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SueInCa On June - 21 - 2012

 

All you really want is a home you can live in comfortably, have the family over, let the grandkids run through, well there are people out there who don’t want you to have it.  At least not at the same price they can outbid you for, but they will gladly sell it to you after they have done all the cosmetic work to hopefully cover up the flaws.  It is a shark tank out there, a big shark tank. 

I have been looking for a home to buy for the past two months.  We have looked at quite a few places and have found out there is no rhyme or reason to the pricing.  The Real Estate agents will tell you, “it is just the going price of the day” or “the market is coming back so grab one now” what ever happened to a good old fashioned true appraisal?  What I have found out is no one learned a lesson from the mortgage meltdown.  Not the banks, the loan agents, nor the Real Estate professionals.  In fact the only ones who might have learned a lesson is the title companies but their involvement is at the back end of the process and to my knowledge they never caused the mortgage problems.

 

So, what happens in the buying process now?  Well, for one thing, never count on the actual list price especially if it is a short sale or a foreclosure.  The banks have absolutely no intention of actually selling that home at that price.  Let me give you an example.  We looked at a home and there was quite a bit of interest.  They listed the home for $123,000.  A decent home, not in the best neighborhood but in an area where homes are being bought at a price people can afford.  This home needed little work except for a wall in the living room.  A previous owner had bricked in one wall in the living room in order to install a free standing fireplace.  Yes they mortared the brick onto the existing wall and yes, the wall was splitting from the weight.  No problem though that could be easily fixed, we have a friend who is a contractor.  The rest of the home was really pretty nice.  There were a lot of people going through and in retrospect I now can tell who the investors were.  “Oh look at that wall, I would sure not buy this house”.  “Oh that tile is disgusting”.  “Oh that back yard is no where near big enough”.  Uh huh sure, you were probably one of the people who bid it up so real people with real families could not afford it and that is the catch. 

See while they listed it at $123,000 the bank had no intention of actually selling it for that price.  And people who have been in the market for awhile know this and bid accordingly.  Of course our Realtor should have known and warned us but that is another story.  Needless to say our measly bid of $125k was not accepted.  Ok by me I would really have preferred a home on another street in that subdivision.  So onward we search.

Then we looked at another place, good bones but needed a great deal of work in order for me to live in it.  We had seen another home in the same neighborhood that sold for $155k in immaculate condition and even one that was in the same shape as this one go for $129k so we were going to bid $135k right in the middle kind of.  There were 10 bids and all over asking price on that house.  Again it was not move in ready so investors were looking for a flip or a rental property.  Out bid again but this lady is not giving up, no sirree bob. 

We bid last week on another condo.  Asking price $82.4k and yes we learned our lesson so we went in with $92k.  Then a couple days later the bank came back and asked for everyone’s BEST bid.  Huh?  They did not counter anything but wanted best bids anyway?  Well we did because we really like this unit and offered $95k going in and we will see where it goes. 

But I have learned, we are still looking and have already found another townhouse in a better town so we will be bidding on that townhouse.  It is a Fannie/Freddie home and the skinny is that they prefer families or owner occupied on their foreclosures.  So yes, we will bid over their asking price of $164k because it is well worth it (1400 sq ft and ready to move in) but now we are in another conundrum.  Do we go in way over and hope ours is selected?  Do we go in a little bit over and not look like greedy investor types?  What exactly do you do with a seller who wants to sell to families?  Well, we will somehow go in with a bid that is not outrageous but solid and we will include a buyer letter.  We are very familiar with this particular part of town and have looked there for months trying to find a place.  So we will tell them that.  We will tell them how perfect that home will be for us and we will wait. 

In the meantime, while we are waiting, what do you think we will be doing?  That’s right, we will be looking for another home.  Because, THAT is the reality about home buying these days.  One out of 10 that come on the market are actual straight seller sales(and that is a generous guess).  And the banks are still trying to recover all of their money.  As far as the insurance paid by the Private Mortgage Co/AIG I am not aware of what they are doing in regard to any claims they had to pay out either.  You never know on any house you bid on whether or not the bank received PMI insurance reimbursement so they very well could be making a profit on any given home.  In fact most homes could be in that category.  The GSE’s are now forcing the banks to buy back on the loans they can prove were fraudulent so who knows what a house’s history really is and that is just how the banks want it. 

