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Professional property managers are experts in the field acquiring and keeping paying tenants for real estate investors. They are knowledgeable about the local rental market, vacancy levels, and rental price trends. But most of all, the property manager you use for your real estate business should excel in leasing and managing rental property. Read more »
HSBC has done well to style itself the great subprime survivor. But the world’s biggest bank is less special than it thinks. True, its shares have outperformed almost every banking index around. And its core tier one capital ratio – 7.8 per cent at the end of September, towards the top of its target range – is on the high side, versus western peers.
But as HSBC has three-quarters of its loan book in the benighted US and UK, that target may be a moving one. A note to third-quarter accounts shows that the carrying value of US consumer loans was $111bn, but that the market value was $34bn lower. Fine: these are banking assets, not held for trading, so the group does not have to account for them at fair value. But if you were to tot up HSBC’s subprime losses taken so far through its P&L, then add the reported fair-value deficits not recognised on balance sheet, the sum would be almost $70bn – higher than Merrill, Citi or UBS, and second only to Wachovia. An accounting confection, of course, but it does throw a light on the scale of HSBC’s exposure to US subprime and the potential for further impairments.
- Lex - www.TheFlipBoard.com
A market analyst from Wachovia Bank said yesterday that he feels real estate is about to hit the bottom. I agree and disagree at the same time. Yes, some specific niches of real estate may bottom out, but some still have a good way to go.
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For the uninitiated, a real estate broker is one (or a firm) who acts as mediator between sellers and buyers of real estate. They also market and put together deals. Hmm… If you are a good RE Broker, then chances are you are very affleunt and handle very exclusive accounts.
Or, you are a newbie who is trying to break into the real estate market by not actually purchasing any real estate.
It sounds to me that brokers do nothing outside of what an experienced RE investor can do on their own. So, why do we have brokers? When real estate companies wish to capitalize on fees and “add-ons”, they come up with things like brokerage, handling services and negotiation representation. All things that you will be charged for. And all things you can do yourself for nothing.
In this particular real estate market, we have a large supply and a lower demand, which is causing prices to drop. This also means brokers are out of work. Some brokers are trying to move devalued real estate. And some are trying to convince buyers to buy. Bottom line is without buyers and sellers and enough cash to support both, you have no real estate brokerage business.
Save some money and handle real estate yourself. Keep as many transactions in-house as possible. This includes locating properties, negotiating deals and representing yourself and/or company.
Let the brokers move their businesses to insurance.
-Richard - www.TheFlipBoard.com
The weekend before Christmas 2008 is upon us! Beware! Streets will become crowded, retail prices lowered and people more obnoxious than ever. It’s time to jump into the fracas that is last minute Christmas shopping. Or better yet, go look at houses and build your business. It’s safer and a lot less stressful. Here’s a rhetorical one for ya… If we have been in a recession for a year now, then why are people literally breaking down doors at Wal-Mart to purchase things like TVs?
Instead of bowing to the gods of consumerism, we should be getting back to basics this holiday season. And those basics are family, God and country. Spend some quality time with your kids. Instead of cramming them in car and driving all over the place, sit down and read them a story. And if you do have to get out, go look at houses. You never know when you will find a good investment deal.
-Richard
As an investor, especially in this market, people are always asking to be shown the ropes or for some advice. That is the fundamental purpose of TheFlipBoard.com. As most of you know, most amatuer advice is useless and wastes everybody’s time. Below is some real advice from individuals who have done it and are doing it. Ok, it’s from me and a good friend of mine who believes in Carlton Sheets’ system. But everything else is solely just my opinion.
I stick mostly with single-family homes but most of the techniques below will apply to multi-units as well.
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Reading the news has become an exercise in how much bad news I can take before I feel the need to jump off a building or drink 100-proof alcohol until my tears become flammable.
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Short sales gone awry have become a recurrent theme in real estate circles.
Here’s the common narrative: A home goes on the market as a short sale - priced at less than is owed on the mortgage, so the lender must approve any sale. The bank either declines offers as too low or takes months to decide, which drives away potential buyers. Either way, the short sale never happens. Eventually the lender forecloses on the home, the owner or renter is evicted, and it is put on the market again by the bank.
“It’s maddening and infuriating and everyone loses,” said Peter Harris, a Realtor at Bradley Real Estate in Novato.
He has exactly such a story to tell.
He listed a Santa Rosa duplex for sale in January for $499,000. By spring the price had been cut to $449,000, and it drew an offer for $420,000 from an investor. The bank, Countrywide, took three months to decide, according to Harris. It countered at $425,000 in July. The investor agreed but with an inspection contingency. The inspection “turned up all kinds of stuff - rot here, fungus there, termite damage, asbestos falling down, foundation weak,” Harris said. “It was substantial; anyone buying would want some credit back for these damages.”
The investor asked for $24,000 credit for the repairs, essentially making the offer $401,000. Countrywide said no dice.
The house went through foreclosure in late August. The owners and a tenant in the second unit had to move. The bank put the home on the market a couple of weeks ago, after spending $7,500 for painting and new carpets, according to the new listing agent, George DeSalvo, a Realtor with Frank Howard Allen in Greenbrae.
The new price? $374,900 - about 6 percent less than the rejected short sale offer.
“I wish I could say this was unique, but I had three other properties with the same situation,” Harris said.
A Countrywide representative said it followed due process in weighing the short sale offer.
“At the time the offer was considered, the market value of that property was shown to be somewhere closer to $425,000,” said Rick Simon, a spokesman for Countrywide, which is owned by Bank of America. “The value is determined by appraisal.”
