Do you watch Foreclosure Radar’s videos? I like to check them out because it’s interesting to see some of their points in action in the local market trenches I work in each day. Based on the data, it seems like bad news on some levels for California in that Notice of Defaults increased and there were more pre-foreclosures last month too. But at the same time the number of properties that actually went back to the bank during June 2010 went down.

Are we out of the foreclosure woods? What do you think? What are you seeing in the market in the course of business or even in your own neighborhood?

Foreclosure Radar gives the following points (from YouTube): “Foreclosure filings were up in June after two months of decline. Foreclosure cancellations reached a record high of 21,962 in June, up 27.09% from May. The number of properties purchased by 3rd parties dropped by 23.73% since last month, but those properties bought were at the best margins in months. Fewer properties went back to the bank, down 23.73% from the prior month. Time-to-Foreclosure was flat month over month, but up 34.93% from June 2009. Time-to-Resell continued it’s slow ascent, up 5.95% for the banks and up 4.29% for 3rd parties.”

I made this one-minute “before & after” video for a client (Housing Group Fund) to help show one of their recent first-time home buyer projects in Sacramento. I appraised this property and I have permission to post the information here. This is a block  construction house (cinder block) near the Fruitridge area that was purchased recently as a bank-owned fixer and then rehabbed extensively throughout. One of the features I really like about this remodel is that there is now sheetrock and texture on the interior walls so the house does not have a typical “block” feel to it. If you are reading in RSS, you can view the video directly here.

It’s amazing to see the difference from beginning to end. What do you think? 

What do you get when a builder runs out of money in the current economy, but is only half-way finished with a house? Answer: Probably a foreclosure. This was certainly the case with three 2,222 square foot 4/2.5 properties on the corner of 37th Street and 12th Avenue in the Oak Park Area of Sacramento. 

I am very pleased to see these foreclosures were purchased earlier this year in a bundle deal by the same buyer for $35,000 each, and they are currently being rehabbed. When I think of an area improving, this appears to be a win because improvement happens one house at a time, doesn’t it?

No, this is not a storage container, but a stripped AC unit on a bank-owned multi-unit property in Sacramento. Why do you think REO properties are such easy targets for theft? I gave some thoughts to this a few days back in an audio post. Obviously the properties are vacant, so it makes it easier to give the “five finger discount”, but is there something more sociological to consider here. Is it deemed more “acceptable” to take things that belong to a faceless bank as opposed to an actual person? Your insight and thoughts are welcome in comments below.

Is this still considered a built-in microwave? It’s a marketing feature too, right? Just be careful when taking out your Lean Cuisine or Hot Pockets because they might slide out to splatter you.

There is often a stigma for properties that are listed as “foreclosures”, so it’s no wonder that bank-owned homes tend to sell for less than regular non-distressed transactions. However, consider too that many times REO properties need things like interior paint, carpet, and even new microwaves (and kitchen repairs) like this Sacramento area house. So foreclosures will sell for less than typical arms-length transactions in many cases, but not just because of the REO stigma, but due to obvious condition issues.  

How is the Sacramento real estate market doing? Is it getting better or worse? Are there more bank-owned sales right now than in recent years? There are so many indicators for the health of a real estate market, but let’s take a look at the percentage of bank-owned foreclosure sales (REO) vs. short sales. What do you see? What stands out to you? Any good news here? 

* Data is based on Sacramento MLS for all single family detached properties in Sacramento.

I recently inspected a bank-owned huge fixer of a house in the Oak Park area of Sacramento, and I put together a one-minute video below (or HERE) for you to experience a bit of what I saw. This house sold for less than $20,000.

By the way, I do have the full blessing of my client to use images of this house they purchased. I would never violate my client’s confidentiality by posting pictures or sharing information like this without the absolute blessing of a client. Thank you also to Bill Cobb for the music. Let me know what you think.

Looking at the sales history of a property can be very telling. In fact, you can often get clues into the happenings of the real estate market. Here is an interesting sales history for a Sacramento fourplex I came across in the course of a current appraisal I’m working on. This is not at all atypical because the market for residential-income properties really boomed in Sacramento (and then it fell hard too).

