It seems that every day now, we see more and more properties for sale that are listed as REO (Bank Owned Foreclosures), and/or Short Sales.

Our team, has always run numbers as a means to better understand our markets. We researched the EBRD multiple listings service, following a conversation that we had last night. We were not surprised as to which cities had a higher percentage of REOs.

However, we did not expect the number for the entire San Francisco East Bay area to be this high, 21%. That means that roughly one in five houses that are for sale, are Bank Owned in the East Bay area. The interesting factor is that this number does not include “Short Sales.”

When lenders allow a home to be sold for less than the amount still owing on the mortgage loan, that’s called a pre-closure “Short Sale!”

I think you can see where this is going once you add “short sales” into the mix as well. The competition for many houses for sale in the market are from banks.

Here’s our spreadsheet tracking cities in the San Francisco East Bay Area for Months Supply and REOs. Months supply is the ratio of inventory to sales. It tells us how many months the stock of homes for sale would last, if sales continued at their current rate.

For those living in other parts of the country, we’d love to hear what’s happening in your market. We’ve already heard from one Las Vegas agent, that 20.8% of their listings are REOs or short sales.

Labels: Bay Area Real Estate, Foreclosure, Housing Inventory, Months Supply, REO, Short Sale

Losing your house to foreclosure, involved in a "Short Sale?" Not only do you lose your house, your credit and have to deal with all the stress that goes with it, but any debt forgiven by the lender is considered taxable to the IRS. Seems a bit unfair to someone with a financial challenge ahead of them.

"A bill that would give homeowners facing foreclosure a tax break when lenders forgive part of their debt would make up for lost revenue by collecting more capital gains taxes on the sales of some second homes claimed as primary residences."

"HR 3648, the Mortgage Forgiveness Debt Relief Act of 2007, would eliminate a provision of the tax code that allows the IRS to tax debt that's forgiven as part of a foreclosure or loan modification as income."

"NAR said the bill would restore "fundamental fairness for homeowners in financial and economic distress" by eliminating taxes on the "phantom income" generated by foreclosures and workouts."

View the entire article HERE. (Inman News)

"To make up for the bill's $1.97 billion impact on tax revenue over the next decade, it would also tighten the rules for counting a second home, vacation or rental property as a primary residence for tax purposes. Under current law, up to $250,000 (or $500,000 if married filing jointly) of the gain on sale proceeds from the sale of a primary residence are exempt from capital gains taxes."

Labels: Bay Area Real Estate, Foreclosure, Inman News, IRS, NAR, Short Sale, Tax Relief

"California Foreclosure Activity Hits Three-Year High," as reported by DataQuick Real estate news.

"Second quarter California foreclosure activity rose at the fastest pace in at least 14 years, the result of waning home price appreciation."

A Reckoning With Risk. "Will adjustable-rate loans lead to record foreclosures? Here's an article found in August's edition of U. S. News & World Report.

Buying real estate for a song is alluring, but there are pitfalls that could spell disaster.

"Nationwide interest has spawned an industry of foreclosure mavens as well as countless Web sites, infomercials, how-to books and seminars."

I had the oppostunity to attend one such seminar on Forecloures and Short Sales that was offered by Finanicial Title Company last week and wanted to share some insights.

"Such auctions may have piqued the interest of novice investors anticipating a rise in interest rates and the inability of some owners to meet their financial obligations.

"Yet while there is a tantalizing possibility of getting a deal, people who are intimately familiar with foreclosure auctions — lawyers, mortgage bankers, brokers and former auction regulars — advise steering clear of them."

"Success is not impossible, but to even set foot in the ring you must put in hours of due diligence and overcome myriad obstacles, including competing against auctiongoers who have mastered the art of the bid."

"You really have sharks at these sales," said Bruce Bronster, a partner in the Manhattan office of Dreier L.L.P. — his litigation group has handled more than 3,000 foreclosures. "You're a guppy. And you're going up against very seasoned and sophisticated guys."

This is from an article entitled; "Foreclosure Auctions: Bidder Beware," by Stephanie Rosenbloom of the New York Times.

"You don't know exactly what you're getting," said Melissa Cohn, the president of the Manhattan Mortgage Company. "That's the biggest risk."

For a better understanding of the foreclosure process, here are some links to review, compliments of Financial Title Company;

Foreclosure Timeline - California

Short Sales - Real Estate Preforeclosure
"The forclosure rate is soaring in most areas of the country presenting incredible opportunities for preclosure real estate investors! There are a number of ways the informed real estate investor can profit from homes facing foreclosure and one of the most lucrative is the pre-foreclosure.... SHORT SALE!" What is a Short Sale? Read the entire article HERE.

Trustee Sales - High Risk - High Payoff?
Keep in mind some of the risks and do your homework.

Post Foreclosure - REO Many properties are not sold at the trustee sale. If the minumum bid is not met, the bank becomes the owner of the property, REO (real estate owned).

Top Three Foreclosure Scams and One That Isn't

To Find a Bank's REO/Loss Mitigation Departments Phone Numbers; www.scotsmanguide.com

Labels: DataQuick, Foreclosure, Real Estate Cycles, Short Sale, Trustee Sale, U S News