In fact beware of the bank who wants to use their Title Company.  You could very well end up with a robo-signed title search.  After all when all the business is done, a title company you or I have never heard of could very well vanish just like mortgage brokers did back in 2008.  And when that happens, the buyer could be left with a mortgage on a house where they do not hold clear title.  In fact homes sold since the mortgage meltdown business could very well run into trouble when they try to re-sale and it would take hundreds, maybe thousands of them prior to people even becoming aware of a problem.  That is fact but also based on my total mistrust of banks these days and a clear understanding of the mess they have at Mortgage Electronic Registration Service( MERS) who was supposed to be keeping the docs on loans that were sliced and diced.  Problem is now they cannot exactly match docs to original loans, big problem – huge.  So what is the best way to fix it?  Lie your ass off again, plain and simple.

So, if you have not guessed yet the business of buying a home is not for the faint of heart or for the novice without a real good realtor.  I am lucky my sister-in-law is an escrow officer, a loan officer and has her real estate license.  She is not active in the business anymore but she knows a great deal after 25 years in the business.  But the market has changed and not for the better.  Even in the heady days of multiple bids and ever increasing home prices you still had a buyer and a seller on somewhat equal terms.  And an offer was taken, usually as soon as you had looked at the house. I put together my offer and my RE person would present to the other realtor, then we would either dicker a bit or just accept the offer.  There was not a great deal of mistrust, in fact making an offer for the asking price a lot of times was just what a seller expected.

It was not until the Bush administration, the banks, mortgage companies and realtors dreamed up these new processes that things changed and not for the better.  It all came crashing down on them and instead of learning their lessons, they are still trying to screw the consumer.  THEN they wonder why they are so hated.  When I close on my home, I am sure going to let them know…to be continued.

Written by SueInCa

I am a soon to be 59 Nana to Anthony who is 11. I live in Benicia CA with my husband and Shih Tsu. I worked in Banking and the Financial Industry for 24 years in Fraud, Risk Management, Account Management, Program Management, Project Management and Customer Service. I was a Fraud Investigator for Credit Card and Merchant Business and investigated internal fraud and responded to Bank robberies. I was also management in most of these positions. Now I am content to find a part time job where I am just a worker bee, no more corporate BS for this gal. I also make jewelry. I can spend hours in a bead shop just touching all the fine baubles. Only another beader would understand that one.

36 Responses so far.

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  1. coveark says:

    In many cases I do feel bad for those whose home values dropped……But…………those who had bought in an earlier time and then were very excited when the bubble happened….. ( say they bought a home for $89,000 and in the bubble years they were told it was worth $650,000) Well, that was dream cash and unless they sold….it was never real.

    My friend lost over $1,000,000. in the stock market during the big loss time in tech. stocks…..It was awful for some time and then she told me…….We had that much on paper from our investments. We never invested nearly that much and we never saw the money at all…..It was our financial joy but it was never real.

    Those are the things we always need to be aware of. Good luck on your search…….

    Now I am in a pickle trying to sell a very nice home out of CA and will get home no matter how I have to live…..I am adaptable and frankly am not spoiled so I will make it done. I hope that we all are………not you and me but our people. That our wisdom and strength grows for the betterment of us all

    • SueInCa says:

      Coveart

      I remember watching the film about Enron and everytime the leaders(term used loosely) talked to the employees they used the term “virtual”. Everything was virtual at Enron. I wonder if they were using code to talk to the employees?

      Many people were rich on paper during those days. Still the people who stayed in their homes after the crash and are paying on an underwater mortgage are to be congratulated. They did the right thing but there were so many different scenarios that I cannot simply lump everyone into a deadbeat status. Some people like me did not take out equity and we did not get in over our heads but we lost equity right along with everyone else. In fact we got less when we sold our condo last year than either of the realtors who took their cut. That is bad but we did not stiff the bank.

      • coveark says:

        Enron..the beginning of VISABLE evil in this era. Rats they were and their code was used to keep their employees in the dark. Thus settng a trend that became the bain of employees, their trust and and futures thrown out in the name of profit. Too many followed this model into these days.

        That is disgusting that the realtors made more than you did. Here in this berg the realtors charge 10%. I hope to sell on my own. If the one’s I met and listed with in the past were one tenth as dedicated as a representative I had on a sale in CA ( at 6%) I would list immediately.

        No, none of us should lump those who have lost into the deadbeat catagory. Peoples dreams shattered on all the levels sucks. The loan scammers working with unsophisticated buyers and not making clear the actual terms and what they mean were very much to blame. Whether they were banks or lending companies. What a high all of that fast money , gambling etc must have been.

        Your honesty is to be commended. Perhaps good Kharma will prevail.:-)…….Anyway if you do the right thing you can hold your head up and know that you did it.

    • bito says:

      coveark, Correct me if I am in error, but the did not the example of the 89,000/650,000 home also add to the false financial economy? Many homeowners were doing refinancing and taking out the equity of their homes further fueling the housing bubble? I realize that some amount of capturing of the equity, from one’s home, was good for the hard economy if the money was spent on actual products and or remodeling, however too often it wasn’t.

      • coveark says:

        I would think so. I, personally would just look around and think ….this is insane. It was unsustainable and I am quite sure that in the long run our money would be worthless.

        It gave a real windfall to those who took the money out but if the result was losing their home……..was it worth it in the end?

        It was an excellent time for my Son in Law who is a contractor. When times are very very good people tend to live up to their income and and when the fall comes it is not so pretty. It was a false very very good time.

        I do not know all the answers at all. I just thought it was crazy and that only came from years of experience…..both good and bad.:-)

      • SueInCa says:

        Bito

        I called it the ATM machine.

  2. Spirit42 says:

    Your words are harsh and judgmental of a lot of Real Estate Professionals who are out there doing a great job. I am one of them.

    It really seems to me you may have a bad agent and one rotten apple does not always spoil the entire barrel as you infer above.

    I see your points on what has happened to you and I’m sure your stories are real but if you had an agent who explained the process of short sales and foreclosures, you would have been better equipped to deal with the process.

    I doubt your numbers that 1 in 10 sales are traditional transactions. Where did you get the data?

    I speak from the experience of selling dozens of homes successfully over these past few years and my buyers are very satisfied with how I educated them and communicated with them on the process. They have all secured homes that have since increased in value because we did our homework going in. This can happen for you too.

    It would seem that your case of sour grapes would be resolved if you’d fire that agent and go with one who has a proven track record of success.

    Check references and be sure you like this person and can have them manage your transaction as they teach you the real ins and outs of navigating the short sale and foreclosure marketplace.

    And make sure they understand the process and can explain it to you before you hire them.

    • SueInCa says:

      http://money.cnn.com/2011/12/21/real_estate/foreclosure_sales/index.htm

      The numbers may be even worse than what I judged from the homes I review in the bay area.

      Did you also miss this in my posting?

      One out of 10 that come on the market are actual straight seller sales(and that is a generous guess).

    • SueInCa says:

      So you are saying that pricing a home intentionally low in order to get people in the door is ethical? Especially when you have done many of these deals and you know the investors are out there waiting for more properties? You are saying that is ethical? Well I happen to disagree. And you claim I have sour grapes? I guess you missed the parts where I am going on to the next before I even hear on a multiple bid offer I placed. If you call wanting people to go by ethical business practices sour grapes then I guess you would not be the realtor for me either.

      I DID hire another agent so you assume way too much there as well. Sounds more like I might have hit a sensitive nerve with you and you automatically bit back.

      • AdLib says:

        Some agents do choose the strategy of low balling a listing in order to whip up a bidding war. That was going on a lot during the housing bubble and it was very frustrating.

        It doesn’t always work but does sometimes and I do feel like it’s dishonest, putting a price you know is phony on something in order to lure people into paying much more than that.

        How would one feel if a car salesman offered a new car at a certain price then when one tried to buy it, the price was greatly hiked up because the original price was intentionally phony?

        My mother was in real estate for over 20 years, she disdained that type of business practice but was well aware that it was practiced by many.

        • SueInCa says:

          Adlib

          Or if a car salesman put the price on the car then put it up for bidding. The price is low but you know if the car is desirable people are going to out bid you. It can also cause problems in the appraisal process. We are getting a small loan so it might not affect us but if the appraisal does not meet the sales price the bank will not lend the money so people who are getting a loan for 97 or even 80% of the sales price will run into issues at appraisal time. We thought we were doing pretty good with a 100k+ cash down but we are little guppies in the fish bowl compared to investors.

          • AdLib says:

            Sue, it’s a free country and there’s nothing unethical about having an auction…if it’s honestly represented as such.

            It is however detrimental in an area such as home ownership if the wealthiest 1% uses its inordinate wealth to keep homes out of the reach of many others in a scheme to leverage up their investment.

            We’ve just seen this happen, we see it happen with other commodities all the time such as oil and gas, speculators intentionally inflate prices then collaborate with each other to jump out around the same time with their profits while the 99%ers are left holding the bag…and not much more.

            So true, that’s part of what makes buying foreclosures so treacherous. You can go all the way down the road on buying…then the bank can say it doesn’t appraise out and refuse to loan on the agreed upon price.

            It is just a matter of time until the right home falls into place but in such a soft real estate market, it is amazing at how hard it is for a home buyer to buy a home!

            • SueInCa says:

              Adlib

              If they were actually holding auctions on these homes I would expect to follow the auction rules but to hold a silent auction(that is what they are doing) in the guise of the bank just “listing” the house for sale is disingenuous at best. And if they are using the market as a free auction shouldn’t they be advertising as such? Bids start at 72k? I think the board of realtors might have a problem with that but you just gave me a good idea.

              I agree it is treacherous but the thing is we would rather be buying straight from a seller even an approved short sale but most of the inventory in our area is “bank owned”. I told you about the home yesterday and I take full repsonsibility for passing it up but the right home at the right time, will be ours. I am sure of that.

    • AdLib says:

      Spirit42, welcome to The Planet!

      I would disagree with your comment, I think that everyone must be willing to accept criticism of their industry and profession without taking it personally. It is no reflection on you nor on other professionals in the Real Estate profession to criticize the current process in dealing with foreclosures.

      The way I read it, Sue’s article focuses on the new practices of the banks in handling foreclosures and on the high level of speculators in the marketplace.

      I’m interested in your take on this from a real estate agent’s POV, do you see the banks’ current handling of foreclosure sales generally the same as before the 2008 crash or do you see it as having changed? Is there a greater percent of speculators buying foreclosures today than owner-occupiers?

      BTW, SueInCA is a financial professional with years of experience in the banking industry, so for me, her insights on the evolution of banking and lending practices are meaningful.

      Lastly, I would just suggest that in the pursuit of steering clear of harsh and judgmental words, it would be consistent not to apply descriptions of others’ experiences and POVs as “sour grapes”.

      At The Planet we welcome everyone’s POVs and disagreements, we believe that it’s healthy to have honest discussion and debate and most constructive to do so with a modicum of respect for all members.

      • Spirit42 says:

        I see a vast change in how the banks handle the short sale and foreclosure process. It’s far better than before and actually works in a reasonable time.

        The process can turn into bidding with other buyers and even when you have the high bid, if your in competition, they will ask for best and final. When an agent and a buyer are confident that theirs is the high bid, its not necessary to increase it. We have let many am offer stand at best and final and we got accepted.

        We have completed literally dozens of these sales and all it takes is one: educate the buyer and two: communicate with them a lot.

        I know there is some sort of family connection with Sue and her agent yet something just does not ring true to my experience.

        • AdLib says:

          Spirit42, are you seeing speculators outweighing those who are buying homes for themselves?

          This type of thing was part of the destructive cycle that culminated in 2008’s crash. When homes are being bought more by speculators to quickly flip and sell at higher prices, that process has repeatedly led to a cycle of over-inflation of prices which is eventually followed by a crash when the “pyramid scheme” can’t be sustained.

          Of course, add to that the subprime loans and Wall Street derivative sales of them globally and we had a massive collapse. But in the early to mid 1990’s, we had another real estate bubble burst for the same speculation-cycle reason, homes becoming far over valued due to the frequent flipping.

          I’m not saying that people shouldn’t be investing in real estate but the feeding frenzy of quick flipping homes has had disastrous results again and again.

        • SueInCa says:

          Something does not ring true? Are you calling me a liar? YOU KNOW there is some family connection with my agent? No I have a family member in the background who can give me advice. I clearly stated she is no longer in the business and for your further info has not been for a year. I know you are defending your profession and I can see you doing that but do not put words in my mouth I did not write or speak. You seem to live in a different market than the bay area so your experience may well be different

    • kesmarn says:

      I know that Sue is totally capable of speaking for herself, but I would just note that in the “mini-bio” attached to her article, she explains that she has had 24 years of experience in the banking and financial industries. She was a fraud investigator for much of that time. Her sister-in-law is a loan officer, an escrow officer and has her real estate license.

      If a knowledgeable team like that has encountered ethically shabby behavior, I don’t think I’d chalk it up entirely to “sour grapes.”

      • Spirit42 says:

        But you are doing the same thing in your comment saying there is a near total breakdown in business. You both are lumping a lot of pros into one bad barrel and you missed the point of what I said entirely.

        So I think it would be nice if she spoke for herself and maybe answered some of my concerns and questions. It seems you have failed to do that in speaking for her.

        btw-
        I did read her bio when I read the post and I stand by my comment.

        • kesmarn says:

          I don’t think either Sue or I said that every realtor in the entire country is corrupt…which would be a ridiculous statement to make. So obviously I’m not going to defend a phony “position” that neither she nor I hold.

          When employers short-pay employees, when banks use little tricks to try to get customers to incur late fees, when medical suppliers bill Medicare fraudulently, when companies hire union-busters and lobbyists to write legislation that harms consumers, when energy companies pollute ground water and our shorelines, it doesn’t seem to be an exaggeration to say that there’s been a breakdown in trust between the consumer and business.

          And — no — I didn’t just say that all business is always bad all the time.

          • SueInCa says:

            Kes

            Love the straw man explanation. This person has assumed an awful lot and I think it is mostly because he/she did not like the portrayal of the realtors and banks I have run into so far.

            I worked for banks for 20 years and I was a reputable banker but it would not serve my best interests to jump on everyone who puts down banks now and I have not.

            • kesmarn says:

              I’ve never known you to pigeon-hole or stereotype any group before, Sue. And I didn’t think you were about to start now!

              😀

          • Spirit42 says:

            You said :I think it’s in part because this is a story of yet one more instance of the nearly complete breakdown of trust in American business. The atmosphere seems so predatory. ”

            She said: “The Real Estate agents will tell you, “it is just the going price of the day” or “the market is coming back so grab one now” what ever happened to a good old fashioned true appraisal? What I have found out is no one learned a lesson from the mortgage meltdown. Not the banks, the loan agents, nor the Real Estate professionals. In fact the only ones who might have learned a lesson is the title companies but their involvement is at the back end of the process and to my knowledge they never caused the mortgage problems.”

            So I say that we DID learn our lessons and she is saying we did not. What she means to say is maybe some are not that bright?

            • kesmarn says:

              That’s a great FDR quote, b’ito. Thanks!

            • kesmarn says:

              Sometimes Wikipedia comes in handy:

              A straw man is a type of argument and is an informal fallacy based on misrepresentation of an opponent’s position.[1] To “attack a straw man” is to create the illusion of having refuted a proposition by replacing it with a superficially similar yet unequivalent proposition (the “straw man”), and refuting it, without ever having actually refuted the original position.

            • bito says:

              Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
              True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

              FDR

            • SueInCa says:

              At this point after you basically calling me a liar it is not worth answering any more of your comments.

