of the national banks, they all have their own web pages which are a lot more accurate than sites like RealtyTrac. RT has places listed that were off market long ago and new ones take forever to show up on their site. Also, it appears that they have someone flooding Trulia with the old listings that they have stumbled across, making Trulia worth less to someone hunting for a house. Zillow is pretty worthless, too, as agents often get less commission for "selling" a REO, so they don't bother listing it on Zillow either. All of the sites like RT, as far as I can tell, get their info from the bank web-sites, and are not very timely about what they want you to pay them for.

SUCKISSTAPLES said: Geo, I havent seen evidence the banks hold back inventory after it goes through foreclosure and becomes REO in CA, but what I am definitely seeing (from personal experience) is homes in default for a year+ before NOD is even filed....now we can presume this is due to the backlog, understaffed depts etc, but I have to think that some of it is intentional delays amid hopes for some recovery...To the outsiders it often seems as if the banks are intentionally holding off on foreclosing on properties in the hopes that property values will recover. In reality, however, there are numerous internal reasons that it can take a while to foreclose. For instance, I have just had to postpone foreclosures for the third time on a set of properties because we are having trouble getting appraisals done on all of them because of some technical issues associated with the legal description. There is a very good chance that we'll have to postpone these foreclosures again, for the fourth time. So, every month we are re-running foreclosure ads on the same set of properties and it appears to the outsiders that the bank is just waiting for the best timing to take them down, when the reality is very far from it.

On yet another set of properties we are about to enter into an EIGHTH forbearance agreement and it's now been about a year and a half since the initial default occurred. The reasons for all these multiple forbearances is the fact that the developer is obviously struggling but is able to get enough sales and to muster enough resources to induce the bank to enter into another forbearance every couple of months.

A couple of months ago we represented a large bank in connection with a complex restructuring of several hundred million dollars in loans made to a large publicly traded national homebuilder. For a while all the newsstories were suggesting that a successful restructuring would be impossible and that all the subdivisions would be foreclosed on in all the states because of all the complexities associated with the homebuilder's debt structure. The reality was, however, very different from the published news reports and the restructuring was successful.

By the way, there are numerous additional reasons that banks are often forced to take their time taking down properties. For instance, a file audit often uncovers various documentary issues that must be addressed and rectified internally before a foreclosure can be completed. There are often last minute glitches, such as last minute issues shown in a pre-foreclosure title update (if, for instance, you discover a very recent federal tax lien, you are forced to postpone the foreclosure so that proper steps can be taken to extinguish it), a Phase I that recommends a Phase II, appraisal issues, etc...

geo123 said:

Once again, I am not speculating about the reasons that only a relatively small percentage of foreclosed properties end up on the market -- I am often intimately involved in making all these decisions and am one of the people who advises banks on these matters.
As related to SFRs (not developers, commercial properties, etc) does this still hold true that only a small % become REOs listed on the MLS, and could you help those of us who missed it previously understand why foreclosure homes would not end up as MLS listed REOs?

Assuming no one else bids at the foreclosure auctions and the banks take ownership, Where else would they end up (besides in the hands of agents/insiders)?

Also when you say small % (again talking about SFRs), just how small a % make it to the MLS roughly? And any tips on snagging the homes after the courthouse steps auction but before they make it to MLS?

Sorry if Im asking too many questions or questions not fir for public response.

I think realty track search for public data for default properties. That is a one spot search for all states for public data without going into each county web site. There may be other sites though.

Mickie3 said: lgyeresi said: Does RealtryTrac have properties listed that aren't in MLS? Is there any point to signing up for their service?

No and no. The only thing I have seen about them is that by paying their fee, you are keeping someone off welfare.

The sites I have seen that are worth looking at are: reotrans.com and the specific REO pages of the individual banks. If you are looking for a home where 5thTurd is big, go to their web-site and look at the REOs there. Same for any of the national banks, they all have their own web pages which are a lot more accurate than sites like RealtyTrac. RT has places listed that were off market long ago and new ones take forever to show up on their site. Also, it appears that they have someone flooding Trulia with the old listings that they have stumbled across, making Trulia worth less to someone hunting for a house. Zillow is pretty worthless, too, as agents often get less commission for "selling" a REO, so they don't bother listing it on Zillow either. All of the sites like RT, as far as I can tell, get their info from the bank web-sites, and are not very timely about what they want you to pay them for.

wiredspider said: SUCKISSTAPLES said: And any tips on snagging the homes after the courthouse steps auction but before they make it to MLS?

