Tag Archives: REO homes for sale

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

Foreclosed Homes in Lake Forest California

Bank Owned Home

The foreclosed home inventory in Lake Forest has been running between 43 and 49 homes for the most of the last year, but today, there are only 33 REOs (bank owned) homes on the market.  The majority of them are condos, and the average list price is $318,700 ($232/square foot.)  They range in price from $116,600 up to $599,900. 

 

The highest priced REO in Lake Forest today, at $599,900, has been on the market since March, and has had the price reduced twice, but not enough to generate the excitement that would make it sell.  Located in a good neighborhood, with 4 bedrooms, a bonus room, and a pool, the price seems ok for the current market, but it is vacant, dirty, and needs just enough work to scare many buyers away.  My guess is that it will eventually sell in the $475,000 to $525,000 range.   

 

In the last month, 39 REOs have closed escrow, with 21 of them selling for an average of 6% over list price after only 13 days* on the market!  The other 18 sold for an average of 96% of final list price, after 58 days on the market. 

* The “days on the market calculation” is often overstated for these properties, because many of them require 7 days of market exposure before they will even look at offers, then they allow another 3 – 5 days for potential buyers to raise their offers to “highest and best.”)

The trustee sales, where lenders actually take back the properties from the previous owners, have slowed considerably in the last 3 months.  As an example, a typical schedule will show 135 properties on the daily foreclosure sale list, but at the last minute, only 10 of those properties will actually be sold or taken back, and the rest will be postponed or cancelled.  

Of the properties where the foreclosure sale was cancelled, some were refinanced by a new lender, some were sold at a short sale, and a few were brought current by catching up the late payments.  The properties that were  postponed, are partly due to the new California law requiring lenders to document that they have attempted to work with the delinquent borrowers, or to some institutions being so overwhelmed with bad loans that they just can’t get them all done.  (I also believe that some institutions are holding back, waiting to see what the government bailout will do for them.)

Related posts:
Buying Homes from the Bank
You Want to Buy a Foreclosure?

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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!

This house just had the price reduced yesterday, now qualifying for my “hot buy” stamp of approval.  With 4 bedrooms, 2.5 baths, over 2100 square feet, and 3 car garage at end-of-cul-d-sac location, it’s one of the best on the market today!  It is located in Foothill Ranch, which has a very highly rated elementary school!  $614,900

4 Bedroom 2.5 Bath 3 car garage!

I just spoke with the bank’s agent, and he told me that several agents say they will be bringing in offers, but none in hand yet!  Call me, if you like this too!

Foreclosure, Bank Owned, REO Homes in Lake Forest and South Orange County California

Foreclosure sign

There are currently 510 properties in the Orange County MLS that are coded as Bank Owned, REO or Foreclosures.  There are probably more that aren’t coded correctly, but I’m not going to sift through all 17,635 properties that are currently on the market to find them.  Most of these are priced very close to “market value” (whatever that is!) for owner-occupied homes, but there are a few that stand out in the crowd as worthy of consideration for bargain hunters.

Unless there are multiple offers, my experience with foreclosed properties in the last real estate downturn (mid-nineties), is that there can be some negotiating room for well-qualified buyers!  Generally, the banks are exempt from providing seller disclosures, like the “Transfer Disclosure Statement”, they are very strict with sticking to contractual deadlines, they won’t accept your offer in writing until they get around to it, and they won’t fix anything discovered during your inspections.  (Other than that, they are swell to work with!)  It takes some courage to deal with them, but many of my clients have successfully completed the process and eventually profited from their efforts.

Here is the list of better valued properties that I published last week on my other blog , and I decided to provide the lastest status of what has happened to them.

Aliso Viejo Single Family – $593,500 – (last sale $735,000)   4 bedroom, 2.5 bath, 2 car garage w/full driveway, 1740 sq ft, built in 1989.  HOA dues $63, Mello Roos approximately $1500/year.  SOLD

Corona Del Mar Condo –  $689,000 – (last sale $780,000)  2 bedroom, 2 bath, 918 sq ft, built 1963.  HOA dues $402, no Mello Roos tax.  SOLD

Dana Point Single Family – $654,900 – (Last sale $995,000)  3 bedroom, 2.5 bath, 1270 sq ft, 4000 foot lot, built 1958, close to Harbor, no HOA.  SOLD

Huntington Beach Single Family – $795,150 – (Last sale $866,000)  3 bedroom, 2.5 bath, 2022 sq ft, 2 car garage, built 1977, only 5 blocks to beach!  STILL AVAILABLE

Irvine Single Family – $674,900 – (Last sale $830,000) – 3 bedroom, 2.5 bath, 2 car garage, 2194 sq ft, built 1969, HOA dues $198, no Mello Roos.   SOLD

Laguna Niguel Condo – $464,900 – 3 bedroom, 3 bath, 1527 sq ft, 2 car garage, HOA dues $350, no Mello Roos.  SOLD

Mission Viejo Condo – $419,900 – 3 bedrooms, 2.5 bath, 1400 sq ft, 2 car garage, built 1987, HOA dues $216, no Mello Roos.  STILL AVAILABLE

Ladera Ranch Single Family – $679,000 – (Last sale $812,000)  4 bedrooms, 3 bath, 2200 sq ft, 2 car garage, built 2001.  HOA dues $207, Mello Roos tax approx $3000/year.   SOLD

Dove Canyon Single Family – $829,000 – (Last sale $975,000)  4 bedroom, 3 bath, 2900 sq ft, 2 car garage.  HOA dues $205, Mello Roos approximately $1800/year.  SOLD

New list of recommendations to consider:

Aliso Viejo Detached Condo – $574,900 – (Last sale $730,000)  4 bedroom, 3 bath, 1600 sq ft, 2 car garage.  Mello-Roos approximately $1500/year.

Lake Forest Condo –  $369,000 – (Last sale $490,000)  4 bedroom, 2.5 bath, 1550 sq ft, 2 car carport.  HOA $330.  No Mello-Roos.

I check the new listings daily, looking for any “diamonds in the rough.”  If any of these properties are of interest, or you would like to be notified of other foreclosure, REO, bank-owned properties, please call me at (949) 457-0281 or send an email to Foreclosures@VickiLloyd.com