Tag Archives: Foreclosure

Foreclosure Listings in South Orange County

Foreclosure sign

Foreclosure properties continue to lead the market in Orange County home sales.  In the last three months, 2,438 out of the 5,907 sales (41%) have been bank-owned properties! 

Sometimes, these homes are agressively priced to immediately attract buyers, which leads to multiple offers and results in selling for over the list price!  The average time on the market for these REOs is only 36 days – almost twice as fast as the average 69 days that non-REOs are taking. 

In order to buy one of these homes from a bank, you need to be pre-approved and non-contingent on the sale of any other property.  They also almost always require that you “pre-qual” with their selected loan officer.

With foreclosed homes making up such a large portion of our active real estate market, I’ve set up a new page on this blog where I will post the REO lists for each city in South Orange County.  If there is an area that I’ve left out, please let me know and I’ll send out exactly what you want!

If you aren’t looking for an REO, take a look at all the other properties available:
 Search ALL the homes for sale in the Southern California MLS  (there must be at least one that you like!)

Don’t miss the next exciting update to this blog – click on the envelope to be notified by email!  )

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Thanks for visiting!

Vicki Lloyd

Best Deals on Bank Owned Homes

Foreclosure sign

The bank-owned (REO) homes in South Orange County are still looking like the best values available.  I picked out a list of about 15 that are seriously discounted below their last sale price. 

I am planning to resume posting my “Vic ‘s Picks” on a more regular basis – probably once per week.   This week, the list features homes in Coto de Caza, Laguna Beach, Mission Viejo, Newport Beach, Newport Coast, Rancho Santa Margarita, San Clemente and Tustin.  These are all bank-owned and offered for somewhere between $200K and $800K below the last market sale price! 

If you would like to see the actual location on these, click on the little airplane, on the right side of the listing sheet, and it will give you an aerial view of the property.  Some REO agents provide very few photos, so this can help guess what the home may look like.  I’ve also noticed that several of them like to include shots of the bathrooms with the toilet seat up (one is even sideways!)   

Open toilet!

If you have any interest in seeing any of these, please give me a call at (949) 457-0281, and we can go check them out together!

You can Search ALL the homes for sale in the Southern California MLS  (there must be at least one that you like!)

Don’t miss the next exciting update to this blog – click on the envelope to be notified by email!  🙂

 Click here to receive updates by email

Thanks for visiting!

Buying Homes from the Bank

Does this look like a bargain?

Does this look like a bargain?

I have been getting a number of calls or emails from buyers who think they want to buy a foreclosed home.  After I ask them why they would want to do that, I usually hear “Because I want to get the most for my money and I’ve heard that foreclosures can be a real bargain.”

Fair enough answer.  Many buyers believe there are lots of bank-owned homes just waiting to be bought for 35% – 50% of market value.  But here is what you should really expect :

  • If the property is priced well, you will be in competition with many other buyers, and it will probably sell for over the list price, after you and the other buyers have submitted your “highest and best” offer.
  • The bank will have a very one-sided contract – you will have to cool your heels and wait, and wait, and wait for them to get the contract back to you in writing, but then they will want you to remove all of your contingencies (“escape clauses”) very quickly.
  • You will be buying the house in “AS IS” condition, even though you won’t know what the condition is until you pay an inspector* to examine it in detail.
  • If you find that the cost of repairs will exceed your budget – too bad!  They will very rarely re-negotiate the price or give credit for repairs.  Your choice will be to cancel the contract, or spend more than you had originally expected.

*Make sure you find an experienced and thorough inspector!  The seller (bank) really has no idea what may by right or wrong with the house and you will have no recourse if big problems reveal themselves after closing!

Click Here to search over 14,000 homes available in the Orange County MLS   (You might find one that you like!)

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You Want to Buy a Foreclosure?

I am getting a lot of calls lately with people telling me that they want to buy a foreclosure.  Maybe it’s the mentality of the market, or the late night infomercials, but many people seem to think that foreclosures, by definition are a “good deal”.  They might be or they might not!

Foreclosures aren’t necessarily priced right, relative to the market conditions, or even relative to other REOs.  I just checked out 2 new foreclosures in Lake Forest today.  Both are within the same (nice) neighborhood, located only 2 blocks from each other. They are the same builder, age, square footage and floorplan, so a direct comparison is very easy.

The first one has a decently upgraded kitchen, scraped ceilings, remodeled baths, and lightly worn Foreclosed Home $545,000carpet. The atrium area is unfinished dirt, and it looked to me like an above ground spa had been removed from that area.  The garage door is the original wood tilt-up (instead of the more popular roll-up door) and it has a wood shake roof that the builder had installed in 1975.  The windows are all original, and the road noise coming in the house at 3:30 in the afternoon was quite loud. That house is priced at $545,000(Update 7/14/2008, new price is $439,900!)
 

 

Foreclosed Home $498,900 The second house, just around the corner has similar kitchen upgrades, scraped ceilings, remodeled baths, professionally installed laminate flooring (it looked pretty good), attractive used-brick walkway and atrium, newer tile roof, and no significant road noise. It is priced at $498,900(Update 7/14/2008 – price is now $466,900!)

 

It’s obvious to me which lender is more serious about getting this sale done!

Please call or email me if you would like valuable information about any home for sale – foreclosed or not.  I’m starting to see some well-priced homes come on the market, and they are selling pretty quickly! 

