April Stats Preview: Slouching Sales Edition

It’s time yet again to check in on our monthly stats preview for King and Snohomish counties. Most of the charts below are based on broad county-wide data that is available through a simple search of King County and Snohomish County public records. If you have additional stats you’d like to see in the preview, drop a line in the comments and I’ll see what I can do.

First up, total home sales as measured by the number of “Warranty Deeds” filed with King County:

King County Warranty Deeds

A pretty big drop from a year ago is expected, since last year’s sales were being juiced by the tax credit. What isn’t exepected though is a drop from March. Usually sales tend to increase through the spring, so this is rather surprising.

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Snohomish County Deeds

Same trend as King County. Down month-to-month and down from last year (for the first time in 2011).

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

King County Notices of Trustee Sale

Snohomish County Notices of Trustee Sale

Both counties saw a pretty decent drop from month-to-month and year-to-year. It will be interesting to keep an eye on this to see if the trend of softening foreclosures continues.

Here’s another measure of foreclosures for King County, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

King County Trustee Deeds

Although initial notices are down from 2010, actual repossessions keep rising from 2010’s levels.

Lastly, here’s an update of the inventory charts, updated with the inventory data from the NWMLS.

King County SFH Active Listings

Snohomish County SFH Active Listings

Same story we’ve seen all year. Flat inventory when we usually see a steady rise.

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

55 comments:

  1. 1
    Snigliastic says:

    Interesting numbers. I have seen quite a few sales in my interest zip codes (Snohomish County) for nice houses, but I’ve seen a lot more houses go “pending” then a month or two later go back to “active.” These are on non-short sale properties.
    Trying to figure out if this is a financing issue, or an issue with inspections.
    I guess my question is: Is there any particular reason to stay away from houses that go pending then active several times? Is this an indication that a house isn’t in salable condition, or am I reading too much into it?

  2. 2
    Scotsman says:

    Yeah, but. . . this data is for all of King county. Seattle is hot, hot, hot! And this site is called Seattle Bubble. So let’s focus on Green Lake, where the multiple bidding wars rage on night and day.

  3. 3

    RE: Snigliastic @ 1 – Are you certain they are not short sales? Up in Snohomish county you could actually get a pretty good idea from the recorder’s website.

  4. 4

    Sales Down and Active Listings Up Month to Month

    But $4/gal gas has no effect what-so-ever on the economy. SWE is just being pessimistic, article in part:

    “…The unemployment rate in King County was 8.6 percent last month, up from 8.5 percent in January, according to figures released Thursday by the state Employment Security Department.

    Unemployment also rose slightly in Snohomish and Pierce counties: The jobless rate was 10.3 percent in Snohomish County in February and 10.6 percent in Pierce. Cowlitz County had the highest unemployment rate among the counties, at 13 percent….”

    http://seattletimes.nwsource.com/html/businesstechnology/2014590124_jobs25.html

  5. 5
    David North says:

    It all looks like good data to me.

  6. 6
    ARDELL says:

    RE: Snigliastic @ 1

    If it goes in and out quickly, very quickly, it’s usually the buyer having 2nd thoughts. If it falls out in the 2nd week it’s usually inspection. If it falls out near the end it’s not necessarily financing, but financing related, as in it didn’t appraise. If it falls out on inspection more than once, there is often an issue with the house itself.

    Have you tried calling the Listing Agents when they come back on market to ask why?

    I don’t see it as often as you seem to be. On my last listing sold in Sammamish, all 3 in the neighborhood went pending between 3/21 and 3/30 and two are closed and the last is Pending but looks like it will close. In my closing before that, all of the homes we considered went pending in Cherry Crest and Kirkland South End and all closed including the one my clients bought.

    If there is a high incidence of sales failing in your area of interest, that could mean something about the area. It could be as simple as there are a lot of short sales and bank-owneds closing, and the non-short sales you are following are having trouble appraising as a result.

    If you are comfortable disclosing the area or the mls numbers, we might be able to shed more light on that. For instance, if the homes were built in the early 90s in that area, it could be pressed wood siding issues.

  7. 7
    Scotsman says:

    This just in- the fabled spring bounce has been canceled and replaced by the big spring suck. Some realtors remain optimistic, however, knowing that “you’ve got to sell the sizzle- not the steak.” “It’s a sellers’ market says Chappy LaRue- with little inventory to choose from nice properties are almost always subject to intense bidding wars, often pushing up prices to within a few points of asking. This may be many folks last chance to get out of the bad deal they made back in 2009 before all of their down payment is gone LaRue continued.”

    From now on, the spring bounce will be replaced by the “March Bump.” Please note that March, 2011, is over.

    Sell now, or own it much longer than you planned to.

  8. 8

    Real Estate is Just Like Inventory on a Car Lot

    The savvy buyers compare prices and won’t touch high prices units, but there’s always usually someone naive [sucker] that will buy without doing their homework….

    I saw on TV where a gas station was gouging Californians $2/gal more, but just took down the price signs so no one would know….there were many consumers filling their cars without looking at the price on the pump, until they realized that normal $50 fillup was costing ’em $87….LOL

  9. 9

    RE: Scotsman @ 7
    You know Chappy LaRue? From the real estate brokerage ” The Spread’em Team?

  10. 10
    jlb says:

    two questions:

    Do you have the data available to do an ‘active listings’ chart that shows the data broken out by age of the listing? say 30-60-90-120+days? I think that would be really interesting.

    Additionally, how do you treat things that go on and leave the market in the same month? I guess most things are pending for ~1 month; would a pending house show in the active list or no? That would be a great addition to the chart I was asking about above to show houses that list and sell immediately.

  11. 11
    Scotsman says:

    RE: Ira Sacharoff @ 9

    Whoa there! Wrong guy- my Chappy is a realtor and upstanding citizen. He can be found commenting on this thread about Mormon missionaries (next to last comment):

    http://mormoninquiry.typepad.com/mormon_inquiry/2006/06/books_for_lds_m.html

  12. 12
    Scotsman says:

    Ok, seriously guys- what can realtors do to speed up the process of clearing inventory and getting us to a more stable/balanced market? What’s the real hold-up here- no equity, financing, buyers too cautious, sellers delusional, what’s the main stumbling block you run into?

  13. 13
    No Name Guy says:

    While the data is quite interesting as far as it goes, is there longer term data available that can be included? Like 2009, 2008 and earlier?

  14. 14
    The Tim says:

    RE: No Name Guy @ 13 – 2008 and 2009 can be seen in the charts from the December 2009 preview post. I only started this series in late 2009, so I haven’t created charts further back than that, but the Seattle Bubble Spreadsheet that I link up every month in the NWMLS stats update has King County sales data going back at least through 2000.

  15. 15
    S-Crow says:

    RE: Scotsman @ 12 – The real stumbling block is that there is not enough man power to process the volume of properties going back to market via HUD or REO’s. Many properties are prepared for market via vendors and or agents doing required safety checks, utility checks etc….

    Maybe there are some vendors/agents or contractors that visit the SB that can provide more insight?

  16. 16
    Drone says:

    RE: Scotsman @ 12 – Ironically, maybe YOU’re the holdup. Oh and me too. The comment of “What can we do to speed up the process” and “what’s the hold up” indicates a certain degree of impatience that I certainly feel as well. Perhaps the realtors/sellers are sensing some of that impatience, and hoping that they can hold out longer… hoping against all rationality that you and I will be the sucker that buys their overpriced crap shack just before the market takes a dirt nap.

  17. 17
    No Name Guy says:

    RE: The Tim @ 14

    thanks

  18. 18
    David North says:

    I’ve received the largest volume of BPO orders from the most sources this week that I’ve received in many months. I don’t usually do BPOs, but waves of BPO orders are indicators that banks are moving on waves of distressed properties, so I like to be on the list.

  19. 19
    David North says:

    By Scotsman @ 12:

    …what can realtors do to speed up the process of clearing inventory and getting us to a more stable/balanced market?

    Real estate brokers aren’t supposed to be making the market, we’re supposed to be working in the market serving the best interests of our respective clients. Some of us actually do that. :)

  20. 20
    ray pepper says:

    RE: Scotsman @ 12

    Seriously Scotsman the only problem is we need more Real Estate Agents out there that bring something NEW and EXCITING to the table:

    http://www.youtube.com/watch?v=pYuH5bIgzoo&feature=related

    This Agent will stimulate potential homebuyers to call their Realtor and look forward to spending time with them shopping for a new home.

  21. 21
    Julie Lyda says:

    RE: Scotsman @ 12 -A big clog in the system right now is getting short sales closed.

    King Co. (residential + condo) has 5,226 pending sales.

    1,722 of those are short sales.

    On average only 166 per month close.

    Snohomish County has 2262 pending sales.

    811 are short sales.

    On average only 69 per month close.

    Many of those will flip as buyers become tired of waiting for responses and return to the market as short sales or go into foreclosure and return to the market as REO’s.

