Friday, May 28, 2010
Thursday, May 20, 2010
Foreclosure Filings down in April
ForeclosureRadar (www.foreclosureradar.com), the only website that
tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for April 2010. Foreclosure filings were down in April for the first time since the beginning of the year. Despite the decline in filings, the inventory of properties in preforeclosure or scheduled for sale only dipped slightly as the drop in filings were offset by an increase in the time to foreclose. Cancellations continue to climb, up more than 32 percent from the beginning of the year. The number of properties sold to 3rd parties also continues to climb, helped again this month by slightly better
discounts.
“The steady rise in cancellations leads us to believe that loan modifications and short sales are gaining traction” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “I’d caution, however, that cancellations also occur due to filing errors and extended postponements, which require the Notice of Trustee Sale to be re-filed. In fact, 14.6 percent of new Notice of Trustee filings in April were on previously
cancelled foreclosures.”
Notice of Default filings are the first step in the foreclosure process. Notice of Trustee Sale filings set the date and time of auction and serve as the homeowner’s final notice before sale.
Foreclosure Filings Foreclosure Cancellations Continue to Climb Short sales and loan modifications are not the only explanation
After the filing of a Notice of Trustee Sale, there are only three possible outcomes. First, the sale can be Cancelled for reasons that include a successful loan modification or short sale, a filing error, or a legal requirement to re-file the notice after extended postponements. Alternatively, if the property is taken to sale, the Bank will place the opening bid. If a 3rd party, typically an investor, bids more than the bank’s opening bid, the property will be Sold to 3rd Party; if not, it will go Back to Bank and become part of that bank’s REO
inventory.
Preforeclosure inventory is an estimate of the number of properties that have had a Notice of Default filed against the property, but have not yet been Scheduled for Sale. The Scheduled for Sale inventory indicates those properties that have had a Notice of Trustee Sale filed, but have not yet been sold or had the sale
cancelled. The Bank Owned (REO) inventory indicates the number of properties that have been sold Back to Bank at the trustee sale, and which the bank has not yet resold to another party.
tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for April 2010. Foreclosure filings were down in April for the first time since the beginning of the year. Despite the decline in filings, the inventory of properties in preforeclosure or scheduled for sale only dipped slightly as the drop in filings were offset by an increase in the time to foreclose. Cancellations continue to climb, up more than 32 percent from the beginning of the year. The number of properties sold to 3rd parties also continues to climb, helped again this month by slightly better
discounts.
“The steady rise in cancellations leads us to believe that loan modifications and short sales are gaining traction” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “I’d caution, however, that cancellations also occur due to filing errors and extended postponements, which require the Notice of Trustee Sale to be re-filed. In fact, 14.6 percent of new Notice of Trustee filings in April were on previously
cancelled foreclosures.”
Notice of Default filings are the first step in the foreclosure process. Notice of Trustee Sale filings set the date and time of auction and serve as the homeowner’s final notice before sale.
Foreclosure Filings Foreclosure Cancellations Continue to Climb Short sales and loan modifications are not the only explanation
After the filing of a Notice of Trustee Sale, there are only three possible outcomes. First, the sale can be Cancelled for reasons that include a successful loan modification or short sale, a filing error, or a legal requirement to re-file the notice after extended postponements. Alternatively, if the property is taken to sale, the Bank will place the opening bid. If a 3rd party, typically an investor, bids more than the bank’s opening bid, the property will be Sold to 3rd Party; if not, it will go Back to Bank and become part of that bank’s REO
inventory.
Preforeclosure inventory is an estimate of the number of properties that have had a Notice of Default filed against the property, but have not yet been Scheduled for Sale. The Scheduled for Sale inventory indicates those properties that have had a Notice of Trustee Sale filed, but have not yet been sold or had the sale
cancelled. The Bank Owned (REO) inventory indicates the number of properties that have been sold Back to Bank at the trustee sale, and which the bank has not yet resold to another party.
Friday, May 7, 2010
How To Buy a Foreclosure
How to buy a foreclosure
By Les Christie, staff writerMay 4, 2010: 5:44 AM ET
NEW YORK (CNNMoney.com) -- You want to buy a foreclosure? Remember, there are both great opportunities and great pressures and pitfalls in this market.
