Realtor Coaching & Training: harris real estate university
Foreclosure Firestorm Ahead.
Where are all the REOs?
You know there are literally millions of ‘bank controlled…soon to be REO’ homes in your market. Yet, they aren’t for sale…
Why?
It should surprise no one that the Bank-sters are doing that is best for them. Bank-sters have demonstrated their unlimited ability to work exclusively for their own self-interest.
NOTICE: If you are ready to become a REO Listing Agent…join us for this weeks FREE Agent REO Secrets teleconference. 90 Minutes of the must-have…how-to information you must know to be a REO Listing Agent. There IS still time for you…its not too late. Here is the information you need to attend this Thursdays FREE event. Agent REO Secrets teleconference (or webinar) info.
Here is an interesting article that a student sent to me to share with you….
There was a time when processing the few bad residential real estate loans was routine. Federal and state regulations require bad loans to be passed through three “cauldrons.”
Troubled loans went first into a “30-89 past due” cauldron, where they cooked for up to 89 days. Many healed themselves. Unemployed borrowers found jobs, warring spouses finalized divorce papers or scatterbrained professors returned from sabbaticals.
For many years, that group never rose above the $20 billion mark for any one quarter — a small percentage of all outstanding loans.
The mortgages that made it to the “90-day past due” pot generally were written down to reflect the underlying real estate, minus holding, selling and foreclosure costs. This holding vat generally was reduced to about 25 percent of the first group.
Finally, while a bank-owned home awaited liquidation, it could be placed in the final cauldron, the “nonaccrual” pot.
Now, fast-forward to the quarter ending in June. The 30-89 past due pot, according to FDIC data, was around $68 billion nationwide. The second pot has almost $65 billion. The third pot, about $83 billion.
The loans are not being reappraised. Many “zombie loans” represent homes in which borrowers are living, in essence, free of charge or perhaps sending a few dollars in interest to draw out the process.
This benefits the banks because they can postpone writing down toxic mortgages, which would force them to show losses and to add money to a reserve fund called a loan loss allowance, which could throw some banks into insolvency.
Final charge-offs for residential mortgages were 1.7 percent of total past due and nonaccruals in December 2004. By September 2008, they hit 14.5 percent. The rise was likely because fewer loans were healing themselves as the subprime crisis swung into high gear.
By the quarter ending in June, it had fallen to 6.4 percent. The decrease only can be due to loans not being revaluated. Our calculations put this at the equivalent of nearly 400,000 “zombie mortgages.” If each accounts for one dwelling, that’s 400,000 homes with borrowers being subsidized by banks.
Interesting side note….a recent report estimated the total number of homes that will head for foreclosure (or short sale if the sellers are smart) is…13,000,000. That number included homes expected to be lost due to mortgage resets etc. Bottom line, this market IS the new normal. Learn how to become a REO listing Agent…join us for this weeks FREE Agent REO Secrets teleconference or webinar. Learn NOW how to be a REO Listing Agent (its not too late for you….but, next spring may be!)
The victim? Ultimately, the taxpayer (but more directly, purchasers of real estate and bank shareholders). Reanimated corpses are hard to kill.
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Special Message for long time Harris Real Estate University Students:
2010 WILL be the year of the short sale. As many of you know, because you are listing and selling short sale for years now. You are ready for what is coming in 2010.
Now, build your listing inventory. Do this, double, triple…maybe even quadruple the number of listings you have.
Go into spring 2010 will dozens (in not hundreds) of listings. Everything is going to make 2010 the year of the short sale. Did you miss the Emergency Short Sales Secrets event? Listen to this 90 minute Agent Short Sale Secrets teleconference replay now.
Here is an article from Diana Olick on CNBC.
Home prices may be stabilizing in some areas in the nation, but the damage has already been done in the housing markets that saw the biggest boom and in turn the biggest bust.
Home buying in these markets reached a frenzied pace during the middle of this decade, and that means that a good portion of buyers purchased homes at the top of the market. No surprise that they have now sunk deepest underwater on their mortgages.
A new survey from Zillow.com shows that even in those markets where investor competition has returned and prices on the low end are beginning to stabilize, homeowners still owe far more on their mortgages than their homes are currently worth.
What does this mean to agents? Simple…knowing how to list and sell short sales in now a mandatory skill. For years (and years) agents who have become Certified Short Sale Specialists will have an advantage over agents who don’t. Watch the FREE Agent Short Sale Secrets video and then download your FREE Agent Short Sale Secrets book.
