Wednesday, May 21, 2008

Some banks STILL don't get it, most sellers still don't get it...

Most of the banks have accepted the fact that the value of those REPO's ain't what they were hoping it would be. Most of the REO's hitting the market are priced to reflect this fact. But there are still some banks (or brokers) that are in serious denial. While checking the new listings today I ran across these two REO properties in Greer Ranch in Murrieta.

Home number one is 27146 Red Maple St. This home is a 4 Bedroom, 3 bath home that is 3532 sq/ft is size. Judging from the poor pictures the house is nothing special, just an average tract home. The home was purchased new in Nov 2004 for $588K and it looks like it went back to the lender in March for $659K. Obviously the last owner used the home to finance his high rolling life style. Our "poor" lender thinks they are dumping this place at $610K ($173 sq/ft), Hey that's $50K less than they are into it! It must be a deal, right?

Unfortunately for them a $50K loss is wishful thinking. They are looking at a $250K loss (or more) in all likelihood. As an example of what the should have priced this house at lets look at another new listing just a block or two away. 26727 Chamomile St is a much bigger house with 5 bedrooms and 4.5 baths tucked into 4295 sq/ft. This home sold new in 2005 for $634K, then again in June 2006 for $778k. This one has also gone back to the lender but this lender is more in touch with the market. This home is listed for $410K ($95 sq/ft)

Does bank number one really think anyone is going to buy that house at $173 sq/ft when the can go down the street and get a newer, larger home for $95 sq/ft? Most of the homes in this tract are listed between $100 sq/ft and $120 sq/ft. How a broker and/or a lender can put a home on the market at $173 sq/ft is beyond me.

Now let's look at a couple of F'd home owners. Most home sellers are still in major denial, especially if they bought in the last few years. It's hard to admit you F'd up and it's even harder to throw in the towel and destroy your credit. But the facts are the facts and no amount of rubbing you lucky rabbits foot will get a home sold for 2006 prices. Many sellers are still listing the homes at wishing prices and a few like the one below (on Nuthatch) are just complete morons listing homes at the price they do.

Remember the days when prices made sense and similar homes in similar areas would all be priced within a few percent of one another. Even if one house was totally decked out with pool and fancy landscaping the premium for that home would only be 10% or 15% more than the average homes. Today's market is so screwed up that similar homes can have wildly different asking prices, especially if one is a REO or short sale.

19285 Nuthatch St in Perris and 18774 Malkoha St are examples of this. These are identical homes in the same tract. One home is all tricked out with landscaping and a pool and the other is still looking a little bare in that department. The nice house was originally listed for an unbelievable 1.1 million (in Perris, WTF dude??), Now it's down to $999k ( oh yea, that's better). Someone should call this guy and tell him his house is in PERRIS!.

The other home (Malkoha) is a short sale listing and it is priced at $380k (and it's not the cheapest house in the tract!). Granted it needs some landscaping and it does not have a pool but it's 62% less than the other house and for that extra $619K you could put in a pool, landscaping and a couple of Ferrari's.

We could sure make the inventory numbers look a lot better if all the wishing listings were removed. I have noticed lot's of them have been dropping off over the last few months but there's just so many of them to weed through when you are looking. I just wish the agents would drop those stupid listing and remove all the useless clutter from the MLS.


Paige said...

Maybe I've already said this several times on this blog, but I'm surprised at the number of people looking and willing to pay asking price and higher! We think the homes here in Riverside are worth much less than what they're being listed for. So, we tried offering less for one home. Didn't work, of course. Larger bank-owned homes at lower prices are trickling in and so there are a lot of offers. We can't get near.

golfer_X said...

Yup, it's amazing at the amount of offer some of them are getting. But they are still not selling for much over asking, which is good news. Plus, I am seeing more and more of the low priced homes hitting the market in the high end areas. I like the Bridle Creek homes in Woodcrest and in the last 3 weeks I've seen 4 or 5 list (or reduce) under $500k. That's a big mental barrier for a lot of people, the $500k mark. The Retreat has also posted quite a few under $500k in the last week or two and the first sub $500k listing in Bretton Gait, Norco listed (and sold) last week. It's good news, prices are still falling and this is "the busy season". I half expected to see the prices level off for a few months but they are still falling.

I have noticed in the last 2 or 3 weeks that the number of shoppers at open houses and builders models is dropping off. Maybe it's just me, but I saw a lot more people looking in March and April than I've seen looking this month.

Bigdog said...

Do you see the prices starting to drop more come September when school season is back in and families are not relocating as much?

I think a big part is this economy. With GAS prices on there way to $5 soon. People are just holding on to there money and happy to have there job.

Sellin @ Da Drop said...

What we are seeing is nothing more than the now traditional Spring dead cat bounce. Sheeple with a false perception that the bottom has be reached. Things will be much more worse in the Summer. I say relax, grab some vino and wait for what the IE should be priced at.

Martin Burtin said...

And these guys don't get it either:

Apparently Builders and Realturds met yesterday in Riverside for a roundtable discussion that degenerated into a circle jerk. The best they could come with was to suggest that financing become loose again so that they could return to the good 'ol days. That way they can build more McMansions and enslave even more of the house greedy yet naive, into mortgages they have no bizness being in.

I just hope they washed their hands after the meeting.