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Word on the street is that while Notices of Default may be on the rise - that does not mean you should expect a rise in REO's.
1) Lenders are starting to finally figure out that Short Sales can save them time and money vs. REO's.
2) In areas outside of the City of San Francisco where an investor might buy REO's in bulk from a bank - the public may not see any evidence in a rise in REO's because they are turned around and placed on the market NOT as REO's because they aren't anymore.
Similar to yesterday's post - one of the conclusions is that there's more than meets the eye when trying to read the market.
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I thought I was reading an old article when I read Robert Shiller of Case-Shiller said "It is entirely possible that even with the bad news we are getting, home prices could start a major increase….what happens from here will depend on people's animal spirits and speculative impulses,"
Click here for the link to the article.
The article specifically references San Francisco:
"Home prices in certain areas like San Francisco, have risen by double-digits over four months, and if viewed on an annualized basis, they look like they are in 'bubble territory,' Shiller said."
When the Case-Shiller Index refers to "San Francisco" they are usually referring to the San Francisco "MSA" or what I'd refer to as the "Bay Area". There definitely have been pockets of strength in the City of San Francisco recently, but for big gains you can look outside of the City in low-cost areas where investors and first time home buyers are snapping up foreclosures. I predict gains to be realized in the next few reports for two reasons - the reports are old news, and Closed sales are actually reflect the month earlier action - you contract at a price, and don't get it reported until it Closes, often 30 days later.
Home prices fell off a cliff starting in late September 2008. We're probably a few weeks from seeing how this September did vs. last September, but the real news will be October over October and even November over November since again, a November sales price reflects a October contract - immediately after everyone was worried sick about the economy.
The month over month reports should be extremely interesting for a full year - and could - as Robert Shiller suggests - cause a new bubble mentality with reports of big increases leading to even bigger increases.
Well neither is good. But there has been a lot of noise that Short Sales are so much better for owner/sellers than Foreclosures. From what I can tell some of the claimed advantages just aren't true. There are some advantages though.
Firstly, reviewing pages 3 thru 5 at eFanniemae.com's 2008 0816 announcement which describes underwriting rule changes in how Fannie Mae treats bankruptcies, foreclosures, short sales and other negatives transfers. If you go through a Short sale, they won't loan to you for 2 years. If you go through a foreclosure they won't loan to you for 3 to 5 years depending on whether you had "extenuating circumstances".
But the "noise" I am referring to about foreclosures supposedly being better than Short Sales is that from all indications your credit rating will get severely damaged in either scenario, and it's probably unlikely that your credit score will be high enough in 2 years time to qualify for any decent loan.
So is a Short Sale really better than a foreclosure? I think that's a case by case question.... and one you probably need to discuss with an attorney especially since one of the biggest questions is when and how a lender can go after you for a "deficiency judgement" on the amount owed.
It's official, Sellers must get a water inspection, fix any problems, and once you pass the inspection have it recorded. I hired Alex Mak Energy 415-533-3322) recently for $100 inspection and $75 recording fee. That was after a few calls and I figured I had found the best price until a colleague recommended Timothy Branham (415-269-9361) who charged $40 less.
The inspections took all of 10 minutes, so hopefully in time these might get even cheaper. Of the two inspections I needed for my listings, one passed, the other needed a new toilet - and Alex Mak got the toilet and installed it for $300.
For more on the Water Ordinance you can download the City's pamphlet at
Click on "view detailed listing" link below to check out the video walk and larger photos, description, etc.