Search for homes in Orange County    Get your estimated home value by email  Ask a question or get personal advice from Vicki

Message to Lenders – Who is going to buy all your Foreclosures?

I just spent several days this week inspecting South Orange County REOs. The quality, condition and pricing run the distance from “Wow – pretty nice!” to “Gag – what’s that smell?”   

I saw a lot of REOs back in the mid-1990s and sold more than a few at that time.  They also offered a wide range of conditions early on, but as the lenders eventually learned, most of the time they got a faster sale at a higher price by cleaning up properties before putting them on the market. More often than not, they included new carpet and neutral paint, landscape cleanup, and some minimal upgrades such as replacement of faucets, fixtures and appliances.  At this point in our real estate downturn, there seems to be a reluctance to do this, although a few do. Of the 12 properties that I saw on Thursday, only 3 could be considered move-in ready, and 2 days later, all 3 of them are now in escrow!

From my experience, there are only 3 main types of buyers of foreclosed homes.

Investors who plan to fix, rent and hold for the long term. With real estate values not expected to increase in the near future, the return on investment needs to be justified based on projected cash flow, rather than appreciation. The following factors will influence the decision making for these buyers, and dictate the price that they will be willing to pay:

  • Non-owner financing is generally at a higher interest rate, and requires a greater % down payment.
  • Cost-to-carry during the repair period, as well as direct repair cost, needs to be added to the original investment amount.
  • Tax advantages provided by depreciation.
  • Cash flow should cover at least the monthly cost-to-carry.

Investors/Flippers who plan to fix and re-sell the property quickly for a profit. In addition to requiring a decent return on investment, these buyers require compensation for taking a risk that the market could deteriorate further before they can complete the repairs, find their own buyer and close the escrow. Projected cash flow is not a strong factor in this valuation, except as a fall-back position in case the market value declines below their break-even point. Factors influencing this type buyer’s decisions:

  • Non-owner financing at higher rate will again be required.
  • The ability to accurately estimate costs to repair, and skills or access to skilled workers who can complete the repairs quickly.
  • Market knowledge to be able to estimate (guess-timate?) the final sale price.

Buyers who plan to live in the property. Many of these buyers will be current renters. Some will be move-up buyers, with savings set aside for the down payment, and the ability to rent their current home for close to monthly carrying cost. Since lenders won’t accept contingent sales, move-up buyers that can’t qualify to own 2 properties, will not be included in this group.

  • First time buyers rarely have any spare money to repair after spending it on down payments and closing costs. Lenders need to include allowance for closing costs, rate buy downs.
  • Emotions play a greater role for owner occupied homes. Dirty, nasty, smelly fixers will be severely discounted or totally ignored. Condition generally needs to be fairly close to “move-in ready.”
  • When estimating costs to fix, most owner-occupant buyers over-estimate by about 200%!
  • Many buyers are afraid of the “as-is, where-is” contract, and will need a substantial discount to overcome it.
  • Monthly carrying cost must be in-line with buyer’s previous rent + tax advantage.

Lenders need to get the message, and fix or price their properties in line with the expectations and budget of their most likely buyer. For lower end, first time buyer properties, it needs to be clean, neutral and attractive so that the buyers can move in and immediately start living in their new home. For investors, if the bank won’t invest in fixing the obvious flaws, they will need to allow the fixing plus carrying cost to come off the bottom line either by pricing it substantially below other “comps,” or offering below market non-owner financing.

Foreclosure – Hot Listing! $379,900

Hot Buy - Townhome w/over 1700 sq ft, 2 car garage $379,900

This won’t last long – 4 bedroom, 2 1/2 bath, almost 1800 sq ft, 2 car garage, good neighborhood, great elementary school near by!

Call me today if you are interested!  (949) 457-0281

*Update 3/1/2008 – I looked at this today, and it’s really not too bad.  It definitely needs painting, and I noticed stains on the downstairs ceiling that is likely evidence of a leak from an upstairs bath.  The aluminum windows have all been replaced with dual-paned vinyl ones, and the appliances are newer than the house.  The flooring is wood-look laminate throughout (might be Pergo.)   There is an air conditioner unit on the patio that looks pretty large and fairly young.  My guess is that with $15K or less in rehab & upgrades, this would be a great house for someone!

Hot Buy in Rancho Santa Margarita

I just checked the MLS – this one sold in 3 days (I knew it was hot)!  (updated 2/28/08)

This one just came on today and I don’t expect it to last very long.  I don’t have a specific buyer of my own* for it, so I’m sharing it here. 

HOT Buy in Rancho Santa Margarita - $529,863 

This is another REO (foreclosure, or bank-owned property) that I think the previous owner used as an ATM machine.  It was last refinanced for a total of $650,000 in November 2005.  Today, it is listed for  $529,863.  (I don’t understand the “863” part, but that’s what they are asking.) 

As you can see, it has a 3 car garage, and it seems to be in a decent location near one of the community pools.   It has 3 bedrooms and over 1900 square feet.  Total HOA dues are approximately $97/month.  I think it is better looking than the photo – the overcast sky makes it look all washed out.    Contact me soon if you think it might work for you!   

*When I have a buyer that fits one of my “hot buys,” I call them first before posting to the world.  If you want me to call you first, call or email me and we’ll talk about what you want and where!