"Oh, I don't think it's that bad. . " say realtors

[Mary Tiernan]

This just drives me nuts. I have run into this a few times in the past couple weeks and I've got to wonder what is wrong with them.

Doing an appraisal in a small town, 1700+/- population, 745 housing units. Eight sales in the past one year, 5 foreclosures (4 less than $40,000, 1 at $69,000) and two victorians (one which sold for $167,000 - lawdy I do not want that review!!!). Twelve available properties, 2 are foreclosures.

Mind you, the 5 foreclosures which did sell were previously listed at "normal" pricing levels, didn't sell, went into foreclosure and were purchased by local area investors (per realtors).

The current listings at "normal" asking prices have been on the market for over 1 year, some over 2 years.

What does this tell me? Nothing is selling unless it is rock bottom bargain priced. I need to do more investigation to find out what is happening on the selling side.

So, I call a few realtors in the area to get some input.

I recite my data and ask about potential purchaser activity. "Oh, I don't think it's that bad."

I am always stunned when I hear that as I have just recited what the past year figures show, and that I notice the listings have been on the market for an extended period, etc. etc.

Can I get a pair of those rose-colored glasses?

 

[redfish]

I heard a story in a small Michigan town where an investor was reaching out to homeowners that were losing homes in foreclosure. This investor would talk the people into taking good care of the home until they lost it. The investor would then hound the small regional bank that made the original loan and until the bank dumped the property to him. The original owners that lost the home would move back with a lease purchase agreement/land contract allowing their credit to rebuild and then get the house back after the investor made his profit. I will not say where and will not cite a source for this story. It just might just be a urban myth....or rural myth whatever, sounds possible.

 

[Kevin Little]

How could anyone afford a rent-to-own agreement when they could not make the mortgage to begin with?...unless they got hit with an unreasonably enormous ARM increase. Rent-to-own normally contains huge monthly payments, larger than a normal mortage.

We're lucky in the area we cover...it's normally economically depressed, so there was never a problem with a "bubble" market. We have seen a slight increase in foreclosures, but not due to adjustables, mostly due to job losses...this has put a damper on the RE business, though...people seem very frightened of doing a lot of business that requires utilizing debt, these days. No confidence in the future, it would seem.

 

[hglenbetts]

........So, I call a few Realtors in the area to get some input.

I recite my data and ask about potential purchaser activity. "Oh, I don't think it's that bad."

I am always stunned when I hear that as I have just recited what the past year figures show, and that I notice the listings have been on the market for an extended period, etc. etc.

Can I get a pair of those rose-colored glasses?

As you know, I still work, full time as a Realtor in SE Michigan, and even in the very large and informed company I represent, the typical agent divides the market into two segments: the REAL MARKET, where they still list at values from 2004, stating that this is the true value, even though nothing is selling, and the REPO MARKET, where there's a lot of action, multiple offers, sold before listed, etc. "But that doesn't represent the the REAL values in the market".

The listing agents are afraid to tell the truth to their clients about the value of their homes, and most home owners are unwilling to accept the truth when they are told.

Thus, no one mentions the elephant that's cr@pping in the center of the room.

 

[Financially Feasible]

How could anyone afford a rent-to-own agreement when they could not make the mortgage to begin with?...unless they got hit with an unreasonably enormous ARM increase. Rent-to-own normally contains huge monthly payments, larger than a normal mortage.

We're lucky in the area we cover...it's normally economically depressed, so there was never a problem with a "bubble" market. We have seen a slight increase in foreclosures, but not due to adjustables, mostly due to job losses...this has put a damper on the RE business, though...people seem very frightened of doing a lot of business that requires utilizing debt, these days. No confidence in the future, it would seem.

Kevin, where in PA are you? I'm in SE PA (Chester County). My immediate area has not been hit too hard with foreclosures. In fact, I go to the Chester County Sheriff's Sale every month and am amazed by the amount of properties which are stayed from the list. Maybe a handful of properties sell per month. I also go to the sales in New Castle County, Delaware and, for being about 20% of the size of Chester County, they have about 500% more sales (I see a lot of repeat names popping up every month... investors who are, slowly but surely, losing their portfolio of properties).

I have a really hard time calling this a "declining market", though. I mean, yes, certain areas certainly are declining. However, I'd like to think of it (and maybe it's just me trying to find the silver lining in the cloud) as a big price correction to reset prices to where they really SHOULD be... not where they were a couple of years ago in the ultra-inflated market. You want to see declining values? Go back to 1986. Remember 15-17% interest rates? Remember the last big market "crash"? You talk about inventories not selling? That was a bad time. However, this time around was perpetrated by greedy builders and even greedier real estate investors and SUPER greedy Wall Street investors. Sorry... but anyone with any intelligence could see this coming. I know a lot of members of this Forum did.

If you want to know why Realtors look through these "rose-colored glasses"... look at it this way. If the market tanks, they tank. For us, if the market goes up, we appraise properties (purchases, refis, etc). If the market tanks, we appraise properties (REOs, bankrupcies, foreclosures, estates, etc). For the time being, until we are replaced by AVMs/robots/both, we will always have a job so we're not as hesitant to call the market what it is (actually, some appraisers, out of fear of LOSING a job, will not call the market as it is... but they'll be in jail when they get investigated for fraud :icon_mrgreen.

Sorry if I was babbling... just my .02.

 

[Mike Boyd]

Ed....I used to agree with you on the declining values issue. In fact, we had quite a long thread on it in the forum. I think on the old URAR it mentioned a declining MARKET whereas the new 1004 says declining prices. Big difference in just those two words. If prices are decling, then it is obvious which box you check. In the old days, a declining market had a whole different meaning.

 

[Riick]

Ed....I used to agree with you on the declining values issue. In fact, we had quite a long thread on it in the forum. I think on the old URAR it mentioned a declining MARKET whereas the new 1004 says declining prices. Big difference in just those two words. If prices are decling, then it is obvious which box you check. In the old days, a declining market had a whole different meaning.

????
So... the Market is not declining, only the Prices the market demands are declining ....
????

 

[hglenbetts]

????
So... the Market is not declining, only the Prices the market demands are declining ....
????

Starting to sound like a mortgage broker

 

[Michigan CG]

"Oh, I don't think it's that bad."

They have been saying that now for two years, and will continue for two more years until it is actually true.

I had a Realtor (capital R out of respect for the good ones) tell me in January that Michigan was doing great and the market was turning, and, and, ....just wondered what rock she lived under.

 

[G-man]

Oh no, the market is just fine.

Yeah, & monkeys can fly out of my butt. I have three homes to appraise in Monroe County on Saturday. All three are vacant REO properties. I can't remember the last time I completed an appraisal on an owner occupied sale in Monroe County, with the exception of Bedford Township. Although the last Bedford sale I did do I came in five to eight grand below sales price. :new_cussing:
Toledo is not much better, with some markets just not moving anything right now. Multi-families have just tanked, with a two years supply of duplexes on the market in the Toledo Area. I have one tomorrow where I have ONE sale in the subjects market. No actives, no pendings, no nothing. It is going to be one ugly *** appraisal. m2: