The end of mom and pop investing? NOPE, it's just the beginning!!!

    Recently, there has been a widely discussed rumor going around about the "New Emerging Giant" that is going to buy every foreclosure in the U.S.  The webinar I watched, which happens to be the main conspirator of this topic, is also stating that the housing industry is going to be completely institutional and that owning real estate will be a thing of the past.  The rumor states that these institutions will buy directly from banks and the properties will never make it to the marketplace, ultimately leaving no distressed properties for investors to buy. I can assure you that the rumors are nothing short of a scare tactic used to create urgency towards purchasing real estate guru educational material.

     The argument is that large institutions, private equity firms, and REITs have been raising billions of dollars to purchase real estate due to double digit returns in a bearish stock market.  That speculation is factual and of complete merit.  Several corporations, including Warren Buffet's "Blackstone Group, LP" have purchased close to $1 billion in foreclosed homes. the amount of property purchased equals roughly 6500 properties.  Other private equity firms have been speculated to have raised somewhere between $6-$8 billion for the purpose of purchasing SFR foreclosures.  A quote from a recent article in The Wall Street Journal states "People involved in the market estimate that private-equity firms and other investors have raised $6 billion to $8 billion to invest in the sector, as they try to take advantage of prices that have fallen nationwide on average by more than a third. That could buy 40,000 to 80,000 properties, according to a recent report from Keefe Bruyette & Woods."

     A few months ago, I was approached by one of these institutional "GIANT" buyers.  I was given  specific criteria as to the types of homes that were of interest.  Primarily, they were looking for newer builds and wanting to buy at around 80% give or take.  The criteria became more and more precise and eventually our firm re-shifted our focus back to servicing the "mom and pop" investors.  Tried and true, the "mom and pop" investors have always been there and will always be here.  While the individual investor is buying the unwanted homes in the marketplace, the Giant buyer is looking to purchase the homes that are marketable to owner occupants.  The unrealized factor that the institutions have miraculously failed to calculate is the margin of error that comes into place with being an landlord.  Primarily vacancy, but maintenance and vandalism are  the difference between the speculated double digit return and the reality of the single digit return when rentals are poorly managed.

     Aside from the staggering amount of current foreclosures (which is addressed below), a booming real estate market and robust economy will still generate nearly 8% distressed properties to be purchased in any given marketplace.  An investment firm I once worked with in South Florida was one of the largest purchasers and distributors of investment property.  Prior to the mortgage meltdown in 2007 and the market collapse in 2008, there were not very many foreclosures.  Out of the firms 300+ home purchases in 2006, less than 3% were purchased from MLS and less than 1% were purchased from REO agents.  There were still more than enough discounted investment properties to go around and there were several avenues to purchase them from.

Current U.S. Foreclosures

    The fact that there are so many foreclosures (more than 1.5 million nationwide) is really more of a huge opportunity with about a 5 to 7 year window for "mom and pop" investors to take advantage of.  A calculation from www.realtytrac.com estimates that there are currently  1,554,156 foreclosed homes.  The so called "Giant" buyer will not make a dent in the amount of foreclosures in the marketplace and here is why:
The average sales price for a foreclosure, nationwide, is $179,844.  The institutions claim to have $8 billion in raised capital to purchase foreclosures.  If that is the case, these corporations have the capability of purchasing 44,483 homes.  That still leaves us with 1,509,673 foreclosed homes in the U.S.   Even if owner occupants purchase 90% of the remaining 1.5 million foreclosed homes, that still would leave 150,967 foreclosures to buy, not to mention the average 8% of non-foreclosed distressed properties within the marketplace.

The bottom line: mom and pop real estate investing is as plentiful as it has ever been and will continue to flourish.

   

Do the banks have a heart or are they trying to re-shape public opinion?

GSE's Halt Reposessions...

     In recent press releases, mortgage giant GSEs Fannie Mae and Freddie Mac have vowed to halt foreclosure and eviction filings for the upcoming holidays.  Terry Edward, Executive Vice President of Credit Portfolio Management with Fannie Mae made a statement this week saying "The holidays are a chance to be with loved ones and we want to relieve some stress at this time of the year."  The filings will be suspended beginning December 17th, and will resume on January 2nd... (Happy New Year!)

    Freddie Mac Spokesperson Brad German mentioned that this would not effect other pre or post foreclosure activities such as filing for default and scheduling auction sales.

     Bank of America quickly followed suit and also postponing evictions and foreclosures during the holiday period as well.  If any bank needs some positive PR, it's Bank of America.  Looks like they recognize their public image and jumped at the opportunity to enter the spot light.

     Other banks such as Wells Fargo, JP Morgan Chase, and Citibank have postponed such activities in previous years, but have yet to make a statement regarding the topic for 2012.