Unlike most of Marin County, Novato is an area where foreclosures are increasing and prices are on a downward spiral. Did Countrywide consider that the property’s value might be falling by $10,000 or more every month?
“We don’t try to engage in speculation as to where the market is going when considering the offers,” Simon said.
While real estate agents, buyers and sellers say they are frustrated with the short sale process, Simon said banks are working as hard as they can to keep up.
“The volume of short sale requests is at unprecedented levels,” he said. “More than ever, buyers are making low-ball offers just to test the pricing levels. Each requires the same time and trouble to review as offers that actually will be accepted. A lot of offers are being reviewed that are not going to be in the ballpark for being approved.”
Nationwide, 1 out of 7 homeowners is underwater - owing more than their home is worth, according to real estate information service Zillow.com. In the Bay Area, the figure is even higher: 1 out of 5 is upside down, as the situation is also known. An underwater borrower who needs or wants to sell will generally be in a short sale situation.
Theoretically, a short sale should be a win for the borrower and the bank. The homeowner’s credit isn’t hurt as much by a short sale as by a foreclosure. And the lender doesn’t incur all the costs and holding expenses of a foreclosure.
But although no one keeps firm statistics, according to many real estate experts, the reality seems to be that banks are extremely reluctant to approve short sales, and often let properties go to foreclosure, even when there are decent offers on the table.
Besides looking at the price, lenders consider whether the homeowner can show financial hardship that he or she cannot meet the payments.
“You can’t ask the investors (the actual owners of the mortgage, for whom Countrywide and other lenders act as servicers) to take the hit on the property just because someone is looking to walk away and doesn’t want to make payments anymore,” Simon said. “They need to demonstrate, make some declaration that they are in a situation where they cannot continue to make payments on that loan. If they are capable of making those payments, there may be other alternatives that need to be explored.”
Simon said Countrywide tries to determine whether a loan modification or work-out plan might make it possible for borrowers to stay in the home.
Countrywide, like other lenders, has added employees to meet the increased volume, Simon said. In October, the lender completed 3,000 short sales - triple the number from a year ago, he said.
Richard Orloff has a short sale saga that stands out. His Rohnert Park home drew a dozen offers over 18 months - each progressively lower.
“It was an unbelievable calamity of errors and faux pas,” he said. “It was like a horror story: Short sale hell.”
Orloff, a loan officer who moved to Southern California to live with his girlfriend, put the house on the market in May 2007 at $495,000 - what he owed on the mortgage. His lender was also Countrywide, although he had a second mortgage with Citibank.
Orloff faulted both lenders for foot-dragging on the offers, which started at $450,000 in June, although he said there were also some problems with the house and with some of the five real estate agents he used.
After losing about eight offers because the buyers got tired of waiting for an answer, he went to Countrywide headquarters in Calabasas (Los Angles County), wearing a suit and tie and carrying a picket sign. He got to speak to a senior executive who approved the offer then on the table. It ended up falling through because the house had fungus.
The property finally sold in October for $333,000.
“I learned so much, I could do short sales myself,” Orloff said. “You’ve got to hit the phones really hard (calling the lender). You’ve got to have a boiler-room mentality. I was fortunate to have a beautiful house that I kept getting offers on. Imagine houses that aren’t that nice - they lose one deal then wait four or five months to get another one.”
Darryl Woods, a Realtor with Re/Max Gold Coast in Camarillo (Ventura County), sold the house on Orloff’s behalf. He’s a veteran of about 15 short sales over the past two years.
“I would characterize it as a full-time job” contacting the lender for approvals, he said. “You have to stay on top of them every day, you have to be really persistent; you cannot accept them putting you on the back burner. You have to create urgency and make your file a priority.”
Woods also suggests trying to “get as high on the totem pole” as possible, communicating with vice presidents or presidents. And, he said, mentioning that you might come and sit in the lobby can sometimes get the right person on the phone.
Orloff said he would never again subject himself to a short sale.
“If I were to do it over again, I would let it go to foreclosure,” he said.
E-mail Carolyn Said at csaid@sfchronicle.com.
Before we get to current updates to the housing market in Atlanta, GA, I would like to remind our investors that overall market economics respond to market maker’s skepticism, paranoia and superstitions. Good, bad or otherwise, it is the truth. First of all, it is an election year for the Presidency. Second, the GSEs and investment banks scandal has not been resolved yet. Next, manufacturing in the United States is terribly low with unemployment ticking up, compared to the start of the year. And our beloved government, who created this problem, is passing a new bill that will allocate hundreds of billions of dollars of taxpayer money to procure bad loans. This action will save large firms, like Fannie Mae and Freddie Mac, and increase the national debt for all Americans. (Which is sad, since we are artificially inflating markets instead of letting them do what they are supposed to do: Correct Themselves!)
Could this be the bottom we are waiting for? Or is this the beginning of worthless American dollars, ridiculous inflation and terribly cheap housing? We do not know. However, if we follow what the ultra-successful are doing, we see it is time for action. (Check out what Warren Buffet is doing. Also, look at the deals that Donald Trump is crafting now during this “housing slump”.)
Now back to our story in Atlanta:
ATLANTA - More than $153 million in newly earmarked federal funds will extend a lifeline to Georgia regions hit hardest by the home foreclosure crisis, enabling leaders from Atlanta to Savannah to acquire and redevelop foreclosed properties at risk of being abandoned. Read more »
Now that one of the largest insurance brokers in the world is in trouble and household names like Lehman Brothers and Merril Lynch are either bankrupt or purchased by another entity, what do we do about deals using 1031 exchanges?
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