First, you have to decide at what stage of foreclosure you want to buy. There are three options: 1. pre-foreclosure; 2. sheriff's auction; 3. repossession, called REO (for real estate owned by the bank).
"The safest and best way to buy is when it's a bank-owned property," said Rick Sharga, a spokesman for RealtyTrac, the online marketer of foreclosure properties.
Pre-foreclosure: These homes are in the foreclosure process, but they have yet to be sent to auction. Owners are typically trying to unload them because they are "underwater," owing more on the homes than they are worth.
As a result, potential buyers must negotiate a deal with the lender as well as the owner.(This process is called a "Short Sale" and needs the attention of an experienced agent) That makes buying at this stage of foreclosure complicated and slow. But, you have the advantage of being able to inspect the home before purchase -- which isn't the case in other types of foreclosure sales. Sharga warned, however, that prices are usually higher than at other stages of foreclosure.
Sheriff's auction: These sales yield the lowest prices, but they are fraught with difficulties. Often the house is unavailable for inspection, leaving buyers with a long list of expensive repairs -- and much larger bill than they intended. This stage is usually best left to the professionals, the contractors and investors who regularly bid on these places and know what they're doing.
Repossession: This occurs after the home has gone through a sheriff's auction but does not sell and the bank gains possession of the property. Homebuyers may not get the best bargains during this stage, but they can nearly always perform a thorough inspection before closing, minimizing costly surprises. Plus, the property comes with a clear title.
In addition, the banks selling these places may extend preferential financing terms to the buyers and may have made some repairs before putting the property on the market.
Even in this safer stage, though, homes are still usually sold in "as is" condition. "That means the bank won't pay for cosmetic issues," said Adam Wiener, a spokesman for the Redfin, the online real estate marketer. "Although, they will often pay for some or all of repairs that are health and safety issues. That makes the home inspection even more critical."
He also pointed out that, since you're buying from a corporation, not an individual, the buying process can be faster, so be prepared to move quickly. Many times a listing goes on sale on a Friday and is sold over the weekend.
"The buyers and their agents need to be on top of everything from the inspection to the financing," said Wiener. "Some banks will even charge a per diem fee for late closings."
Once you've decided which type of home to buy, there are several common mistakes foreclosure buyers should take care to avoid. These include:
Getting caught up in a bidding frenzy: The banks often under-price repossessions, hoping to generate excitement, attract multiple bids and sell them quickly. The problem is, as in any auction-type sale, bidders get excited and pay too much.
"Remember," said Sharga, "there are 800,000 REOs in the banks' inventories. There'll be another home to bid on tomorrow."
Underestimating repair costs: Take full advantage of the home inspection and don't delude yourself about much the repairs will cost.
"Take along someone who can give you a good estimate of how much repair costs will come to," said Sharga.
Redfin coaches its agents to warn buyers to factor in a cushion of 10% to 20% of the purchase price to pay for unexpected repairs. "If you end up not using it, go on vacation after 6 months," Wiener said.
Not knowing what comparable properties cost: This is important in any market but especially in this endeavor. In high foreclosure areas, prices can be eroding very quickly. You want to have the latest homes sale prices on repossessed properties and try to keep your bid comparable or lower.
Buying in a neighborhood flooded with foreclosures: This is most important for people buying for the short-term. Any neighborhood saturated with REOs and foreclosures may be headed for further price falls. If you're planning to relocate within a few years or buying a bigger house, that could mean selling at a loss. A better bet, if you can find it, is to buy the only foreclosed home in an otherwise stable community. That's more likely to hold its value.
Not having financing in place: If you don't have a pre-approved mortgage, you're really not in the market. "You have to be able to move quickly," Sharga said.
Banks don't want to dilly-dally on sales; they're losing money every day that homes sit on the market. That means they'll often jump on the highest bid with the best financing already in place.
Having a loan beforehand carries another advantage: It tells you how much credit you have available. You won't spend time shopping for homes that are too expensive.
Remember that pre-approved financing is different from pre-qualified financing; it means the loan is ready to go. Pre-qualified is more like an opinion of a loan officer and there's still work to be done before final approval
By Les Christie, staff writerMay 4, 2010: 5:44 AM ET
NEW YORK (CNNMoney.com) -- You want to buy a foreclosure? Remember, there are both great opportunities and great pressures and pitfalls in this market.
