Friday, March 14, 2008 at 06:54AM
REOs Off-Peak Pricing
Here is a selection of REO sales closed in 2008, and their previous sales prices:
| Street Address and Town | Previous Sales Price | Latest SP | % chg |
| 3500 Corte Romero, CBD | 2006 - $963,000 | $790,000 | -18% |
| 7291 Pas Capuchina CBD | 2005 - $995,000 | $961,000 | -3% |
| 1516 Sapphire, CBD | 2004 - $765,000 | $625,000 | -18% |
| 1079 Cottage, Enc | 2004 - $587,000 | $540,000 | -8% |
| 270 Caliban, Enc | 2004 - $530,000 | $550,000 | +4% |
| 28443 Cerveza, Esc | 2005 - $920,000 | $745,000 | -19% |
| 2725 Alexander, Esc | 2006 - $635,000 | $511,500 | -20% |
| 3334 Terrace, OSD | 2003 - $612,000 | $560,000 | -8% |
| 4905 Colusa, OSD | 2005 - $640,000 | $576,000 | -8% |
| 616 Yarrow, SMar | 2005 - $658,500 | $509,500 | -22% |
| 693 Saddleback, SMar | 2006 - $675,000 | $515,000 | -22% |
| 886 First Light, SMar | 2005 - $725,000 | $540,000 | -26% |
| 11357 Carmel Crk, CV | 2004 - $780,000 | $646,500 | -17% |
| 12791 Briarcrest, CV | 2006 - $876,000 | $800,000 | -9% |
| 6035 Roselle Mdws, CV | 2005 - $862,000 | $690,000 | -20% |
| 12656 Cam Radiante, CV | 2006 - $1,100,000 | $795,000 | -28% |
| 6515 Cmto Stella, CV | 2005 - $2,035,000 | $1,625,000 | -20% |
| 6473 Mesa Norte, CV | 2005 - $2,275,000 | $1,775,000 | -22% |
| Combined Avg | $924,055 | $764,111 | -17% |
These are lender-owned properties that started with an 'aggressive' original list price, and if it didn't work, they usually start reducing quickly. If you are selling and don't adopt the same strategy, expect that your results will suffer.
Jim the Realtor
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Reader Comments (10)
Did you see the quote in the UT from Karevoll. He said eh cannot say the market is as weak as the numbers because there are so few sales in more expensive areas. Does this mean there are no listings in expensive areas? More likely it means people are not willing to pay 40% more to live in Carmel Valley relative to 4S. What does he think is going to happen to prices in nicer areas?
It isn't a stretch to say if you bought in 2006 you are underwater. Okay, not everyone just everyone who put less than 25% down or took out equity beyond 75% CLTV. Darned close to everyone in 2006 IMO.
FC distribution:
2003 1 -8%
2004 4 -11%
2005 8 -18%
2006 5 -19%
2007 0
That's admittedly a sparse matrix but still scary.
RE: It isn't a stretch to say if you bought in 2006 you are underwater. Okay, not everyone just everyone who put less than 25% down or took out equity beyond 75% CLTV. Darned close to everyone in 2006 IMO.
We'll that's not exactly true. I bought newer custom home west of I5 in Encinitas and the price has actually gone up on similiar sales in the area.
Goes to show that West of I5 and the POWER OF THE OCEAN is a wonderful thing. And, I, like my other neighbors don't want to sell anyways because we love the cool weather and listening to the surf at night.
Todd
Because real estate is local, right?
Jim,
I read your blog regularly and I do have a question that has always been at the back of my mind, perhaps you can offer an informed opinion? Banks regularly lose money on their REO's, so why do they keep buying them at auction? Why not let them go to the highest bidder? I know in these times there are sometimes NO bidders but assuming there are some and the bid is at least REASONABLE (let's say, within 20% of what they are owed prior to expenses) why not save the listing and marketing etc and just let it go? I frequently see properties go back to the bank only to sell 6 to 9 months later for half what they "paid" at auction.
You make a very good point, caveat emptor. One would think the banks would catch onto this logic sometime in the future.
Right now, they probably think they will get more than the auction price (and they do, sometimes), but why would a buyer pay more for an MLS-listed foreclosure than they could get at an auction?
caveat,
I am on red alert, watching for the banks to start doing that - I think they should, and I think they will start liquidating right on the steps of the courthouse.
What i am looking for specifically, so you can watch too, is for banks to all of a sudden lower their opening bid the day of the sale.
If their loan was $850,000 and with interest and back payments the minimum bid was advertised as $880,000, and then the sale price ends up being $650,000 - then they are dumping on the steps.
They would be smart to advertise the lower price ahead of time, but not sure if they realize that yet.
But I'll answer CA renter's question - the buyers of MLS sales get the benefit of seeing and inspecting the property, and arranging financing over a regular escrow period. Buyers at the steps have to pay all-cash, as-is, with no inspection period - that narrows the buyer pool in a hurry.
I guess the idea is to find out which houses are being auctioned and check them out before the bidding starts? That still seems very, very scary to me.
Interesting. Thanks for the info.
Thanks Jim - appreciate the informed opinion.