I'm wondering the same thing, I can find houses that have reverted to the bank, but now sure how I can purchase before it hits MLS. Just recently I saw a property had been bought by the bank for $220k, in a neighborhood of $300k+ houses. Asked my agent about the property and all he could do was pull the MLS from a few years back/a not active MLS. Just recently the property became active in MLS for $295k, less than a week and the property is already pending! Sure would have liked to snagged the place for $220k.

Then wouldn't the best strategy have been to bid against the bank at the auction?

patch96 said: WAIT FOR CAPITULATIONJust out of curiosity, how will you know that "capitulation" has taken place? How do you know what the conditions will be during the capitulation? For all you know, interest rates could be signficantly higher than the historically very competitive interest rates that we've had (even though interest rates have jumped up) or credit conditions could be even tighter, so it'd cost more for people to acquire properties. As I've previously posted, there is no way for anyone to accurately predict how any of the events are going to shape up in the future, but I can tell you that for market novices market timing is the absolute best way to ensure that their plans will fail. Not only are you only guaranteed to badly miss the bottom but you also have no idea what the conditions will be at the bottom. There is a very good reason that in a lot of areas the best deals are attracting multiple prospective buyers. Just ask anyone who has gone after an aggressively priced REO or any other property lately and you'll immediately hear about multiple bidders in quite a few situations.

Now, none of this means that now is a good time to buy a house because, in part, real estate is by definition very local and because there is more to a decision to buy a house than just real estate conditions in the area. What people need to realize, however, is that even if real estate prices will continue to fall in your local area (which will not be true for a lot of areas and price ranges) does not mean that you cannot or should not find a smoking deal now. Worry a little less about the "average" price and concentrate a little more on finding great deals, which will still be great deals even if average prices in your area continue to decline. In many cases these deals will be a lot more difficult to get once the hysteria is over and all of those sitting on the sidelines hear a news report or two that the bottom has been reached (which report will invariably come way after it happens) and start jumping in to snatch up what they think are great deals.

There is a reason that I say that people need to worry a lot less about the "average" prices and a lot more about specific deals. For instance, a year ago I posted about us buying our latest primary residence (the smallest and the cheapest house in our subdivision). At the time it was appraised by Penfed (a pretty conservative lender) for a whopping FORTY-ONE PERCENT (41%) higher than our purchase price. Our county estimated its value to be 36% higher than our purchase price. Since then the housing market and the economy have weakened some more, including additional weakening in our area. We continue to be quite happy with our deal, however. For instance, our neighbor's house was sold 4 months ago for about 60% more than our purchase price. That house was larger, but even after adjusting for the square footage, the price was higher even though the neighbors got a good deal. I can tell you that not too long ago I participated in a number of conference calls dealing with the merits of our property tax appeal in which we sought to use our purchase price for tax purposes (in our state, just like in many other states out there, property taxes are based on the fair market value of the property, which may or may not be the same as the purchase price). The county tax assessor, however, argued that based on the sales data in our subdivision and in the area our sales price was so far below the comps that our transaction could not have been an arms length one and does not, therefore, represent a fair market value of the property. Just 2 weeks ago or so we refinanced our house with Penfed and, in connection with the refi, obtained another appraisal. The appraisal came in 26% higher than our purchase price, which reflects the fact that market prices in our area weakened some more last year but that our deal remains a terrific one.

What a lot of us are taking advantage of right now is not just the depressed housing values but also relative inefficiency of the housing market, which is causing tremendous deals to pop up from time to time, which are not only far below today's depressed fair market values but are also way under fair market values that can be expected even if the worst predictions materialize. Once the hysteria is over and all the "would be" buyers jump in, marketing times will shorten considerably and all the best deals will disappear WAY before the average prices start to go up.