  22. 22

    RE: Scotsman @ 12
    I think a fair number of sellers are stuck between a rock and a hard place. They bought the house when it was worth 200,000 more than it is now, but they’re still working and barely making the payments. They can only eat so much of a loss. But they’re not eligible for a short sale, and feel too responsible to even consider giving the house back to the bank or walking away.
    So they’re stuck, unable to lower the price. A lot of these houses weren’t nice five years ago and they’re not nice now. You can’t make a silk purse out of a sow’s ear.

  23. 23
    Scotsman says:

    RE: Ira Sacharoff @ 22

    What are the guidelines for a short sale? Is there a certain percentage loss the banks will accept, capped at say 15%, or is it wide open? What percentage off has a realistic chance of closing?

  24. 24
    Scotsman says:

    RE: David North @ 19

    You’re OK by me. But some, likely Ardell, would argue that as a professional you have a duty to provide guidance, even as regards market timing and prices.

    Who gives sellers the news that home sweet home isn’t worth what they think- even on a really nice sunny day with tulips blooming in the yard?

  25. 25
    Julie Lyda says:

    RE: Scotsman @ 23

    In most cases, the banks are only “servicing” the loans and must go to the “investor” for short sale approval.

    Depending on the “servicing agreements” some are allowed a certain percentage of short sales and then others must get approval directly from the investor.

    The complication is that the investor is usually a pooled group of mortgages that have been securitized into mortgage backed securities (MBS’s).

    Also complicating the process is that the Banks are understaffed in processing the massive amount of short sales throughout the entire country.

    I see no easy solution, yet.

  26. 26

    RE: Scotsman @ 23
    I don’t think there’s a set percentage that the lenders are willing to eat, but approving a short sale would have to make financial sense to the lender, that it would bring in a similar amount or more than allowing the property to foreclose. Also, lenders aren’t always wise. If they think the market is about to turn around and that prices are going to increase, they’ll be less inclined to approve a short sale. What they also might balk at is a seller/buyer deal at a huge discount to what they perceive as market value.
    And some short sales also have several lenders to deal with, rendering the deal difficult, complicated, or impossible.

  27. 27
    David Losh says:

    RE: S-Crow @ 15

    My company A Spring Cleaning has been a preferred provider of services to HUD since 1988. We worked through 1998 then it was a dead, dead ,dead, business model until 2007, 2008. Banks went to a Third Party Vendor system and the business exploded again. The problem was getting paid by these Third Party billing systems. By the end of 2009, and beginning of 2010 most contractors wanted to be paid at the time of service. So that was the lag.

    Last year we prepared 124 houses for sale, this year we did 4. The season isn’t over yet, but normally we would be booked by the end of February.

    We don’t really care because more, and more people need help around the home. Working with Real Estate people, or banks, or distressed properties isn’t what it used to be. The money is very slow pay, no pay. There is no up side to being privy to what distressed properties are doing. There are no deals to do, no insider information worth having.

    David North said it, the BPO orders are going through the roof. It looks like banks will be making a move no matter what the condition of the property.

  28. 28
    The Tim says:

    By jlb @ 10:

    two questions:

    Do you have the data available to do an ‘active listings’ chart that shows the data broken out by age of the listing? say 30-60-90-120+days? I think that would be really interesting.

    Additionally, how do you treat things that go on and leave the market in the same month? I guess most things are pending for ~1 month; would a pending house show in the active list or no? That would be a great addition to the chart I was asking about above to show houses that list and sell immediately.

    To your first question: I don’t have the data on active listings, but I can dig into it for a future post.

    To the second question: Interesting idea. I did a quick look at currently pending sales in King County and nearly 40% of them went pending within 30 days of coming on-market. That definitely seems significant. Will dig into this further and post something later this week or next.

  29. 29
    David North says:

    By Scotsman @ 23:

    RE: Ira Sacharoff @ 22

    What are the guidelines for a short sale? Is there a certain percentage loss the banks will accept, capped at say 15%, or is it wide open? What percentage off has a realistic chance of closing?

    I have an 11 x 17 flow chart posted on the wall in my office that was put together by someone in the financial industry who wanted to see who owned what rights and responsibilities to his own mortgage. It took 2 years for him to reverse engineer his mortgage to complete the chart. I don’t have the rights to post it, so I’ll describe it. It has 17 blue boxes, 3 red boxes and 10 green boxes, 20 black solid lines, 1 black dashed line, 5 purple solid lines, 3 purple dashed lines, 6 orange solid lines, 3 yellow solid lines, 7 green solid lines, 4 blue solid lines and one black circle labeled “Black Hole.”

