The Bad News

Unfortunately, the short sales in Las Flores are abundant at all price points. Short sales comprise nearly half of all the inventory - 7 of 15 current active listings. The bulk of them (5) are in the $500 to $750 marketplace. The one big failing in my video post is the lack of mention in the short sale closings - there are none in the last 30 days. It's important to note because of the abundance of active homes and those in escrow that are short sales - in 30 days we haven't had 1 short sale successfully close. The pending, or 'In Escrow' inventory, are slightly skewed by the high number of short sales. Many of these properties have been in escrow for months, and some may ultimately foreclose. Out of the 17 in escrow - 11 of them are short.

So What is the Good News?

The good news is that there actually is good news. There are four big changes to note for Las Flores real estate conditions.

1. Active inventory is down. In March, there were 23 active listings and today we have only 15.
2. Pendings are up. In March, we had 9 pending, but today we have 17 in escrow.
3. Closings are up from 4 to 6 from that same 30 day period.
4. 2 of the 4 closings in the last 30 days were over $750,000. In previous analysis, we had no movement at all in those price points.

So What Does This Mean If You Are Selling in Las Flores?

Note your price point. Under $600,000 seems to be moving nicely and there is significant demand for equity sellers - those that can sell without bank approvals. Just don't think that it means you can expect a premium sales price. The ones that sell are the ones that are priced right. Even over $750,000 is moving for the first time in a while, but you must be priced to reflect market conditions.

So What Does This Mean If You Are Buying in Las Flores?

Prices have come down dramatically but available properties are tough to find. Be prepared to watch and wait carefully for the right fit. Speak to your agent about automatic notifications if you are focused on Las Flores - especially in the lower price points.

So What Does This Mean If I Am In A Short Sale Position?

If you need to sell and you owe more than your home is worth, develop a strategy that makes sense. Talk to someone you trust and someone that understands your circumstances and your needs. Don't pay upfront. Be careful. There are NO guarantees in this area of the market. Every short sale is different and every bank is different. And, honestly every day it can change.

Questions?

If you have questions, I'm happy to help. There is no obligation and no pressure; we really do want to serve the homeowners and potential buyers in Las Flores. Let us know how we can best help you.

Originally posted at My Las Flores.

Las Flores continues to suffer some of the same conditions we are seeing in the overall South Orange County market - very little activity in the upper price points, a large number of short sales, and very low bank owned activity.

As of today, there are 23 homes on the market in Las Flores and 10 of them are short sales, and presently there are no bank owned homes active. Unfortunately, I'm fully expecting the foreclosures to increase in the next 30 to 120 days (refer to my post on OC Real Estate Voice) and subsequently bank owned listings to increase.

Ironically, even with the abundance of active short sale listings, there have been no short sales that have successfully closed in the prior 30 days. There are currently 5 short sales in escrow. These can be in escrow for as much as 6 months, so we can expect the number of short sale closings won't be dramatic in the coming days. As a matter of fact, the MLS notes only 2 short sales have successfully closed year to date in Las Flores, the last one was 2/17.

The highest closed sale in the last 30 days is in the Avelino tract for $525,000. The higher price points (over $750,000) is particularly slow with 8 active listings, no recent sales, and nothing presently pending.

If you ever have questions about the Las Flores real estate market, these numbers, or conditions in Orange County, please consider me a resource. If you, or someone you know, is currently thinking of buying or selling in Las Flores, I always appreciate your recommendation.

To contact me, (949) 939-2514 or email me at linsey@ocrealestatevoice.com.

All information and statistics are from SoCalMLS and are deemed reliable but not guaranteed.

Originally posted on My Las Flores.

No crystal ball needed here - we are about to see a sharp increase in foreclosures in the coming months. The foreclosure report for the month of March was recently released by Foreclosure Radar.

During the final months of 2008, many lending institutions participated in a voluntary moratorium on foreclosures. Notice of Defaults (NOD's), the first step in the foreclosure process in California, plummeted. The final days on the moratoriums have just passed. Fannie Mae and Freddie Mac's were lifted as of March 31.

And if you've been paying attention to my 'Microscope on the Market' series, you've noticed the drop in bank owned homes on the market - hence the second half of that headline, 'Foreclosure Sales Drop'. Without the new NOD's, there's been a dramatic reduction in bank owned homes.

Notice the following chart that tracks Notice of Defaults and Foreclosure sales. The green line represents California's NOD filings. Notice the arrows - the dramatic dip in September and the sharp rise as of March '09.

With the rise in filings, we can expect the foreclosures to rise. Will Obama's plan help? My guess is no for Orange County. Why? The loan modifications the banks are offering, by and large, don't change the significant negative equity that many of these homeowners are facing. Without a substantial equity reduction, many sellers (who've already seen their credit damaged) will opt to walk away from the property.

What does this mean for buyers and sellers? If we see a large rise in distress inventory, this market may see some downward pressure on pricing - although in some of the lower price points, overall inventory is still low (especially if you remove the difficult short sales). I would expect that demand for this inventory will remain high - as we have seen in recent months.

One interesting note in the Foreclosure Radar report:

"The California Foreclosure Prevention Act, which goes into effect this summer, adds an additional 90 days to the foreclosure process if lenders fail to take certain actions. It is quite possible that the dramatic rise in foreclosure notices occuring now is an attempt by lenders to process as many foreclosures as possible before this law takes affect."

If you are interested in viewing foreclosure data and bank owned homes don't hesitate to contact me.

Originally posted on OC Real Estate Voice.

If you are thinking of buying a short sale (or if you're an agent looking for an outlet for your short sale frustrations), PLEASE read. Understanding this information is a must.

