QUOTE OF THE YEAR:

    Sales are up, listings are declining. Sounds really good especially if you are a Realtor. That should be good news and you should be quite busy by now with REO’s and short sales. But wait one minute, remember those sellers in your farm area who used to be your bread and butter. Well it seems that the REO and short sales have dealt them a blow that will take them a long time to recover from. I am rarely observing the typical seller of the past and they seemed to have headed for an early and long winter hibernation. Not that they want too – just that big ol’winter bank is making its way though first. The only good news is that during the intermediate future, Real Estate Professionals can make a living. The downside, when the foreclosures clear up, what will be left and how long will it take for values to rebound enough to allow for the old sellers of the past to make their grand re-entry back into the market place.

            But first, currently I am observing REO/ short sales in Hillsborough neighborhoods ranging from 70-90% of total sales. In some instances ( mainly the newer neighborhoods ) , I am observing 100% REO/SS transactions. The prices are such, that you cannot even think about arguing a lower price. They are so low a first-time homebuyer knows they are getting a good deal.  They are dead give-aways. I played the lotto the other day hoping to win so I could buy a neighborhood or two. Well, that didn’t work so back to the grind. I ran total lis pendens in the clerk of the circuit courts office last week and compared them month by month for one year. I will put the results up soon. The troubling thing is that, Hillsborough County is having an increase in lis pendens ( partially due to some hold-offs from the Christmas Holidays). However, these lis pendens filings are far exceeding sales and in some cases more than double actual sales. Now , I don’t think this will lead to a perpetual downwards spiral , however, this “is” dragging quite a few more people into the short sale position that would not have been if actions were/are taken. – This goes back to some prior posts where I supported the “cram down” and appraisals instead of BPO’s for REO managements companies. That would get this stuff off the market so it would not adversely affect the typical homeowner. I was talking to a Realtor the other day and she said that “if it is not an REO don’t even bother if you’re a buyer, there are plenty of great REO deals to be had”. 

            This brings me to my second point. Typical sellers of the past. Your old bread and butter. I really feel bad when I hear stories about a seller who wanted to move to another area or upgrade to a bigger home or even downgrade to a smaller home and they could not. A lot of them have not been able to compete in this market with the REO and short sales to even attract a buyer. And why would a buyer pay more for less? Some of these sellers bought their home prior to the housing boom with no refinance and still cannot compete. Some are able to absorb the reduction in contract price through cash savings ( not their 401k, since that’s almost all gone ), and still others have been able to rent their home and buy another- (that is very rare today). So they are stuck until the market turns to a point in which they can afford to sell. This is a perfect opportunity for a Realtor who is looking to increase their future earning potential, although not much for the short term. A return of the typical seller of the past will be the main indication of stability in our housing prices.

            I do have to reiterate that there are real solutions to these problems. BPO’s are being used instead of actual appraisals for REO listings. This practice is  illegal in all but 14 states in America. It is legal in Florida. Read my prior post on how BPO’s for REO’s are a very bad thing. As a matter of fact,  when compensation is only offered for the actual sale of the REO then the BPO is inconsequential and there is no binding requirements for a BPO as there is for an appraisal. An appraiser can face fines and even jail time for certain appraisal violations, whereas, there are no regulations to be concerned about over BPO’s.  The other is getting meaningful 1^st mortgage bankruptcy legislation passed, also, read my prior post on this.

            Before I retire this post, the new HVCC that went into affect May 1^st, is the biggest load of meaningless, worthless legislation passed by lawsuit I have ever heard of. I am going present a new post on this soon. However, since it only affects new applications on or after May 1^st, I want you the Realtors to have experienced a little more of it in your daily Real Estate Life.

            As always send me your response , whether you agree or not, I will post it to the end of the blog under comments.