    I negotiate short sales, and there aren’t really any cookie cutter answers to what banks will and will not approve. There are anywhere from one to a half dozen layers of approval criteria involving the bank(s), the underlying investor(s) and the mortgage insurance company(s). Then there is the critically important matter of whether the bank relieves the seller of the deficient debt** or reserves the right to try to collect all or part of it in the future, which is generally dependent in part upon the seller’s financial situation, and whether or not the seller agrees to the bank’s approval terms.

    Sometimes short sales where the loss is >50% are approved, and sometimes short sales where the loss is <20% are not approved. There are a number of factors that can help indicate likelihood of approval, but there are countless combinations of circumstances and no absolute rules. That said, decisions are generally coming faster than they were a year ago.

    ** There are going to be a lot of surprised and angry short sellers when they find out down the road that they still owe the debt. The good short sale negotiators either get the debt relieved (unambiguously in writing and reviewed by an attorney) or make sure the sellers understand that they may still owe the debt, but there have been a lot of short sales where that important detail hasn't been taken care of.

  30. 30
    David North says:

    By Scotsman @ 24:

    RE: David North @ 19

    You’re OK by me. But some, likely Ardell, would argue that as a professional you have a duty to provide guidance, even as regards market timing and prices.

    Who gives sellers the news that home sweet home isn’t worth what they think- even on a really nice sunny day with tulips blooming in the yard?

    As a professional I believe I have a duty to understand the market as best I reasonably can, and apply that understanding to the service of my clients’ best interests as best I reasonably can. Every broker has a different level of ability and willingness to do these things, which makes shopping for a broker really important if one is intending to rely on a broker for advice and/or service. If that’s what Ardell would argue, I would agree.

    Regarding the home sweet home value news question, that’s a big part of what I do. It’s not very pleasant for very many people these days. I really got an earful the other day from a prospective seller when I gave the results of my market analysis and the price range in which their property could be expected to sell. As in this case, the broker delivering the truth is often villified as if they are setting market values rather than interpreting them. It’s the interpretation of the market for their respective clients, not the causing of the market that professionals do. Trying to do things the other way around, or doing them poorly isn’t professional.

    Industry associations that push the notion that all of their members are superior, and web sites that push the notion that all of the same are inferior, equally cloud the ability of the public at large to distinguish those that are truly professional and valuable to their clients, from those who are truly unprofessional and a huge net cost to their clients.

  31. 31
    Jonness says:

    I think what’s occurring is a general shift in market psychology. Up till now, a lot of buyers were tricked into believing they were buying at a market bottom, the price would soon shoot up, and they would make a bunch of money. But now, buyers are finally realizing they could very easily lose money on their 2011purchase (just like people who bought in 2004, 2005, 2006, 2007, 2008, 2009, and 2010 have lost money). Therefore, people are looking either for cherry homes at good prices or somewhat lesser homes for screaming good deals.

    Truthfully, the sales numbers wouldn’t look so bad in April if it wasn’t for a pretty good rise in March. But since things are clearly heading the other way right in the middle of the best selling season of the year, and at a time when interest rates have been near record lows, I think the bulls are losing ground on their argument of a bottom.

    For a long time, I’ve said prices will fall to a minimum of 2003 levels. However, the truth is, they could easily fall to 2001 levels. It really depends on what happens to the national economy. This week, we get the unemployment numbers, and I think a lot of people are waiting to read these numbers into what’s really occurring. Let’s face it, without jobs, all of the “Seattle people are filthy rich and can afford to pay 2x 2000 prices” theories in the world won’t trick sellers into parting with their hard-earned money and becoming the next generation of hopelessly underwater homeowners.Keep in mind, in 2003, the economy was speeding up, home prices were pretty low, and buyers didn’t even need a job to qualify for a 0-down loan. Compare that environment to today, and it’s not difficult to realize why prices are heading back to that level.

    In addition, it’s increasingly looking like the Fed is out of bullets. However, I believe they are going to try to error on the inflation side. If wages follow, it could work. But if jobs and wages don’t increase in light of rising prices, things don’t look rosy. Especially in light of simultaneous government fiscal tightening working against rising GDP. IOW, don’t hold your breath.

    Back in 2007, when people claimed the U.S. was heading for a Japan-like house price disinflationary period, most people thought they were nuts. Yet, we are 5 years out from the start of the national correction, and we still have a seemingly long ways to go. It appears we are stuck in a deleveraging trap, and the only one making any money are those who jumped on the Bernanke train and bought into stocks and commodities. But before you attempt to get aboard the gravy train, keep in mind, Bernanke stops the printing presses at the end of June. Most likely, if he doesn’t start up QE3, house prices will continue south for several more years. Economically speaking, we are approaching and extremely interesting juncture.