     For investors, this means nothing.  Business will resume as usual.  There is still inventory and there will still be inventory.  A minor lag may be felt in January from this action, but it will be short lived.  

     As for troubled home owners, this also means nothing.  Unless people facing foreclosure have a very generous stocking stuffer coming their way, the foreclosure will continue as processed, just slightly later.

     

Cash or Financed, BOA places 60 Day Deed Restriction On ALL Foreclosures

Bank of America Places 60 Day Deed Restriction On ALL Foreclosures.

     Nearly a year and a half ago Bank of America set a procedure into place that caused investors to retract from placing offers on their REOs.  Management in the loss mitigation department decided to set deed restrictions on any cash offers they received on properties that were foreclosed on.  The deed restriction contained a "no transfer or recording of deed for 30-60 days after the sale and purchase" of the defaulted asset.  

    This was intended to prevent mortgage fraud caused primarily by straw buyers who boost false appraisals and collect cash at closing while using another borrower to be the actual party closing the transaction.  Whether it is realized by BofA's loss mit department or not, the side effect has left the average american investor unable to purchase these assets with the intention to rehab and re-sell.  Further to the point, the average investor buyer accounts for 73% of all foreclosures purchased.  

  

     Over time, investors discovered loopholes.  Primarily, if an investor purchased the property under a deed of trust (as in a mortgage), there would be no deed restriction. Meaning, if there was a recorded mortgage and the offer was presented as "financed", the deed restriction would not apply.  

     As of a week ago, BofA has decided to modify this deed restriction.  Instead of the 30-60 no resale applying only to cash investor offers,  it is now mandated across all of their REO inventory.  So, no matter if the purchaser is paying cash or buying with a loan, the deed restriction is applied.  No matter if the purchaser is an investor or owner occupant, the restriction still applies.  If the purchaser has no intention to buy for investment purposes..... the deed restriction still applies.

     It will be interesting to see the effect this will have on BofA's defaulted asset inventory.  If only 17% of their inventory can be purchased, how many of these assets can they keep on their books?  They should fully understand that a majority of their properties cannot be purchased with a mortgage since they are the originators and underwriters of the same notes they deny due to property condition.  Good luck, Bank of America.  When you come to your senses, I'll be waiting for you to unload massive amounts of inventory from the smart banks who purchase these assets from you and do not place deed restrictions on the sale of the property.

Is foreclosure inventory drying up?

Recent reports from Pro Tech Valuation Services describe a much different outlook on the nation's foreclosure crisis in contrast to what the previous trends have shown.  The headlines have been stating that it will take 7-12 years for the shadow inventory to decrease at a level that is sustainable for the marketplace.  The newer reports are showing that some of the worse effected markets are now containing only 5 months of current inventory.  

For the investors that have been waiting on the sidelines for banks and portfolio managers to dump distressed assets, you might just miss your opportunity as it passes you by if you aren't already taking advantage of the current foreclosure inventory.   Below, the article lists the top 10 markets with low inventory, and the bottom 10 markets with the most inventory.  It is no surprise that 3 of the top markets are within the state of Texas.  

A steady job market and housing affordability will continue to lessen the chances of Texas losing it's spot in the lists of top marketplaces.  

For investors in Texas, less foreclosures does not mean less investments.  As I mentioned in my previous blog, there are still plenty of distressed homeowners.  However, they are utilizing different strategies to remove themselves from the property they live in.   The number one culprit is short sales.   This still allows investors the opportunity to capture returns on discounted properties.  It just may be a bit more frustrating and time consuming (you know what I mean if you've ever purchased a short sale).  Aside from short sales and foreclosures,  a market has on average 8% homes in a some sort of a distressed situation no matter what condition the marketplace or economy may be in.  So, investors,  the deals are out there.  The key is knowing where to find them.  The best place to seek investment properties is to find the professional real estate investing firms in your marketplaces.

http://www.dsnews.com/articles/pro-teck-ranks-top-markets-explains-away-potential-foreclosure-flood-2012-09-28

Investors who are eagerly waiting for bargain prices from the potential foreclosure flood are likely waiting for something that won’t happen, according to the September home value forecast report from Pro Teck Valuation Services.

In the report, the company explained why it believes there will be no such flood.

“With regard to the U.S. foreclosure inventory, there has been a misperception that it is a problem for the entire market. In fact, it is quite concentrated in specific cities and neighborhoods,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “For this reason, potential buyers who have been waiting for bargain prices in desirable neighborhoods may be disappointed.”

Instead, the report focused on the current lack of inventory in San Diego, Orange County, and Los Angeles.

Overall, Pro Teck found that all three areas have less than 5 months of remaining inventory left.

