Foreclosures redux

To the right is the interior of a gorgeous bank owned home in Bell Canyon. I just got off the phone with the bank and they had an accepted all cash offer as of last week. Guess what? For some reason the buyer couldn't (or wouldn't) perform. So this thing is on the market again. It's a monstrous house with a wonderful design and some really creepy issues lurking. Remember that the banks do not have to disclose anything. You're on your own. This particular property is high stakes. All cash offers only. Listed at a million three. Fixed up, a clear 1.6 million or more kind of property. Problems? There is NO landscaping on the entire 35000+ sq. ft. Lot. The retaining wall in the back yard is illegal and has to come down. There are City and County Notices of illegal grading. there is an "issue" with the septic pumping system. Inside the home is the framing of an illegal room built OVER a two story living room. A real "what the hell?" structure that makes absolutely no sense. There's a leak that appears to be a bad connection in the upstairs spa tub. These problems are the apparent ones. Lord knows if there are any issues with the electrical.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>BUT
If you want to take a big bucks flyer on this place, there are big bucks to be made.
The investors bidding on this place know this,and they all have their own formulas that lead them into what to bid. There are even sophisticated algorithm based programs that will tell you what to bid. I actually have one of these. I'm going to assume the winning bid to be around 850k. Maybe up to 925. Then you have to fix the retaining wall and yard. I'd go with natural landscaping and a small grassy area together with a shallow pool and spa that doubled as an architectural landscape feature:probably about 60k. Add the cosmetic repair of removing the framing in the two story living room. About 20k. Paint and repair upstairs tub leak. Another 20k.
Reserve for issues that appear: 50k. You're into the property for a million and fifty thousand. Flipping? Get it staged, another 10k. List at 1.7 million.
Take the first offer you get over a million five. Pay closing costs. Et Viola. a cool $350,000 profit. All in 90days if you do it right.

Who's with me?

Existing-Home Sales Rise Unexpectedly in October

This via Linked In's news arm, DSNews:
Sales of previously owned homes got an unexpected boost last month while the number of homes on the market continued to decline, according to data released Monday by the National Association of Realtors (NAR).


The trade group recorded a 1.4 percent month-over-month increase in existing-home sales in October, pushing the annual rate of sales to 4.97 million. NAR’s latest reading is 13.5 percent above the 4.38 million-unit sales pace in October 2010.

Housing inventory fell 2.2 percent to 3.33 million existing homes available for sale as of the end of October, which represents an 8.0-month supply.

That’s down from an 8.3-month supply in September. NAR says the housing supply has been trending gradually down since setting a record of 4.58 million in July 2008.

Distressed homes – foreclosed REOs and short sales – slipped to 28 percent of October’s transactions, down from 30 percent in September. They were 34 percent in October 2010.

NAR says 17 percent of last month’s existing-home sales were foreclosures and 11 percent were short sales.
Market analysts were expecting up to a 3 percent drop in overall existing-home sales between September and October. Forecasts ranged between an annual rate of 4.76 million and 4.80 million.

According to NAR, October home sales should have risen higher than the 1.4 percent the trade group recorded.

According to Lawrence Yun, NAR’s chief economist, contract failures reported by Realtors jumped to 33 percent in October from 18 percent in September. Only 8 percent of contracts fell through in October of last year.

“A higher rate of contract failures has held back a sales recovery,” Yun said. “Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents, and high affordability conditions. Many people who are attempting to buy homes are thwarted in the process.”

NAR’s report shows the national median existing-home price was $162,500 in October, which is 4.7 percent below October 2010.

“In some areas we’re hearing about shortages of foreclosure inventory in the lower price ranges with multiple bidding on the more desirable properties,” Yun said. “Realtors in such areas are calling for a faster process of getting foreclosure inventory into the market because they have ready buyers.”

Yun adds that extending credit to responsible investors would help to absorb distressed inventory at an even faster pace, which he says “would go a long way toward restoring market balance.”

NAR’s data indicates investors purchased 18 percent of homes in October, while first-time buyers accounted for 34 percent of transactions. All-cash sales made up 29 percent of last month’s purchases.

Certainly this has been the case in my neck of the woods, which is Malibu/Topanga/Calabasas/Conejo Valley. Activity and sales both have been strong with traffic up significantly. There is pent-up demand that is the driving factor underlying all this.
Give me a call if you'd like to know what your home is worth in today's market