7/25/2000 – $110,000 sale
7/16/2002 – $278,000 sale
8/18/2004 – $435,000 sale
2/10/2005 – $459,000 sale
9/08/2008 – $377,500 sale  (maybe a short sale – did not list in MLS)
5/01/2009 – $104,250 (transfer to bank – foreclosure)
7/13/2009 – $140,000 sale

What do you see? Does anything stand out to you? Let me know if you have any questions about the local real estate market or your neighborhoood. One of the things I enjoy most about my job is that I get to talk with local home owners and real estate agents about important decisions they are making.

Language is important. The way we describe things can evoke certain emotions and reactions, so we must choose our words carefully. This is true in all aspects of life, and definitely true in real estate. I always smile when I see the ways agents attempt to not say “bank-owned” or “REO” or “Foreclosure” in listings. I suppose if potential buyers would be put off by “FORECLOSURE”, then by all means, use a different word or phrase. In place of “bank-owned” I’ve seen “corporate-owned” or “owned by the mortgage company” or “lender-owned” or “liquidation sale”.

If you were in the market to purchase a property, would it matter to you whether something was labeled as “corporate-owned” or “foreclosure”? Is there any stigma in your mind for a home that is selling as bank-owned?

Last Friday the Sacramento Bee came out with a story that Dorthea Puente’s old house at 1426 F Street in Sacramento would be going up for sale. Who is Dorethea Puente, you ask? She is a woman who ran a “boarding house” in the 1980s out of her Sacramento Victorian duplex. Unfortunately though instead of finding respite her tenants were drugged and murdered so their social security checks could be cashed. Eventually seven bodies were found buried in Dorothea’s backyard.

This property sold for $560,000 on 08/31/2005, went into foreclosure last year, and is now listed on the market at $309,800 as of 02/26/2010. The current MLS listing states, “Property has notorious history that must be disclosed.” 

Would you have any problems purchasing a property like this? Or would you consider renting this house? Would it bother you on any level or be no big deal? Creepy? Good investment? If you are a real estate agent, have you had experience selling a property with a stigma due to a murder, violent crime or some other heinous or notorious issue?

Original photos of 1426 F Street (it was a bit cloudy today unfortunately):

I had two appraisal inspections in the City of Galt today and I couldn’t pass up this photo opportunity. While snapping pictures of comps, I happened to see a dog walking around on the roof of a two-story house. Security dog? Sun tanning? Neighborhood Watch program taken to the extreme? This made me smile.

Do you have pets that enjoy heights or the roof? Comments are welcome below.

Have you attempted to get your home loan modified? Were you successful? Or did the bank deny you? Have you seen family members or friends modify their loans? What was it like to communicate with the bank during this process? Did the bank ever lose your paperwork? What advice would you give to home owners considering a loan modification?

I would love to hear your comments below. Please share your story and feel free to use a pseudonym if that makes you feel more comfortable. Thank you.

I snapped the image above in Olivehurst CA while on an appraisal inspection today for a bank-owned property. I used the “Obama Cam” app on my Android phone. This application overlays an image of President Obama (17 to choose from) on any picture taken with my mobile phone. In light of recent news that Obama’s Making Home Affordable program has only seen 4.3% of applicants receive a modified loan, I think the image above is powerful. The photo simply juxtaposes a governmental program with a real life distressed situation (vacant lots surrounded by other property owners who purchased at the top of the market and are now struggling with a high level of foreclosure).

The truth is that many home owners are reaching out for help (modification), but not finding any. I’m reminded that good intentions in Washington DC do not necessarily translate to good results on “Main Street”. Let’s hope to see greater success in this arena during 2010.

NOTE: This image above is in no way meant to belittle the President, make a political statement for any political party, or even rant about the Making Home Affordable program. By the way, I do NOT do loan mods and I never plan to. I am a real estate appraiser by trade and I think this is a very important issue for conversation.