“This is significant because in the Los Angeles market over the past 25 years, whenever this indicator was below five months, the median price increased by close to 19 percent the following year. Of course, it remains to be seen if the same appreciation happens again,” said O’Grady.

The report also analyzed price per square foot and months of remaining inventory in the three areas and found that the lowest priced areas have the lowest levels of inventory.

The report included a list of the 10 best and worst performing metros based on the company’s market condition ranking model.

The list of the top performing markets is based on a several indicators, such as changes in sales, foreclosure sales, prices, and inventory.

The reported noted that one common characteristic of the top markets is they all have experienced significant declines in active listings over the past year.

Top CBSAs                                                                           Bottom CBSAs

Oxnard-Thousand Oaks-Ventura, California         New Haven-Milford, Connecticut

Seattle-Bellevue-Everett, Washington                   Bridgeport, Stamford, Norwalk, Connecticut

San Diego-Carlsbad-San Marcos, California           Augusta-Richmond County, Georgia-South Carolina

Los Angeles-Long Beach-Glendale, California      Rochester, New York

Santa Ana-Anaheim-Irvine, California                     Spokane, Washington

*Houston-Sugar Land-Baytown, Texas                   Portland-Vancouver-Hillsborough, Oregon-Washington               

Baltimore-Towson, Maryland                                     New York-White Plains-Wayne, New York-New Jersey

**Fort Worth-Arlington, Texas                                  Edison, New Jersey

Austin-Round Rock-San Marcos, Texas                  Nassau-Suffolk, New York

*San Antonio-New Braunfels, Texas                       Newark-Union, New Jersey-Pennsylvania

http://www.dsnews.com/articles/pro-teck-ranks-top-markets-explains-away-potential-foreclosure-flood-2012-09-28

Real Estate can be a much better retirement plan than traditional passive investments

Rental Income Produces A Better Return Than Wall St.

 

Let's face it.  The times of gradual yields from a typical stock have faded into the pre-mortgage melt down days.  Private equity firms are offering much higher yields for purchasing percentages of certain securities of their unwanted assets, claiming up to a 19% return.  If that sounds too good to be true... it more than likely is.  Aside from that, S&P's 500 is offering typical returns of 2% to 6% for their average junk bond.  Across the map, stock investing is less than average based on its averages.

Current trends are shifting to more tangible assets.  Primarily, real estate.  Specifically, rental property.  Buying a distressed property such as a foreclosure or short-sale at a significant discount can offer "hard to believe" returns in comparison to any typical investment vehicle offered on Wall St.  

Let's say you purchase a property from someone like OCWEN, BofA, Fannie Mae, Freddie Mac, or any other bank that has a massive amount of REOs.  More than likely, you can purchase that property for nearly half of it's after repair value.  After repair value is exactly as it states... A fair market value equivalent to it's comparables in updated marketable condition.  Typically, another 15% to 20% of that after repair value will be applied to repair the distressed asset.  With that added into the equation, the average investor is left with about 30% to 35% equity capture.  If the property's after repair value is $200,000.00, that leaves you with around $60,000 to $70,000 in equity.  

A standard rule for rental averages in the DFW marketplace typically allow for a property to have a rental rate of 1% of it's after repair value.  Using the previous example, the property would rent for around $2,000 per month.  If you were to cash out what liquid assets you have placed into the property with a mortgage,  your PITI (principle, interest, taxes, and insurance) payment would be near the amount of $1400 per month. That leaves the investor with what is called "cash flow" of around $600 per month.  

The strategy is to hold the investment until the mortgage placed on the property is completely paid off.  Since the investor has a tenant paying rent, the mortgage is paid by the tenant and the investor is simply profiting each month the difference of the rent minus the mortgage.  Once the mortgage is satisfied, the investor can choose to sell the asset.  Because the property has seasoned for the term of the loan (typically 15-20 yrs), there will be appreciation to factor into the value.  Using conservative appreciation at 2% of the term over 20 years, the value will have increased to just shy of $300,000.  

Obviously, there will be some renovation costs and some un-forseen instances.  Assume costs of 30,000 are to be subtracted from the selling price along with realtor fees and closing costs of an additional 20k, this investor will walk from the closing table with around $250,000.  Keep in mind that your passive income of $600 a month from this property over 20 years have not been accounted for.  Tax benefits are also unaccounted for as well, but that is for another blog.

This is one of my retirement plans, and it is proving to be an extremely profitable one.  I have others, but those are for different blogs as well.

Raising "G-fees" is FHFA's Way Of Loosening Up Lending In High Risk States

Starting in 2013, the FHFA plans to increase G-Fees charged on single family mortgages.  The charges are only to be increased in those states that have the highest rate of defaults.

What are G-fees you ask?  G-fees or "guarantee fees" are basis points charged by Mortgage Backed Securities providers for bundling, servicing, selling, and reporting to MBS to investors.  It's primary purpose is to protect against losses from defaulted MBS.

Currently, the rates for G-fees are the same across the country.  But, next year, states with higher foreclosure rates will be paying in excess of 15-30 more basis points for G-fees.  The current average rate of G-fees are 15-25 basis points.  What this means to the consumer is about an increase of $3.50 to $7.00 per month on a mortgage for around $200,000.

Passing this on to the consumer does not place responsibility on the banks, and still presents the same issues we faced half a decade ago.  If the bank or servicer responsible for packaging the MBS paid for the G-fees, it would more than likely ensure proper packaging of securities. If the banks are not directly being impacted by these fees, what does it matter to them to continue to package loans as ineffectively as they did in the past?

What this presents to me is not a way of presenting defaults from occurring, but rather opening up the tight reigns of lenders in states with the most defaulted MBS.  It has been difficult, if not impossible  to secure a mortgage in states such as Florida, New Jersey, Connecticut, New York, and Illinois since the mortgage meltdown at the end of 2006.  Now that these states will be charged an increased premium in G-fees, lenders will be able to loosen guidelines for borrowers.

As the market appears to be bottoming out and actually showing very mild appreciation, over optimism is allowing for business to resume as it did in the past.  Charging more "fees" to allow lenders to write paper for unqualified borrowers sounds a lot like "sub-prime mortgages" to me.  Creative methods are great, but must have a control to acquit for economic stability.

Investment home flipping is on the rise, by over 25%

     As you already know, flipping properties was a way of life for close to half of the population in the early 2000's.  As lenders loosened up contingencies and qualification standards, more properties were purchased for investment purposes and things quickly spun out of control.  Mistakes were made that lead to a disastered market and crippled economy.  The market has been reshaped and government infiltration has placed strict restraints and precedents to control a downfall market such as the likes of the 2000's.  As the real estate market place inches itself into recovery, investors are capitalizing on a sea of foreclosures and short sales.  Below are the stats on current to date flips as of January 2012.

     That is correct! Investors have purchased more than 25% than last year.  Without investors to buy otherwise unwanted homes, this market would be in an out of control downward spiral.  Go ahead investors, pat yourself on the back.  Without the risk that real estate investors inherit when buying these homes and bringing them back to marketable and FHA worthy conditions, these houses would sit and rot.  And for those of you who doubt; think of this when you leave your home this morning and drive past that house on your street that has been on the market for over a year with grass up to the windows that are boarded up.  Because, without investors, that house will stay that way....

If you are looking to buy one of these houses, there are professionals that strictly find these homes for investors at drastically reduced prices.  A good start is to do some of your own research on your local markets.  Visit websites such as www.trulia.com, www.realtytrac.com, www.city-data.com, or local investment real estate websites.  A service provider that can locate these properties for you can be found at www.newwestern.com.

Good luck, and do your neighborhood a good thing by flipping that horrid house on the end of your street!

Fear: Your biggest competitor

In some situations, it may seem difficult to "ask for the sale."  An impatient buyer may shut down every rebuttal to an overcome objection.  Non- motivated buyers may stonewall an opportunity to close.  While some buyers can cause agents to be discouraged, the truth is that they are creating nothing more than a fear for you to ask them to sign the contract.  Just because a showing or a meeting is going well according to your point of view, it doesn't necessarily mean that the other party feels the same.

Overall, an agent's perception of how the client feels can dictate their ability to close the sale.  If this is the case, there are some simple solutions to help sales associates get past those discouraging moments.  For those of you who occasionally struggle with overcoming your fears, here are some mental tricks to help overcome your biggest competitor; you.


Geoffrey James writes the "Sales Source" column on Inc.com, the world's most-visited sales-oriented blog.  Below is his column from July 30th, 2012.

4 Mental Tricks to Conquer Fear

You can't be successful if you're ruled by fear. Here's how I reprogrammed my brain to be more courageous.

Fear is the enemy of success. Large rewards only result from taking comparably large risks. If you're ruled by fear, you'll never take enough risks and never achieve success you deserve.

If I've learned anything in this life, it's that the actions that scared me the most at the time--leaving a cushy corporate job to freelance, asking my beautiful wife for a first date, and adopting our two kids--have also paid off the most.

That doesn't mean these moves aren't hard at the time, but I've managed to retrain my brain to get past the momentary fear and push toward the payoff. Here are four ideas that I've made an integral part of my thinking:

1. Value Courage Over Security

Repeated surveys have shown that most people value "security" over just about everything else in their lives. People will put up with jobs that they hate, marriages that make them miserable, and habits that are killing them (think "comfort food") simply to feel more secure.