  32. 32
    David Losh says:

    RE: David North @ 30RE: David North @ 29

    In my opinion no one should be involved in a short sale. Banks should be forced to do deed in lieu of. Banks created this situation, crashed the securities market with bogus valuations, and now are reaping massive profits off those that did what they thought was the right thing.

    The fact Real Estate professionals are now profiting from a situation they helped create really bothers me.

    Short sales have always been an option. The criteria is very restrictive. It has to be a financial hardship, or medical reason. Many of these Real Estate professionals who had no problem convincing people to lie on loan applications also have no qualms about encouraging people to send false information to the banks to get a short sale approved under false pretenses.

    If any one is considering walking away, or short selling a property, they need an attorney. They should consider litigation or looking for a class action suit to join. You need to fight.

    People shouldn’t be playing these games with the banks. If you are in need explore, a deed in lieu of foreclosure, get an attorney, fight, and keep in mind you should also consider a bankruptcy. Know your rights.

  33. 33
    ray pepper says:

    RE: David Losh @ 32

    “The fact Real Estate professionals are now profiting from a situation they helped create really bothers me.”

    David Real Estate Agents were simple pons in the game. They had no clue of this historic crash that was coming nor could they hinder the wheels that were in motion. Neither did Title, Escrow, Appraisers, Mortgage Lenders, on and on…..None of these professions need to be castrated and they VERY MUCH should profit now and attempt to make a living in what they feel they know best. So many of these people are bankrupt themselves and have paid heavy prices and continue to be shamed.

    It is for this reason I support every homeowner that chooses to WALK, STRATEGICALLY DEFAULT, DEED IN LIEU, and SHORT SALE. The sooner our American citizens can get this behind them the sooner the stress to the family unit will be relieved and they can move on with their lives.

    Carrying upside down debt that was perpetrated by Wall Street upon the millions of homeowners is incompetent at best and its time for people to stop crying and make one financial decision that is truly in the best interests of your family. BTW, for those of you wondering and hoping I will say it again: ITS NOT COMING BACK! Sure you can pay it down over the next decades but STOP CRYING because millions will choose the financially correct decision thats in the best interests of their families.

    This is getting a bit dated but it will remain an accurate portrayal of what occurred and what we must all remember:

    http://www.500realty.net/crisisofcreditvideo.php

  34. 34
    David North says:

    RE: David Losh @ 32

    David, the most important line in your post is:

    If any one is considering walking away, or short selling a property, they need an attorney.

    I require any would-be short seller to engage with an attorney before I will list their property. If they refuse to engage an attorney, or if their attorney advises them not to sell short, I won’t represent them. I’m running into more other brokers who are beginning to do the same, but I think it’s still a minority.

    I mostly agree with your entire post. Where I don’t completely agree with a few of the details, I pretty much agree with the principles. :)

  35. 35
    ARDELL says:

    RE: Scotsman @ 12

    Scotsman asks: “Ok, seriously guys- what can realtors do to speed up the process of clearing inventory and getting us to a more stable/balanced market?”

    From where I’m sitting, I don’t see that as a problem. Of course we have already established that I apparently work on another planet, that being North King County, North of the I-90 Bridge in both Seattle and The Eastside. A large area to be sure, but apparently one Blessed by the Archbishop of Rome by my presence here.

    In the Lower Tier, which I am calling as $500,000 or less, there are currently 1,259 homes for sale closing at the rate of 400 a month at present. 70% of the houses for sale are not bank owned or short sales and 70% of the houses sold are not bank owned or short sales.

    You’re roughly looking at 3 months of inventory in the Lower Tier. Hardly a glut of inventory that needs “clearing away”. In fact we could use another 1,000 homes on market in the $500,000 or less category.

    In the Mid Tier, which I am calling $501,000 to $800,000 (since there are virtually no houses for $200,000 or less) there are 835 houses for sale selling at the rate of 200 a month at present. 97% of the homes for sale are not bank owned or short sales and 90% of the homes sold are not bank owned or short sales.

    Roughly 4 months of inventory in the Mid Tier, again not a glut of any kind that needs to be “cleared away”. We could use another 400 or so on market in this price range.

    Top Tier – $801,000 to $1.1M (basically 3 tiers of $300,000 added to each starting at a $200,000 baseline) you have 241 homes for sale selling at the rate of 50 a month at present. 90% of the homes for sale are not bank owned or short sale and 92% of the homes sold are not bank owned or short sale.

    Roughly a 5 month supply of inventory. Whether or not you agree that 6 months supply is a “balanced market”, you have to agree that it looks pretty darned balanced with insufficient inventory for the most part and largely NOT plaqued with pre and post foreclosures.

    Over the Top Tier at $1.1M ad infinitum you have 513 for sale selling at the rate of 40 a month at present. 96% of the homes for sale are not bank owned or short sales and 82% of the homes sold are not bank owned or short sales.

    It wasn’t that long ago that we had a 2 year supply in this nose bleed section. So slightly under a 13 month supply does not look all that bad. You could say it needs to be “cleared out” but really…do you care about this Over the Top Tier?

    So I’d love to help you out with “your problem”, but that problem doesn’t seem to exist in my pretty big world of King County North of the I-90 Bridge including the Seattle side and The Eastside. Maybe I fixed it already. :)

    (Required Disclosure: Stats are not compiled by, verified by or published by The Northwest Multiple Listing Service.)

    UnRequired Disclosure: Stats do not include double-wides, single-wides, houseboats or townhomes as Single Family Homes)

  36. 36
    Real World Express says:

    The tragic thing is that even the people who “see” the bubble, aren’t really capable of evaluating it compared to the rest of the country.

    Seattle has tiny plots and old housing stock.

    I estimate that up to 80% of the “value” of a home here has to do with the Seattle Image that was created during the 90s.

    Seattle was a “place to be”…now it’s a place to flee.

  37. 37
    Scotsman says:

    Here’s some perspective- click the link, scroll down to the chart for FHA inventory and take a look at the trend. Talk about crap piling up in the basement. Eventually they will have to clear this stuff out, and since it’s not their money you can bet there will be fire-sale pricing:

    http://www.calculatedriskblog.com/2011/05/lawler-monthly-report-to-commissioner.html

    We’re a long way from the bottom.

  38. 38
    Hugh Dominic says:

    By David North @ 30:

    As a professional I believe I have a duty to understand the market as best I reasonably can, and apply that understanding to the service of my clients’ best interests as best I reasonably can.

    The problem with this is that most real estate professionals think they can provide accurate and unbiased market insight, when they truly cannot. A layperson will tend to trust the broker, who sounds so well informed, but is not at all qualified to make market predictions and provide advice.

    I will never forget the Windermere agent who was shouting to be heard above the traffic that this house was a good investment, and to take the sellers counteroffer because the neighborhood would surely hold the value. That was in 2007. That same house sold two months later for $80k less. That agent almost cost me a fortune. I learned that she knew that every day is a good day to earn a commission, but nothing about the market.

  39. 39

    By Scotsman @ 23:

    What are the guidelines for a short sale? Is there a certain percentage loss the banks will accept, capped at say 15%, or is it wide open? What percentage off has a realistic chance of closing?

    IMHO the problem is simply that the banks and/or their servicers don’t spend enough on staffing to process these things. There’s no reason it should take so long or that so few should get approved.

    When you consider the fact that not all these mortgages are owned by the party servicing the loans, I suspect there would be a very valid suit for damages against the servicers for negligence in processing short sales. Because they don’t properly staff the owners of the debt lose tens of thousands of dollars on each transaction.

  40. 40

    By Scotsman @ 24:

    RE: David North @ 19

    You’re OK by me. But some, likely Ardell, would argue that as a professional you have a duty to provide guidance, even as regards market timing and prices.

    Who gives sellers the news that home sweet home isn’t worth what they think- even on a really nice sunny day with tulips blooming in the yard?

    That’s entirely different than what you were suggesting. I don’t think anyone would argue that an agent shouldn’t tell a client what they think their property is worth.

  41. 41

    By Jonness @ 31:

    I think what’s occurring is a general shift in market psychology. Up till now, a lot of buyers were tricked into believing they were buying at a market bottom, the price would soon shoot up, and they would make a bunch of money.

    I don’t think I’ve dealt with a single buyer (or even run into any other person) in the past two years who has indicated such a belief.

  42. 42

    By David North @ 34:

    RE: David Losh @ 32

    David, the most important line in your post is:

    If any one is considering walking away, or short selling a property, they need an attorney.

    I require any would-be short seller to engage with an attorney before I will list their property. If they refuse to engage an attorney, or if their attorney advises them not to sell short, I won’t represent them. I’m running into more other brokers who are beginning to do the same, but I think it’s still a minority.

    Our “Designated Broker” has required that since before he was call a designated broker (before the change in the licensing law).

  43. 43

    By
    href=’#comment-131053′ rel=”nofollow”>Hugh Dominic @ 38

    I will never forget the Windermere agent who was shouting to be heard above the traffic that this house was a good investment, and to take the sellers counteroffer because the neighborhood would surely hold the value. That was in 2007. That same house sold two months later for $80k less. That agent almost cost me a fortune. I learned that she knew that every day is a good day to earn a commission, but nothing about the market.