  3. choicelady says:

    Oh wow -- the very idea that people play these games with would-be homeowners is disgusting! It is my profound belief that mortgage insurance has a role here -- the banks get a lot of the loan covered in a default, put up a house on a “loss leader” price then play the game of upward spirals that drive out actual live-in owners but help the flipper and landlord. Since none of this is illegal, there is little to be done.

    Sue -- we wish you well on the condo purchase! A HOME is different from a HOUSE, and you have the right to a HOME! CA started this downward spiral (death spiral?) of housing as investment not as residence back in the early 70s, and we’ve not seen the end. Good luck bucking the trend!

  4. kesmarn says:

    Oh Sue, what a narrative of total frustration! I’m not entirely sure why, but there’s something about the whole situation that inspires a reaction of something like trepidation in me.

    I think it’s in part because this is a story of yet one more instance of the nearly complete breakdown of trust in American business. The atmosphere seems so predatory.

    As you said there was once a time when the buyer’s realtor and the seller’s realtor got together and worked out a reasonable deal. What happened?! I’m pretty naive when it comes to buying property, but my understanding has always been that the asking price was usually considered to be on the high side and the buyer was likely to offer something lower than the list price. Then the bargaining would commence. Apparently that is all wrong in the 21st century? Now the buyer has to offer something between the asking price and infinity. How does anyone decide?

    My son once took a course in Business Ethics. Do those two words still go together? Or are we in the land of oxymoron now?

    BFF, I’ll be interested in hearing the rest of the story on this one. Please keep us posted.

    • SueInCa says:

      BFF

      No they do not go together and this one realtor here seems to be the main culprit. He intentionally low-balls the price to get people in because he knows if he put what he really wants people would not go look. Then in the heat of multiple offers people lose their heads and go high if they want the property that bad.

      • kesmarn says:

        The “auctioneer” tactic and the “auction syndrome,” BFF?

        I wonder how many people wake up the morning after and think: “What have I just done?”

        Good thing you and your sis-in-law make a cool-headed team.

  5. coveark says:

    OMG !!!!! That is exactly why I left CA. !!!!!

    Everytime I agreed to buy a place (2001) some mysterious phantom out of the blue would show up and make a higher offer ………….I just figured it was a back stabbing realtor. I guess that was true but there was more involved !!! ( and I had cash )

    Pardon me while I go vomit!!!( this Bullshit makes me sick )

    Thank you for this article. Oh God, I have to puke again………..I just got back from CA last night and want to go back but am now better informed.

    • SueInCa says:

      Coveark

      I don;t think it is the state but rather ruthless lenders and real estate people. There is one in this area that I plan to take care of when this is all said and done. He seems to specialize in bank owned and is best known for his low-ball pricing to start bidding wars.

      When all is said and done, I plan to picket outside his RE office.

      • coveark says:

        No, I am sure you are correct and by all means go for the picketing.

        I am a California Native and moved out of state because of the insanity of the escalating costs of housing that I mentioned before. The Realtor that I had there was not serving my best interests and it really made me angry. My brother was a successful CA Realtor for many years as is my niece and I have met many decent ones but my experience in my hometown was disgusting.

        Greed is the problem…..was then and apparantly still is. As I continue to search in CA I have noted that if the banks are hurting from their forclosures…..they do not seem at all interested in thinning out their inventory. I do not know how it works but I sincerely pray that they are required to pay taxes on the properties.

        • SueInCa says:

          Coveark

          We moved out of state as well. We moved back in 2007 and bought a home at that time but we sold it to move back to the bay area. We decided to lease for awhile and take our time looking for another home. I can see why there are few seller homes on the market unless they are over 250k. Our new realtor is advising us as I would expect in this market but it is frustrating. One thing I have found is that I am putting out bids on homes I like but not that I love. Or at least I am telling myself that in the event we are out bid.

          As far as I know the banks are responsible for the taxes and some counties are also fining them for properties they let go. You have to feel for the people in the neighborhoods that did everything right and watched their value plummet.


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