To conquer fear, you must consciously dethrone "security" as the thing that you value most in your life and replace it with the active virtue of "courage." You must decide, once and for all, that it's more important for you to have the courage to do what you must to succeed, rather than to cling to the things that make you feel safe.

2. Differentiate Between Fear & Prudence
Most fears are irrational and unreasonable. For example, you might be afraid to make an important call because if the call doesn't go well, you'll have to face the fact that you "failed."  Or you might be afraid to confront a co-worker who acts like a bully, or to start your own business because you're not certain you've got what it takes.
It's these irrational fears that hold you back and keep you from being more successful.
That said, there are other kinds of fear that are actually just simple prudence. For example, you might be afraid to drive aggressively because you might cause an accident. Or you might be afraid to be arrested if you sell a product that kills people.
Prudence is a good thing. Just make sure you aren't pretending to be prudent--when you're just trying to avoid taking reasonable business risks, for instance, or putting yourself on the line to do what's necessary.
3. Treat Fear as a Call to Action

If what you fear is outside of your control (like an economic downturn), write down a specific plan of the exact steps that you'll take in order to adapt, if and when it happens. Once you've completed that task, put the plan aside and have the courage to forget about it. You've done what you can; it's time to move on.
But if what you fear is inside your control--some action that you're afraid to take, that is--take a few moments to prepare yourself, then do the thing that's scaring you.
I mean now. Not tomorrow; not next week. Right now,before you read the rest of this post. Call that person. Write that email. Create a business plan. Do it now!
4. Reframe Fear Into Excitement
Finally, tune in to the aspect of fear that's really fun. Think about the last time you rode a roller coaster: You probably felt plenty of fear, but you were also having a great time.
Let's face it, a life without fear--and without the courage to overcome fear--would be pretty bland and insipid.
A personal note: I want to add that there was a time in my life when "security" was so important to me that I was willing to tolerate being truly miserable. I won't bore you with the details, but let's just say that it was only when I changed my thinking (using the formula above) that my life came together.
Today, I'm actually really excited whenever I discover something that I'm afraid to do, because I know that something wonderful is going to happen--provided I summon the courage to take action!

If the real estate market was the sun... It would be the top of the morning!

Home values rise for first time in 5 years!

Numbers don't lie (usually), and the numbers are in.  According to  Case/Schiller and Zillow,  inventory is declining and home prices are rising.  While most would take this information and positive media as an end in the looming foreclosure disaster, it may be advisable to consider taking a closer look at how banks have been behaving lately.  

Just from personal experience and a few of the foreclosures I currently have under contract, banks seem to be moving a lot of inventory around to other banks and servicing companies.  While it is not uncommon to have a delayed closing due to waiting for an updated deed from a debt transfer, I currently have 4 out of the 23 bank owned transactions I am in the process of purchasing delayed for just that reason.  It is like anything that is troubled; when things get shaky, so do their actions.  For investors, take a closer look at your market before you decide to jump in feet first based on a couple of recent articles..... Unless, of course, you are buying in Texas!

NEW YORK (CNNMoney) -- Home prices hit a bottom and are finally bouncing back, according to an industry report released Tuesday.

Nationwide, home values rose 0.2% year-over-year to a median $149,300 during the second quarter, the first annual increase since 2007, real estate listing site Zillow reported. Prices were up 2.1% from the first quarter.

Even though June marked the fourth consecutive month of home value increases, overall home prices are still down almost 24% since April 2007, when Zillow began to track home values.

"[I]t seems clear that the country has hit a bottom in home values," said Zillow's chief economist Stan Humphries. "The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own."

Last winter, Zillow projected that the housing market turnaround would not arrive until the end of the year.

Other home price indexes have also recorded gains lately, including the S&P/Case-Shiller home price index. In it latest release, it reported thathome prices in 20 major markets rose 1.3% in April, the first monthly increase in seven months.

Where home prices are rising the fastest

Zillow uses a different methodology in calculating home values than other home price indexes like Case-Shiller and the Federal Housing Finance Agency. Sales of foreclosed, bank-owned properties, for example, are not factored into Zillow's data. Zillow does include short sales, however, which are more difficult to distinguish from conventional sales.

"Our index is geared to consumers, conventional sellers deciding whether they want to put their homes on the market," said Humphries.

The indexes that include foreclosures in their market data show larger price declines. The peak-to-trough drop for the S&P/Case-Shiller home price index, for example, is about 34% compared with Zillow's 24%.

Fewer than one third of the 167 metro areas Zillow surveyed recorded annual increases in home values, but the size of the price gains in these areas more than offset the losses posted by the remaining two-thirds of the markets.

In Phoenix, the biggest gainer, home values soared 12.1% year-over-year to a median of $136,200. Meanwhile, the biggest loss sustained by any of the 30 largest metro areas was in Chicago where median home values fell 5.8% to $158,600.