    You’re really giving them a lot of benefit of the doubt assuming they didn’t know the current value, but I have never understood why people think agents will know what will happen in the future. That story is a good example of that. I could see an agent perhaps saying that a neighborhood would do well relative to other neighborhoods (e.g. go up more or down less), but when agents start talking about where they think the market is headed, that’s the time to start running away!

  44. 44
    David Losh says:

    RE: Kary L. Krismer @ 43

    I’ve thought about this and it is the job of a Real Estate broker to know the market place they represent. They should know the value. Banks for sure knew the value of property.

    It is hard to know when the government will step in with some program to prop up the entire lending system, but a Real Estate Broker should know enough to caution any one interested in buying that this is a gimmick.

    If people had looked at values of housing units we wouldn’t be having these conversations.

    This site puts out statistics, and data every day indicating where the market is going. The reason I keep saying we are in a dead market place is because we are far from core value.

  45. 45
    David Losh says:

    RE: ARDELL @ 35

    Well, then again, there is this!?

  46. 46

    RE: David Losh @ 32
    Great post, David.
    It strikes me that those trying to get people to sell their house as a short sale are those who are most likely to profit from it. How is it better than deed in lieu of foreclosure?
    Oooh! I know! The short sale involves a real estate commission!

  47. 47
    jlb says:

    RE: The Tim @ 28

    Great, good luck, I look forward to seeing the data. I realized after I posted that it might be difficult because of expiring listings. Is there a reliable number anywhere for the number of days a house has been on the market? I guess Redfin has a number for that..

  48. 48

    By Ira Sacharoff @ 46:

    RE: David Losh @ 32
    Great post, David.
    It strikes me that those trying to get people to sell their house as a short sale are those who are most likely to profit from it. How is it better than deed in lieu of foreclosure?
    Oooh! I know! The short sale involves a real estate commission!

    I’m not a big fan of short sales, and currently I don’t do short sale listings, but I think one advantage of a short sale is it keeps you from answering “yes” on a future application which asks about foreclosure. If memory serves, they ask about foreclosure and deed in lieu. In the future though they may ask about all three, if they don’t already. But beyond that, a short sale and a deed in lieu may likely be treated differently for future loans.

    The problem I’ve had is finding people who are familiar with all the possible remedies (foreclosure, deed in lieu, modification, short sale, chapter 7 and 13). When you send someone to someone only familiar with certain remedies, their solution is likely to be one of those remedies.

  49. 49
    David North says:

    By Ira Sacharoff @ 46:

    RE: David Losh @ 32

    It strikes me that those trying to get people to sell their house as a short sale are those who are most likely to profit from it. How is it better than deed in lieu of foreclosure?
    Oooh! I know! The short sale involves a real estate commission!

    It is true that many real estate brokers are pushing short sales, but it’s definitely outside the scope of a real estate broker or managing broker license to be advising clients or prospects whether a short sale is a better or worse option than any other option. It’s one of many reasons that a prospective short seller really must engage an attorney before deciding which path to take. In my experience, attorneys advise against short sales in roughly 30% of cases after the homeowner has started considering a short sale. Also in my experience, about 10% of prospective short sellers will not speak to an attorney. There are advantages for some distressed homeowners that outweigh the disadvantages of a short sale, and vice versa.

  50. 50
    David Losh says:

    RE: Kary L. Krismer @ 48

    Number one is the commission aspect, second is that Real Estate brokers are completely incompetent in dealing with short sales, and third is you are making the bank’s problem the seller’s problem.

    I’ll just say I have done a lot of short sales, and was excited about the collapse. Sorry if you are offended, but distressed properties is an area of my expertise. Short sales have fallen into that, in the past.

    The scope is very narrow. Banks look at financial hardship and medical conditions. That’s the policy, and procedure. In my opinion that hasn’t changed. You can show me where I’m wrong.

    It is really weird that Ray has made excellent points over the years given his, and my earlier comments about Real Estate, but a couple of weeks ago he started saying sellers should fight the bank. It’s never been my place to recommend walking away, or a deed in lieu of, but Ray is right, people need to stand up. This market place can’t be blamed on the buyers. It just can’t. There was way too much conflicting information.

    In terms of short sales, I think, unless you are planning on paying the short, you will be in more trouble than if you fought.

