For fun, I decided to compare three properties for sale by lenders, known as REO (real estate owned), by visiting their Web sites. Please keep in mind, the data may not be up-to-date.
Newport Beach-based Downey Financial listed a Ladera Ranch home, the only one in that area on its site right now, on Pleasanton Lane for $325 per square foot. Price is $845,000 and home is 2,600 square feet. It’s a 4-bed, 3-bath house and looks nice. CLICK HERE to see the photo (plug in California and O.C. to find it).
Pasadena-based Indymac Bancorp listed a Ladera Ranch place, also the only one in that area on its site, on Maybeck Lane for $359 per square foot. Price is $610,275 and square feet total 1,700. It has 3 beds and baths, and the site says it’s a house. No photo but CLICK HERE for more details.
Calabasas-based Countrywide Financial had three Ladera Ranch homes to choose from, but all condos. One condo on Rinehart Road is going for $305 per square foot. The lender is asking $518,900 for a 1,700-square-foot, three-bed, 3.5-bath unit. (Countrywide didn’t have the stats on the place so I had to go to Zillow.com, which inexplicably listed the sale price higher at $554,900.)
It looks like Countrywide has the best deal, but one would expect a condo to go for less per square foot. I will say Countrywide has the widest selection but its Web site is the least user friendly. It took me a while to get to the Ladera Ranch homes on their site, while IndyMac’s site had a handy search tool. Of course, Downey only had a handful of REOs in O.C. on its site. Stay tuned for future REO match ups!
Matt, I deal in REO’s, short sales, and loan mods on a daily basis with some of the largest servicers and banks in the nation and I can tell you that one of the biggest problems is that there is no consistency from any of them. They are all outsourcing to several different companies each and when a servicer needs investor approval to do anything with the property, it not only takes weeks or months to get an answer but it is almost impossible for anyone to figuure out what the best approach is to get the properties off the books with the least amount of loss. It is a real mess.
Lou Pacific
Real Estate and Mortgage Comapny Consultant
Serving OC for 30 Years
Lou,
Are you seeing any more motivated asset managers in regards to them trying to get houses off the books? More likely to work with the low ball offers?
The 554k price, if recent, should be the auction price. Most likely the initial bid price.
Lou,
I noticed that you are a mortgage company too…I wonder how many of these BAD loans you sold?
Yeah, listen to Lou. He’s the one that said A paper conforming rates would hit 8% by February. AHHAHAHAHAHAHH
I thought there used to be a TV ad that went something like….
When banks compete……you win.
Seems like this may be the case for REO’s in Orange County. In another year real desperation will set in with the banks and they will get a new set of managers to fix the problem….and sell the properties.
Actually, Condos are usually more expensive on a per sq ft basis than SFR’s. Condos have a higher expense per sq ft to build.
Downey Savings-Newport Beach has a lot more REO’s than a” handful”, and counting.
The market seems to be frozen and it will stay that way until prices come more in line with what people actually earn. Fully underwriting a loan isn’t rocket science, folks. The “magic” loans gave the illusion, for a while, that fundamental economic principles didn’t matter, but surprise…people can’t pay if they don’t have the money, even if they want to pay. I’m working with a guy right now who qualifies for 370K, Northern California and there are some great buys in that price range. He wants to finance more because he knows he can do it, but I’m not about to set him up to lose his house in a few years. If he wants to believe fairy tales, he can go listen to loan officers who are lying to him. I don’t want to deal with borrowers who want to hear a fairy tale. There are realities called “debt ratio”, “residual income”, and “actual earnings”. These are predictable and measurable and they limit what you can do. One the other hand, I am the first to consider “compensating factors” if they are reasonable. Good underwriting means looking at the situation in its entirety, not isolated numbers.
Now that bonafide underwriting is happening again, banks have to make the difficult choice between huge write-offs to sell to qualified buyers or keep the property on the books and worry about vandalism, maintainence, etc. The banks will cave before the buyers because the buyers can’t “qualify” with funny money. Either REOs will be financed by the bank that owns them using lax underwriting (bad idea) or people just qualify for what they qualify for, which means the prices HAVE to come down. (Except the closer you get to the ocean - these properties are not sensitive to the same factors as the majority of family homes to which I refer.)
seems to me home prices are still out of control, are people actually buying thses homes at that price?
sounds crazy
It’s true lenders are way behind in processing their shortsales. I deal with various lenders on shortsales, and the lenders take two to three days just to confirm receipt of faxes which often times they don’t receive and you must resend 3-4 times before they get it!
Ordering an appraisal or BPO also takes 1-2 weeks and once the short sale package is in with appaisal etc., it must go to investor approval if the negotiator agrees that this purchase should go through. That process could take an additional 3-4 weeks. Problem is that by then more negative data from the newspapers and TV news has hit the ears of the buyers. Now that house is not perceived to be worth what they offered, yes you guessed it. The buyers often times get frustrated of waiting and feel their money can buy more for a house just next door. AND if this scenario isn’t the case, I have had lenders who are in second position who have ageed to a shortsale and when escrow requests a pay off demand and the shortsale approval letter, they extort more moneys at the close. I had one lender who on a 75k 2nd TD who initially agreed to a 1,000 pay off subject to receiving the first loan holders short sale approval. ONce we obtained that they decided they did not care what they agreed to before, they now wanted $7,500 and 24 hours later they said they wanted $15,300. The buyer had already signed docs, had wired money to escrow did everything he was supposed to, as did his buyers agent and in this case the second lien holder who was going to get wiped out at the Trustee Sale Auction blew up the escrow.
That house in Lake forest would of sold for $770k on a list price of $790k. The trustee sale has been postponed many times, itt is now due to go to Trustee Sale auction on February 14th. Now we have a n offer of $660kl, but all the information is “stale” because it has expired. What a shame for the neighbors in that town, they think the house could not sell because it was priced to high and it was the lender that sabotaged the deal. That house was originally sold in 44 days. This skews the market data numbers and does affect market values. But it is our reality. It will eventually work itself out. Until then we need to work with what we have got,
For buyers who are willing to exercise patience in a short sale situation it might pay off. But beware at the last minute there are no guarantees. You might be out appraisal fees, inspection fees etc. and still not get the house.
This too shall pass