Foreclosures remain one of the biggest risks to the housing market recovery, Humphries said. In the wake of the national foreclosure settlement which clarified how banks can legally pursue foreclosures, Humphries expects the pace of foreclosures to pick up.

"That will translate to more homes on the market," he said. "But we think demand will rise to absorb that."

Zillow expects the housing market to continue to slowly recover, with median home values projected to climb 1.1% -- relatively flat -- over the next 12 months.

Most affordable cities for buying a home

Beaten down markets like Phoenix, Las Vegas and many Florida cities, will likely record greater-than-average gains over the next 12 months, said Humphries.

The results in those places, however, will be bumpy. Home price increases will cause some homeowners who have been patiently waiting for values to rebound to put their homes on the market. And those additional listings could cool prices for a while, resulting in a staircase effect with "price spikes followed by plateaus," said Humphries.  

Nationstar Mortgage Acquires Servicing Rights from BofA

According to a recent story from DSNews.com,  Nationstar Mortgage LLC (backed 65% by Newcastle Investment Corp) has purchased over $10 billion in servicing rights from Bank of America.  It is unclear precisely what servicing rights have been purchased, but I think I speak for all investors when I say "I hope they are the default servicing rights!"  If that is the case, this could result in much less stringent guidelines for purchasing individual foreclosures from B. of A.  My anticipation is that this will remove the 60 day deed restriction that B. of A. places on any property purchased with cash transactions.  If and when this begins to appear on  the market, I know that I will be buying an awful lot more of B. of A. foreclosures....


Nationstar Mortgage Holdings Inc. announced Tuesday that Nationstar Mortgage LLC has signed a definitive agreement to acquire approximately $10.4 billion in residential mortgage servicing rights from Bank of America, National Association. The servicing portfolio consists entirely of loans in GSE pools. Nationstar will fund a portion of the purchase price with the proceeds of a 65% co-investment by Newcastle Investment Corp. and expects the loans to transfer in July 2012.

Top 10 markets in the U.S. to buy foreclosures

RealtyTrac has just posted what it considers the top 10 U.S. markets to buy foreclosures.  A couple of the ever present metropolitan areas are all too familiar with these hitlists.  Ft. Meyers, Florida and Tuscon, Arizona fell into some of the middle spots. As for some of the cities named, the list may surprise you!  It is rostered with cities such as Pittsburgh, Charlotte, Seattle, and Tulsa.  But, the surprising number one metro area to buy a foreclosure in 2012 is Kansas City, Missouri!  That is right! The "City of Fountains" is officially the number one city to buy a foreclosure this year.  The average foreclosure price in K.C. has dropped almost 28% from last year to 2012.  The average discount is 51%, making up 29% of all homes sales in the greater Kansas City area.   

In its May foreclosure newsletter, RealtyTrac named the top 10 places to buy foreclosures in 2012. The selected locations were out of the 100 largest metropolitan statistical areas based on population. The list was further narrowed according to markets with at least 200 foreclosure-related sales transactions in January 2012. Then, it was whittled down again to only include metros with foreclosure sales prices at least 30 percent below the average price of a non-foreclosure property.

The number one metro to buy a foreclosure in 2012 is Kansas City, Missouri, where the average foreclosure sales price is $73,257 compared to $101,710 a year ago. The average discount for foreclosures is 51 percent. Overall, foreclosures make up 29 percent of all sales in this metro. Citing data from the Kansas City Regional Association of Realtors, the newsletter stated home sales in Kansas City rose 14 percent in March from a year ago, and prices increased 3 percent from a year ago.

Boston earned the number two spot with an average foreclosure sales price of $195,672 compared to $203,606. The average discount is 49 percent, and 18 percent of sales are foreclosures. Boston also had the lowest unemployment rate on the list at 5.9 percent.

Pittsburgh came in at number three. The average foreclosure sales price is $73,142; last year, it was $82,928. The average discount is 48 percent.

At fourth place, Tulsa has an average foreclosure sales price of $86,725 compared to $113,969 last year and also has an average discount of 38 percent.

San Francisco earned the number five spot. A pricey city to own a home, San Francisco foreclosures averaged $307,803, down from last year’s average of $317,409. Discounts for foreclosures are about 38 percent. Out of all sales, 47 percent were foreclosures in San Francisco, the highest out of all 10 cities. Real estate blog Movotoestimated Facebook’s initial public offering will add $1 billion to property values in the Bay Area.

Cape Coral-Fort Meyers, Florida is sixth best place to buy a foreclosure, and averaged at $102,022, with last year’s sales prices at $93,976. Discounts were also 38 percent.

