At a recent foreclosure auction in Santa Ana, investors bought eight properties, or 36% of the 22 offered for sale.
I have looked more closely at those eight properties, after blogging previously on the June 26 trustee’s sale. (Read the first post: Frenzied Bidding on Discounted Foreclosures. Property pictured is on Newell Street in Garden Grove; photo courtesy of ForeclosureTrackers.com)
On seven of the properties, the banks or loan servicers offered an average discount of 61% against the debt owed on a first mortgage. (On one of the properties, I could not find the notice of trustee’s sale.)
Those seven properties sold for an average discount of 56% against debt. Even though investors bid against each other, they barely nudged up the sale price from the bank’s minimum bid.
According to Zillow, investors got discounts to current market value ranging from $21,500 to $141,000. Zillow’s estimate is a very rough guide to what a property might fetch on a resale.
And here’s a table of seven of the properties. NTS is amount owed on notice of trustee’s sale before the auction. Min Bid is the least a bank would accept. Discount is amount between NTS and Min Bid as a percentage. Sale is what investor paid.
| Property | City | NTS | Min Bid | Discount | Sale |
|---|---|---|---|---|---|
| 13114 NEWELL ST | Garden Grove | $561,072 | $253,000 | 55% | $267,600 |
| 2501 WEST SUNFLOWER AVENUE, UNIT H6 | SANTA ANA | $319,663 | $106,250 | 67% | $110,500 |
| 720 NORTH ZEYN STREET | ANAHEIM | $564,741 | $129,147 | 77% | $206,000 |
| 1381 SOUTH WALNUT ST UNIT 2304 | ANAHEIM | $358,096 | $123,250 | 66% | $154,100 |
| 23241 CAMINITO ANDRETA UNIT #57 | LAGUNA HILLS | $455,850 | $170,000 | 63% | $170,000 |
| 61 VIA BACCHUS | ALISO VIEJO | $452,410 | $264,401 | 42% | $293,500 |
| 4201 5TH ST # 103 | SANTA ANA | $277,745 | $111,741 | 60% | $111,741 |
| Totals | $2,989,578 | $1,157,789 | 61% | $1,313,441 |
In other news…
- Delinquencies rise on least risky mortgages
- Banks reject toxic-asset plan
- Frenzied bidding on discounted foreclosures
- FDIC seizes Irvine bank
- Is paying off a mortgage the best option?
- These O.C. homes are about to be foreclosed
- Fed trims emergency lending
- Federally insured home loans keep growing
- Fed to keep buying mortgage securities
- Mortgage applications rose on dip in rates
- 7 lenders escape state foreclosure moratorium
- Bigger loan limit considered for ‘underwater’ borrowers
Matt,
Here are the June 2009 Trustee sales for Orange County:
http://effectivedemand.blogspot.com/2009/06/orange-county-trustee-sales-for-june.html
investors? try idiots
this man is in charge of our central bank- if this doesnt scare
you — it damn well should—
http://fraudonomics.blogspot.com/2009/06/ben-bernanke-moron-or-liar.html
When you consider we were in a bubble in 2002, and prices have more than doubled since then, this level of price reduction is to be expected. Most likely the buyers will be thinking they overpaid by next year.
With foreclosures intensifying anybody who buys now will be singing the blues within a year. The banks are betting less than a 20% decline in values because with a 20% down payment the buyer’s equity dries up before the bank’s stake loses a dime.
investors?
What kind of dope buys into a falling market with declining rents. Oh, next year will be better, ya right.
I hope you continue to follow them through escrow to see what happens to the prices.
We tried to buy a house in SA using FHA. We are first time buyers, we have all of our ducks in a row: down payment, loan approval, good agent. Nonetheless we could not complete with ‘all cash’ buyers buying REO’s from the bank, nor could we afford the shoddy “remodeled” former REO’s that are listed for $100k over what the investor bought it for just weeks ago.
If you are buying in Santa Ana, chances are you are a first time buyer looking for a bargin or an investor. Until the investors cool off, the first time buyers only have a chance if they bid on an overpriced flip. If investors fail to keep up demand as more REO’s enter the market toward the end of the year, we could potentially see the first mini-bubble pop since the big bubble began deflating.
it can’t be fun to stroke each others ego everyday telling yourselves how right you are…all the time!!! You people must not be married.
What do you mean follow them through the escrow? There doesn’t tend to be a whole lot of fallout on properties bought at Trustee Sale…
Also that one in Laguna Hills is kind of an anomaly because you can’t buy it with an FHA loan (due to litigation going on with the HOA).
You’re exactly right.
The whole ‘Camanito” neigborhood is like that, they will not accept any FHA loans.
I also found out there are LOTS banks that aren’t.
You’re lucky to buy one even with a conventional loan because all these stinkin ‘investors’ are getting all the bank owned properties by cash offer.
for anyone who thinks that this house in garbage grove
is a “bargain” at 267000— I’ve got a bridge I’m selling in Brooklyn
So what exactly is wrong with Garden Grove rants?
dude– look at the picture of the house– then look at the price–
you dont see the disconnect? like I said- I ve got that bridge-
if youre interested let me know
Thing is you don’t calculate he discount against the debt. The debt is at this point irrelevant. You have to gauge the discount against CURRENT prices in the market. What the debt was when the house sold in the bubble is more or less useless data unless all you are calculating is how big the fall has been off the peak - and then you need the full sales price to do that analysis. The discount on a sale, auction, short sale or otherwise is calculated off the current BPO or Appraised value - hard to do in these times but still necessary - the former debt value is a useless number to an investor.
when adjusted for inflation, the fantasy OC housing bubble prices will NEVER return….. the magnitude of the bubble was at a once in a century level…
… when we finally do hit bottom, in 2012-2015……. the collateral damage to real estate as an asset class will be massive…. the desire to lend into the asset class (the true driver of RE prices) will be crippled for decades….