I completely understand the allure of the short sales when you are a buyer. The prices are attractive and there are SO many of them. They have become a necessary evil of the Orange County real estate market. I get it.

If you really want to pursue a short sale, be forewarned. Know what you are getting into, understand the risks, the pitfalls, and what is required to make them happen from a buyer perspective. They may, or may not, be worth it.

What is a Short Sale?

The seller's obligations in a sale (loans, encumbrances, and closing costs), exceed the value of the property. The seller must prove a hardship (job loss, wage reduction, divorce, health crisis, lack of assets) to qualify for a short sale.

A Few Realities

• There is no Standard Operating Procedures for the banking industry to handle short sales. Every bank has different guidelines and manages them differently; even negotiators within the same bank manage them differently.

• This is important: Nearly across the board, a banking institution will not consider a seller's hardship application until they submit an offer with a short sale. What does this mean to a buyer? Your offer is used to see if they qualify in the first place. You may sit in escrow for weeks while the bank considers not your offer, but the seller's circumstances.

• There is no Standard Operating Procedures for how agents handle their short sale listings. Frankly, I think there is a lot of irresponsibility in this area.

• Many agents leave their listings ACTIVE in the MLS even though they have an offer submitted to the bank. Once an agent has a good offer with a solid buyer, it should go in Backup position. The bank will only look at ONE offer - highest and best - anyway. Why waste an agent's time, a buyer's time and emotion, showing a property that is not really available?

• Even Banks will ask the listing to remain Active after an offer is submitted. Note the conversation with this agent on Twitter.

• The SoCalMLS has a Special Condition field where agents are required to specify that the short sale has an offer submitted to the bank. Unfortunately, most agents don't use it.

• An 'Approved Short Sale' does not necessarily mean that the process will go any faster. See Countrywide's response on my short sale last year.

• A short sale process will take as little as 60 days (very rare) or as much as 4 to 6 months (common).

• The list price is not a reflection of what the bank will, or will not, take. The listing price is positioned to generate offers. Remember, the bank hasn't even looked at these seller's situation yet, let alone evaluate the the market value of the home.

• There may be past due HOA fees, property taxes, or other expenses, that the bank will ask for a buyer to cover.

• If the seller declares bankruptcy during the process, your deposit becomes a frozen asset that you likely wait a fair amount of time to recover - if you do.

• Many short sales ultimately foreclose. Why? If you find out please tell me. There is often NO LOGIC in the way banks (and investors) approve, or disapprove these.

• More banks are trying to do loan modifications for sellers rather than approve short sales and in some instances, they are incentivized by the government to do so.

Real Life Examples

The following are scenarios that have been experienced by me, my agents, colleagues, and my buyers.

• My Listing last May: I had 8 offers in 3 days. The highest was $580,000 and it took 4 months to get an approval from Countrywide. By the time it was approved, the market value had fallen precipitously and the buyer was no longer interested. When I asked Countrywide if the process would go more quickly with a new buyer given the hardship had been approved, their response was that the each buyer was a new file and they couldn't provide better than a 4 to 6 month time frame. The home sold for $490,000 4 1/2 months later.

• An agent within my company, had a short sale in escrow with a solid buyer for 90 days. The bank asked the insolvent seller to come to the table with $3,500 on the $165,000 sale. When the seller was unable to, the bank refused the short sale. The home is currently vacant and worth about $145,000 6 months later. Currently, it's not in foreclosure and the seller hasn't made a payment in about a year.

• This week alone, I've shown 2 different short sales, marketed on the MLS as Active, that already had offers submitted to the bank without notation in the listing. When I called expressing my buyer's interest in one of the properties, the agent subsequently told me, 'the deal is done'. When asked, "Then why is it active?", his response was, "Don't tell me how to run my business, sweetheart." BTW - Don't call me sweetheart unless you're loving me or you're my husband. :)

• One of my recent short sale listings was in escrow 60 days with a qualified, ready-to-go buyer. In that time, the bank reviewed the seller's hardship, denied it, and offered a very poor loan modification. Buyers lost 60 days and their offer was never considered.

• I currently have an investor buyer in escrow on an 'approved short sale'. We've been in escrow 90 days on a property that had an Notice of Default filed in March 2007! Not only has there been no news, the listing agent has told me essentially - don't call us, we'll call you if there is an update. Not very reassuring to my buyer.

This is the tip of a massive iceberg. So if you want to buy a short sale, you certainly have my blessings. Just be armed with patience, don't become emotionally attached to the property, and be prepared to potentially go through the process more than once.

If you have questions, if you think I've gotten any of this wrong, or if I've just scared the hell out of you - leave a comment or give me a call. Happy to chat with you. If you want to create a strategy to buy in Orange County - whether it's a short sale, bank owned, or an equity seller, just let me know and I'm happy to help.

Happy House Hunting!

Originally posted on OC Real Estate Voice.

As March comes to an end, it's time to do a quick recap of the active inventory on the market in Las Flores, as well as examining what has sold. Because the price point has a big impact on what is currently moving, I've broken it down by price point and distress sales.

Take note that while the bank inventory is currently at zero, it will come back. The moratorium on Notice of Defaults ended (which is the first step in the foreclosure process) and sadly, the NOD filings are back to previous levels. Stay tuned for more on that.

Please note: The closed sales are in the last 30 days.

If you ever have any questions about the numbers presented here or questions about the value of your own home in today's market, don't hesitate to ask. There's never any pressure or obligation. That's just not how we roll here. :)

Information based on SocalMLS and deemed reliable but not guaranteed.

Originally posted on My Las Flores.