First, you have to decide at what stage of foreclosure you want to buy. There are three options: 1. pre-foreclosure; 2. sheriff's auction; 3. repossession, called REO (for real estate owned by the bank).
"The safest and best way to buy is when it's a bank-owned property," said Rick Sharga, a spokesman for RealtyTrac, the online marketer of foreclosure properties.
Pre-foreclosure: These homes are in the foreclosure process, but they have yet to be sent to auction. Owners are typically trying to unload them because they are "underwater," owing more on the homes than they are worth.
As a result, potential buyers must negotiate a deal with the lender as well as the owner.(This process is called a "Short Sale" and needs the attention of an experienced agent) That makes buying at this stage of foreclosure complicated and slow. But, you have the advantage of being able to inspect the home before purchase -- which isn't the case in other types of foreclosure sales. Sharga warned, however, that prices are usually higher than at other stages of foreclosure.
Sheriff's auction: These sales yield the lowest prices, but they are fraught with difficulties. Often the house is unavailable for inspection, leaving buyers with a long list of expensive repairs -- and much larger bill than they intended. This stage is usually best left to the professionals, the contractors and investors who regularly bid on these places and know what they're doing.
Repossession: This occurs after the home has gone through a sheriff's auction but does not sell and the bank gains possession of the property. Homebuyers may not get the best bargains during this stage, but they can nearly always perform a thorough inspection before closing, minimizing costly surprises. Plus, the property comes with a clear title.
In addition, the banks selling these places may extend preferential financing terms to the buyers and may have made some repairs before putting the property on the market.
Even in this safer stage, though, homes are still usually sold in "as is" condition. "That means the bank won't pay for cosmetic issues," said Adam Wiener, a spokesman for the Redfin, the online real estate marketer. "Although, they will often pay for some or all of repairs that are health and safety issues. That makes the home inspection even more critical."
He also pointed out that, since you're buying from a corporation, not an individual, the buying process can be faster, so be prepared to move quickly. Many times a listing goes on sale on a Friday and is sold over the weekend.
"The buyers and their agents need to be on top of everything from the inspection to the financing," said Wiener. "Some banks will even charge a per diem fee for late closings."
Once you've decided which type of home to buy, there are several common mistakes foreclosure buyers should take care to avoid. These include:
Getting caught up in a bidding frenzy: The banks often under-price repossessions, hoping to generate excitement, attract multiple bids and sell them quickly. The problem is, as in any auction-type sale, bidders get excited and pay too much.
"Remember," said Sharga, "there are 800,000 REOs in the banks' inventories. There'll be another home to bid on tomorrow."
Underestimating repair costs: Take full advantage of the home inspection and don't delude yourself about much the repairs will cost.
"Take along someone who can give you a good estimate of how much repair costs will come to," said Sharga.
Redfin coaches its agents to warn buyers to factor in a cushion of 10% to 20% of the purchase price to pay for unexpected repairs. "If you end up not using it, go on vacation after 6 months," Wiener said.
Not knowing what comparable properties cost: This is important in any market but especially in this endeavor. In high foreclosure areas, prices can be eroding very quickly. You want to have the latest homes sale prices on repossessed properties and try to keep your bid comparable or lower.
Buying in a neighborhood flooded with foreclosures: This is most important for people buying for the short-term. Any neighborhood saturated with REOs and foreclosures may be headed for further price falls. If you're planning to relocate within a few years or buying a bigger house, that could mean selling at a loss. A better bet, if you can find it, is to buy the only foreclosed home in an otherwise stable community. That's more likely to hold its value.
Not having financing in place: If you don't have a pre-approved mortgage, you're really not in the market. "You have to be able to move quickly," Sharga said.
Banks don't want to dilly-dally on sales; they're losing money every day that homes sit on the market. That means they'll often jump on the highest bid with the best financing already in place.
Having a loan beforehand carries another advantage: It tells you how much credit you have available. You won't spend time shopping for homes that are too expensive.
Remember that pre-approved financing is different from pre-qualified financing; it means the loan is ready to go. Pre-qualified is more like an opinion of a loan officer and there's still work to be done before final approval
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