Las Vegas leads the way with 81.8 percent of borrowers underwater on their loans in the third quarter of this year, down barely one percent from the second quarter but still up 10 percent from the first quarter.
The bulk of underwater borrowers are in California, Florida, Arizona and Nevada. While home prices nationwide were down 8.5 percent in September from a year ago, prices in these states are still way down — 34 percent in Las Vegas, 26 percent in Orlando, 23 percent in Phoenix and 11 percent in Los Angeles (National Association of Realtors). Again, that’s from a year ago, but many of these cities have seen over 50 percent price declines from the peak of the market.
We have been hearing from our students in these markets that homes less than $200,000 are selling with multiple offers….keep in mind that many of these homes sold at the peek of the bubble at 30-50% HIGHER prices!
Some argue that “underwater” borrowers are no different than any other borrowers, as long as they continue to make their monthly mortgage payments, and as long as they continue to want to live in their homes, knowing they will have to wait out the market for home equity to gradually return.
Not sure about that one….there have been several studies that have suggested that most will abandon their homes (selling via short sale of simply ‘walking away’) once their home is 20% upside down. Look at the stats for Vegas…81% of all borrowers are upside down! As our Vegas students have reported to us, its common for a home owners to sell their current home via short sales and simply (and sometimes literally) move across the street.
But the danger is for those that need to sell, or for those who can no longer afford their monthly payments and don’t qualify for a loan modification.
The government mortgage rescue programs do allow for modifications and refinances on homes with up to 25 percent negative equity, but many homeowners, especially in the hardest hit regions, don’t think they will ever see equity again, and therefore see no reason to continue making payments on their loans, whether they are able to or not.
Many are simply sitting in their homes, rent-free, as banks struggle to catch up and contact them. Others are vacating the homes, mailing in the keys, and choosing a credit hit, rather than be strapped to a home that will only ever be a liability.
Remember, several reports have estimated that the number of bank controlled ‘Shadow Inventory’ homes is….13,000,000.
Home prices are improving, but there is a lot of government stimulus behind that improvement. The extension and expansion of the home buyer tax credit, as well as artificially low mortgage rates backed by the Federal Reserve’s purchase of GSE loans and securities, will all expire by the middle of 2010, so it remains to be seen whether the very tenuous recovery we are now seeing in housing can endure on its own.
As foreclosures and unemployment continue to rise, the potential for a double dip in home prices is very real, and borrowers underwater now will only sink deeper.
Solution, Short Sales! Agents, learn how to become Certified Short Sale Specialists. Watch the FREE Agent Short Sale Secrets video and grab your FREE Short Sale Secrets book!
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New just released NAR report….HUGE SURGE of home sales over the next 9 months!
We LOVE the way that sounds…don’t you?
Watch this new CNBC video…this WILL get you pumped!
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What is one of the biggest potential time wasters…and when used correctly…
……MONEY MAKERS… for Realtors?
Simple….
Blogging and social network marketing.
Go here now to listen to FREE Replay
Everyone (and their brother) is telling agents to learn how-to use social networking sites like Twitter, Facebook, Linkedin……at this point….you know that you should have a blog.
Enter, confusion.What to do first….how much time should you spend doing this….HELP!
We hear you and we are going to help…..
Listen now to this weeks Superstar Interview and we will do our best to demystify the murky waters of social networking.
As any long time HREU Student will tell you…we love technology. For any small business, technology gives you an advantage. The challenge is when agents don’t know how to bridge their online ‘work’….to ‘offline’ sales.
Whats worse is all the companies that are (frankly) over charging agents for things like….blogs….. that are FREE..if you know where to look.
Go ahead and listen now to the replay of this week’s HREU Superstar interview. I have arranged for 4-5 agents to share with YOU exactly what they are doing to not just generate leads but..close sales….ya know, make actual money from their online efforts.
Here is the info for your schedule.
Here is the direct link to listen NOW to this FREE Replay:
http://instantTeleseminar.com/?eventid=9768810
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More ‘new’ information about the real estate markets. (Old information for HREU Coaching Students)
High end homes are now the biggest drag on the real estate markets. Massive price changes are on the horizon.
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Notice: 2010 is the year of the Short Sale.
HREU Students, you should be ready for this….we have been coaching you to become short sale specialists. Get ready, the golden age of short sales is NOW. Remember, attend this weeks FREE Emergency Agent Short Sale Secrets teleconferece. This event is open for HREU students and future students. Everything about short sales is changing. Here is the info for this weeks free short sale event.
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