Charlotte ranked number seven and averaged $118,808 for foreclosed homes. Last year, the average was $144,614, also with a 38 percent discount.

Tucson, Arizona was number eight at $112,660 compared to $129,500 last year. The average discount was also 35 percent. According to the Tucson Association of Realtors, sales rose 16 percent in February from a year ago. Also, the average sales price increased 4.75 percent from January to February, according to RealtyTrac.

Seattle foreclosures averaged $212,565, a drop from the year ago price of $237,852. At number nine on the list, the metro had an average discount of 35 percent.

The number 10 spot went to Columbus, Ohio, where the average sales price is $98,223, falling from $101,152 last year. Average discounts were 32 percent.

The newsletter was authored by RealtyTrac staff writer Octavio Nuiry.

Prices will never be this low again

It's been a topic that has been whispered over and over again for the past couple of years.  People have been speculating when the "bottom" of the market will actually be considered the bottom.  Some markets have seen double dips, triple dips and even quadruple dips in falling home prices.

Finally, numbers are in and are showing that the low prices are going away.  Values in the majority of marketplaces are showing slow and steady growth.  Several economists and real estate experts agree.

Home values in DFW have risen slightly in the last quarter and home sales are at 2007 numbers.  It appears that it may finally be safe to say that the bottom has, in fact, bottomed out.



By Les Christie
Buying a home may never get any cheaper than this. Several housing experts are predicting that this year will be the last chance for bargain hunters to cash in on the best deals of the weak housing market.

With home prices down 34% nationally since 2006 and mortgage rates at historic lows, homes have never been more affordable -- but it won't stay this way for much longer.

Stuart Hoffman, chief economist for PNC Financial Services, said he expects home prices to flatten out by the third quarter and start climbing by next year.

A number of factors will help bolster the housing market, he said, including a decline in the number of foreclosures and continued job growth. In addition, homebuyers will have better access to mortgages as they get their finances in order and improve their credit scores.

"This is a strong indicator that we will start seeing home price indexes, like the S&P/Case-Shiller, start to report home price increases this summer," he said.

Prospective homebuyers who've been sitting on the fence shouldn't worry if they aren't quite ready to make the leap. Analysts are predicting that the initial price gains will be modest, at least, in most markets.

Buy-Fix-Sell strategy is looking to be profitable for summer 2012 in DFW

Sales are on the rise, and are vastly increasing in North Texas.

     According to the volume of sales reported through closed transactions this year,  home sales have recovered to numbers that existed in 2008 as the month of March closed out.  And, that's not the most exciting part.  Based on the projections of how rapidly sales volume is exceeding in North Texas, we should begin to see volume at a level of 2007 by summer (or possibly more).

     For investors, this is great news!  It will allow professional real estate investors to diversify exit strategies from what the market has dictated for the past 3 years.  Until now, it has not been easy to buy-fix and sell investment properties since the banking collapse of late 2008.  Most investors have resorted to primarily using the buy-fix-rent strategy to gain moderate passive income and a much better return than the institutional market has been providing for typical investing.  They savvy investor has resorted to owner finance as their primary exit strategy which allows an above average, but slightly longer return.

     With the volume this year, and the exponentially increasing amount of sales, this appears to be shaping up for the buy-fix-sell investor to have a great summer season.  And, it makes total sense.  Jobs are here.  Affordable cost of living is here.  Everyone wants to be in Texas.  Just look around.  I have never seen more out of state tags in Texas than now.  The secret is out!

DFW inventory on the decline, home sales on the rise!!!

It just keeps getting better and better for investors in the DFW Marketplace.  The median affordable home can be purchased for $50k to $170k, leaving first time home buyers well within affordability correlated to their median income.  Below is a very interesting interview and some statistics that raises only one question....  

WHY ISN'T EVERYONE BUYING INVESTMENT PROPERTY IN THE DFW METROPLEX???

Investors seizing bargains in Dallas real estate market

Perspective: Inventory shrinks to 2008 level

BY INMAN NEWS, MONDAY, FEBRUARY 27, 2012

Investors and first-time buyers are powering real estate sales in the low price points in the Dallas-area market, say real estate agents Mary Beth Harrison and Brian Rayl, and for-sale inventory has declined.

Harrison and Rayl participated in an Inman News Q-and-A

.

Dallas Real Estate Market Q-and-A

1. Describe which types of properties are selling fastest in your market area.
HARRISON: Single-family homes priced from $50,000 to $170,000.

RAYL: Properties below $100,000 have been selling the fastest in the Dallas-Fort Worth market. I attribute much of this to real estate investors who are coming in and picking up good deals in order to flip or rent for profit. Investing has become a huge market here.

2. Describe which types of properties are selling slowest in your market area.
HARRISON: Single-family (homes priced at) $600,000-plus, and also farm and ranch (properties), followed by multifamily.