  51. 51

    RE: ARDELL @ 35
    From a lenders standpoint…have any of you even considered the fact that it is a lot more difficult to find buyers who qualify to buy or are comfortable buying? Our economic situation has potential buyers feeling safer as renters and has upgraders staying put. In our industry (lending), every buyer…even when they look like perfect buyers, go through a more rigorous qualifying process to be able to purchase a home. Many fail that test due to stricter lending guidelines from the investors who refuse to risk it and get beat up with defaulted loans. The investors are pickey, choosey, and for good reason. The banks don’t want to get stuck holding the Note so they must be certain before they give their seal of approval on the loan that it will perform. Still, many default. Although lending has changed so dramatically from when I first started just 10 short years ago, I love what I do! I admit this industry has probably contributed to many extra grey hairs on my lovely mane of brunette! But I’m worth it!

  52. 52
    Jonness says:

    By Kary L. Krismer @ 41:

    By Jonness @ 31:

    I think what’s occurring is a general shift in market psychology. Up till now, a lot of buyers were tricked into believing they were buying at a market bottom, the price would soon shoot up, and they would make a bunch of money.

    I don’t think I’ve dealt with a single buyer (or even run into any other person) in the past two years who has indicated such a belief.

    Apparently you haven’t been reading the monthly bottom calls by the local expert media and how “missing the bottom will cost you dearly,” and “when mortgage rates rise, you will be priced out forever.”

    And if you have been keeping track of such nonsense, then I should probably introduce you to a guy named pffft. :)

    Joking aside, I’m seeing an increasing number of homes bought in 2008 and 2009 that are being listed as short sales.What were these people thinking when they bought the homes? That they’d be short selling them in a couple of years? Of course not. They were bargain grabbers who thought they were cleaning up on others’ misfortunes right up until they became unfortunate.

  53. 53
    ARDELL says:

    RE: Experienced Lender @ 51

    Experienced Lender Asks: “…have any of you even considered the fact that it is a lot more difficult to find buyers who qualify to buy or are comfortable buying?”

    Actually, no, because I don’t go looking to “find” people to buy a house. In fact my #1 answer to “Should I buy a house?” is NO! Because if you have to ask that question, you likely should not do it.

    Once in a while I may look for people who want to sell a house, but never in 20 years have I gone out looking to convince someone to buy one. Buyers always come to me. No Agent has any business trying to convince people to buy, or come up with “talking points” to help them “get off the fence”.

    I look at home buying the same way my mother taught me to look at marriage. “If there’s any question in your mind as to whether or not you should do it…DON”T!”

    The people who call me to help them with a home purchase are qualified, without exception. They may need help making a wise choice, but whether or not to buy is their choice, and they made that choice before they called me.

    As to lenders, I generally work with one, but I change that one from time to time as needed. The one I have seems to have plenty of qualified buyers. She’s very young and relatively new in the business. She has the lowest cost and lowest rates 90% of the time and she works like a dog, never lies, and is 100% dependable. I never see her out “looking to find qualified buyers who are comfortable with buying”. They come to her.

    I don’t know you and I’ve never been a lender, but most times when I meet an agent who has no clients or has a hard time “finding” one, it’s because they don’t work hard enough to deserve one. Lending may be different in that regard.

  54. 54
    Jonness says:

    By ARDELL @ 53:

    She has the lowest cost and lowest rates 90% of the time and she works like a dog, never lies, and is 100% dependable.

    I’d only be impressed if she can beat William Doom’s rates and fees.

    http://www.myequitypro.com/real-time-rates/

  55. 55

    By Jonness @ 52:

    By Kary L. Krismer @ 41:

    By Jonness @ 31:

    I think what’s occurring is a general shift in market psychology. Up till now, a lot of buyers were tricked into believing they were buying at a market bottom, the price would soon shoot up, and they would make a bunch of money.

    I don’t think I’ve dealt with a single buyer (or even run into any other person) in the past two years who has indicated such a belief.

    Apparently you haven’t been reading the monthly bottom calls by the local expert media and how “missing the bottom will cost you dearly,” and “when mortgage rates rise, you will be priced out forever.”

    And if you have been keeping track of such nonsense, then I should probably introduce you to a guy named pffft. :)

    Joking aside, I’m seeing an increasing number of homes bought in 2008 and 2009 that are being listed as short sales.What were these people thinking when they bought the homes? That they’d be short selling them in a couple of years?

    As to the joking, LOL, but I do try to avoid reading such things.

    As to the second part, plans change. The most notable causes are employment and domestic issues. If a job is lost or a couple splits up, it can be almost impossible to keep the house. Finally, as I’ve said repeatedly, despite what you read in the press the standards for making a loan really have not changed all that much in that they still base them on things they shouldn’t (e.g. credit scores) and don’t necessarily look at all they should (existing budgets compared to new budgets).

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