Mortgage rates in 2010 were the lowest in six decades, but a recent and sustained increase may indicate that consumers can expect to pay more in the new year to buy or refinance a home.
Mortgage rates may have hit bottom
One out of 4 foreclosers go to investors
In Sacramento County one in four foreclosure sales went to investors during the 2009 year.
Prices have come down enough so that rental properties purchased with cash can yield a 5 to 9 percent return, much better than the stock market. This return does not include home appreciation.
Price point homes go pending quickly, usually in 5 to 10 days.
Nine out of ten foreclosures priced under 200 thousand sell for over asking price with multiple offers.
Multiple offers are the norm with banks instructing buyers to bring their highest and best- no time for countering back and forth.
I have been up against 20 other cash offers on well priced foreclosures.
One HUD foreclosure priced at 53 thousand accepted an offer for 136 thousand. This is on 10th ave in Tahoe park! No joke, see this listing here……….. http://prospector.metrolist.net/scripts/mgrqispi.dll?APPNAME=Metrolist&PRGNAME=MLSLogin&ARGUMENT=Ok7KmNi58nbInAxeCH8GTewqhdlV8u%2BS18SoY4VDiZQ%3D&KeyRid=1&Include_Search_Criteria=
First time buyers that need financing for their purchase are forced to offer more than the cash buyers for their offer to be accepted.
Waiver of the 90 day flip rule helps buyers and sellers
The 90 day flip rule waiver reduces the time an investor has to wait to sell their recently purchased property.
Most first time buyer use FHA financing to make their purchase because of the low down payment requirements. FHA guideline mandated that borrowers can not purchase a home that has been “flipped” within 90 days regardless of the value of the property. This has dicourage investors from buying and re-habing properties because so many of the potential buyers could not qualifiy to buy the property due to the 90 day flip rule.
Buyers that need financing have found themselves unable to compete with cash buyers- especially with distressed properties which have imperfection that lenders would rather stay away from.
Summary
Investors will buy, fix and resale more properties which will create more inventory for buyers that need financing for their purchase.
The waiver of the 90 day flip rule is set to last until 2/1/2011.
Real Estate investors swoop up sweet deals
Real estate news for the Sacramento area
- Residential- single family homes priced under one hundred thousands dollars are the investor’s delight in the Sacramento area.
- Multiple, cash offers from real estate investors are the norm in Sacramento-especially with homes priced for less than one hundred thousand dollars.
- Most foreclosure properties under $100,000 get multiple offers within 2 days after being listed on the Sacramento MLS.
- Most properties asking $100,000 or less sell for over the asking price.
- Properties listed under $150,000 and less sell quickly, usually less than 34 days after being listed.
California Unsold Inventory Index declines to 3.8 months for December
The unsold inventory index indicates how many months it will take to deplete the supply of homes at the current sales rate. The current rate of 3.8 months is the lowest it has been since 2005. In December of 2008 the California Unsold Index, or UII was 5.8 months. Real estate investors acquiring foreclosures within three or four days of being listed can explain the low Unsold Inventory Index in California. Homes as low as forty or fifty thousand are selling in Sacramento to cash buyers. With so many real estate investors presenting cash offers banks are not willing to look at offers that require financing.
Laws that pertain to Foreclosure propeties
In foreclosure sales transfer disclosure statements are not required
A transfer disclosure statement is a document that sellers must complete and give to the buyers before selling a property. This is mandated by law. Transfer disclosure statements allow the seller to disclose all of the known defects of a property. Defects may include a leaking roof, bad drainage, cracked tiles, noisy neighbors, bad plumbing, or a death on the property. Disclosures are meant to let the seller disclose all problems they know about the property. The seller reduces their risk of being accused of hiding things from the sellers. Also, Transfer Disclosure Statements let buyers know exactly what they are getting into should they decided to buy the property.
Foreclosure properties, or bank owned properties are exempt from producing disclosures because no one from the bank has stepped foot onto the property or lived in the house. This is super important information for buyers who are interested in purchasing a foreclosure property. There may be serious problems with the property that would otherwise be identified in a normal sales transactions.
Inspections are extra important in purchasing a foreclosures because there are no transfer disclosure statements that alert potential buyers to what may be wrong with the house. Inspections to consider when buying a foreclosure include a home inspection, septic or sewer inspection, roof inspection and pest inspection–just as a start. Upon reviewing those reports buyers may choose to bail out, or they may choose to get further inspections to assess the severity of defects. The findings of the reports can sometimes help negotiate a price reduction, especially if the buyer is paying cash.
Foreclosure News in El Dorado County
The supply of foreclosures properties in El Dorado County remains slow and steady. Some of the latest foreclosures sales have sold for as little as little as 80,ooo dollars in Placerville (two bedroom, one bath residential unit).
Homes have sold for as little 48,000 dollars in Somerset.
Greenwood Creek, which is next to Garden Valley, is featuring a run down 2 bedroom one bath home for 70,000 dollars. The Greenwood property sits on an acre of land.
Roughly half of the home sales in El Dorado County are made of short sales and foreclosure sale properties. With so many foreclosures hitting the market in the lower price range it is common to see three bedroom, two bath homes that sell for less than 200,000 dollars. These prices have perked the interest of real estate investors and first time home buyers. The demand is high for the well priced foreclosure properties. The high demand causes them to sell quickly. Another term that is used for “foreclosure” is “real estate owned,” or “REO” properties. Usually the REO properties, or foreclosure properties sell for over the asking pric, unless the offer is cash. It is very common to have multiple offers come in on foreclosure properties.
El Dorado county, like many markets across the nation have two types of markets. In the low end market, which consist primarily of foreclosures, homes are selling quickly for over the asking price within one or two months after being introduced into the market. In the mid to high end markets, homes continue to sit for longer periods of time. There are fewer foreclosures in the mid to high end markets and there is less demand for homes priced in the mid to high end price range in general. Therefore, homes tend to sit longer as property owners hold out for their asking price. As owners of the mid to high end properties become forced to sell their properties due to job losses, or ill effects of the recession, they will have to reduce their prices in order to sell their homes. Thus, prices are expected to continue to fall in the mid to high end price ranges, while prices in the low end of things are expected to remain flat.
Foreclosure Industry News Update
Foreclosures have dominated real estate in El Dorado County and set the bar for home sales in the last 3 years. The shear volume of homes for sale introduced into the El Dorado County real estate market place is massive. The abundance of foreclosure properties that are being sold at a discounted rate has helped to push prices down to affordable levels. The number of buyers who can qualify for financing has dropped since the sub-prime debacle which left a wake of destruction for potential buyers and sellers. The amount of qualified buyers is less and the number of El Dorado county homes for sale is more, which has driven prices down for the last three years. The downward trend is beginning to change. In some markets, there is no question that prices have hit bottom because we are seeing prices rise. Read the rest of this entry »