RAYL: Homes priced over $250,000 have been selling the slowest, although they have seen a dramatic decrease in time on market. A year ago, you could expect a home priced over $250,000 to sit on the market an average of 145 days. Today, that number is down to 120, a decrease of nearly 20 percent.

3. Describe any changes in the demographics of buyers and sellers in your market area.
HARRISON: Investors continue to be strong, driving the $50,000 to $100,000 sales

RAYL: A large part of today's real estate environment in Dallas is foreclosures. We are seeing a huge influx of real estate investors -- local as well as national and international investors -- coming into the Metroplex to purchase great deals.

4. Describe the level of activity among first-time buyers in your market area.
HARRISON: First-time buyers are very strong in our market, driving the $100,000 to $200,000 sales

RAYL: First-time homebuyers have come out of the woodwork looking for great deals, but many of them are not realistic about their home search. All they hear is the state of the economy and expect to purchase a home for significantly under list price.

In today's market, more than ever, significant education is needed, and it is needed at all levels of homebuyers -- not just first-timers.

5. Describe the level of activity in the luxury market in your area.
HARRISON: Luxury sales are strong, but inventory is still high. It represents triple-digit sales for the year vs. (four-digit) sales (among properties priced at) $499,000 and below.

RAYL: The luxury market has definitely picked up over the past year. Much of this has to do with the realization by the homeowners of what the current market is and beginning to price their home realistically. Financing has never been an issue for this market. It has always been about confidence and price.

Dallas Real Estate Market Data

# closed home sales (2011)	64,509
# closed home sales (2010)	64,423
% change closed sales (2010-11)	0.1%
# closed home sales (for most recent month or quarter available)	3,572
# closed home sales (for same month or quarter one year earlier)	3,311
% change closed sales (most recently month available in 2012 vs. same month in 2011)	7.8%
Median sales price (most recently month available in 2012)	$145,000
% change sales price (most recently month available in 2012 vs. same month in 2011)	-2%
% share of distressed properties (most recent month available)	25.6%

Source: North Texas Real Estate Information Systems Inc.

6. Describe recent trends with home prices, sales and inventory.
HARRISON: Inventory is down (below a six-month supply in many areas), and prices are climbing in those areas and flat to rising in the others. There are not many decreasing areas.

RAYL: During the spring and summer of 2011 we certainly saw the normal influx of listings. What was unusual was that during the fall and winter months we saw much more activity than usual. Our current inventory sits at around eight months of supply for the Dallas-Fort Worth Metroplex as a whole. We have not seen inventory this low since 2008.

7. Describe the current state of the distressed property market in the area.
RAYL: Foreclosures account for approximately 25 percent of today's real estate transactions here in Dallas. Banks are trying to unload their inventory and are realistic about their prices in most cases.

8. What worries you most about the current state of the market?
HARRISON: The difficulty in getting loans, real estate owned (REO) inventory that banks might be holding, and the election year.

RAYL: My worry is that interest rates will begin to climb before the housing market truly recovers. Add on top of that the continued flow of bank foreclosures into the marketplace and you have a recipe for a continued anemic real estate market for the near future.

9. What represents a sign of optimism and opportunity for the real estate market?
HARRISON: Lower inventory, rising interest rates, job stability and growth, and good weather have helped make January and February great months.

RAYL: Those who have considered investing in real estate have never had a better opportunity to dip their toes into the water with the deals that are available in today's market. On top of that, those who are looking to refinance their current home or purchase a new home can do so very cheaply and inexpensively.

You can afford to purchase 25 percent more home today than you could a year ago and have the almost the exact same mortgage payment. That says a lot.

10. Describe the overall economic health in your market area.
HARRISON: Dallas has maintained a much healthier economic climate than most and it continues with good population growth.

RAYL: The economy in Dallas is thriving. Job creation continues to be a big economic driver. As the home to several Fortune 500 company headquarters, the Dallas area has always had a fantastic job outlook and will continue to for the foreseeable future.

In addition to this, the fact that Texas does not have a personal income tax offers a big incentive for both blue-collar and white-collar workers to choose Texas as the home for their business and/or their families.

Agent Reboot, a one-day real estate tech and marketing conference for real estate agents, is coming to Dallas on Wednesday, Feb. 29. More info.

Mary Beth Harrison, a Realtor for Keller Williams Realty, has worked as a Realtor since 1990. She sells real estate in Dallas and the surrounding areas. Her website is www.DallasNative.com.

Brian Rayl is a Dallas real estate agent who works for Keller Williams Elite - Park Cities. Find out more about Rayl at: http://BrianRayl.com/about. Rayl provides real estate services in Highland Park, University Park and all of the North Dallas area.