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RealtyTrac Reports Foreclosures Up In July

Josh Deknoblough RealtyTrac an online marketplace for foreclosure properties, released their July 2008 U.S. Foreclosure Market Report today. Foreclosure filings, default notices, auction sale notices and bank repossessions were reported on 272,171 U.S. properties during the month, an 8 percent increase from the previous month and a 55 percent increase from July 2007. The report also shows one in every 464 U.S. households received a foreclosure filing during the month.

“Bank repossessions, or REOs, continued to be the fastest growing segment of foreclosure activity in July, posting a 184 percent year-over-year increase compared to a 53 percent year-over-year increase in default notices and an 11 percent year-over-year increase in auction notices,” said James J. Saccacio, chief executive officer of RealtyTrac. “The sharp rise in REOs, combined with slow sales, has resulted in a bloated inventory of bank-owned properties for sale. RealtyTrac now has more than three quarters of a million properties in its active REO database, a number that represents approximately 17 percent of the inventory of existing homes for sale reported in June by the National Association of Realtors.”

Nevada, California, Florida post top state foreclosure rates.

Nevada continued to document the nation’s highest state foreclosure rate in July, with one in every 106 households receiving a foreclosure filing during the month. Foreclosure activity in Nevada was up 15 percent from the previous month and 97 percent from July 2007, pushing the total number of properties with foreclosure filings to over 10,000. Bank repossessions in Nevada were up 384 percent on a year-over-year basis, while default notices were up 59 percent and auction notices were up 31 percent.

One in every 182 California properties received a foreclosure filing in July, the nation’s second highest state foreclosure rate, while one in every 186 Florida properties received a foreclosure filing, the nation’s third highest state foreclosure rate.

RealtyTrac’s full report click here.

Shasta County July Housing Stats

I am a few days late putting the July sales data together but It is now complete. July was a decent month with homes sales increasing over last month from 155 to 167 homes sold. New listings were down from 434 to 424, and active inventory slightly climing to 1961 homes. The chart I put together below compares July 08 to July 07 & 06.

	New Listings	Active Listings	Sold Listings	Months Inventory
July 08	424	1961	167	11.74
July 07	517	2227	188	11.85
July 06	590	1991	216	9.22

The year over year comparison looks pretty good with the exception of sold listings, that is to be expected given our current market conditions. The new listing numbers are down quite a bit and this is helping keep the active homes for sale at a healthy number.

First Time Home Buyers Tax Credit!

Bill

Great News!! President Bush just signed into law the Housing and Economic Recovery Act of 2008.

Homebuyers will soon have access to more affordable financing, and first-time homebuyers (those who have not owned a home for three years) will receive a tax-credit to help them enter the market. For more details on all of the provisions in the new law, please use the link below.

See Tax Credit Chart

Summary of Housing & Economic Recovery Act of 2008

June Foreclosure Filings

Bill

Because a large part of our business is helping people that are in foreclosure (and investors that purchase pre-foreclosure properties) we have been tracking the amount of default notices that are recorded in Shasta County. Since last year we have noticed a large increase in foreclosure notices. As an example, for the month of June 2008 we have seen an 88% increase in foreclosure filings compared to June of last year.

88 % increase in Notice of Default Filings compared to June 2007!
There were a total of 86 notices filed in June ’07 and 162 notices filed in ‘08

The amount of foreclosure filings for the week of July 18, 2008 through July 25 is 43, the week before was 42. At this rate, July is on track to meet or beat June’s number of 162 notice of default filings.

Whether it’s through pre-foreclosure sale, Bank Real Estate Owned (REO) or bankruptcy, most of the homes that enter foreclosure end up on the market. With our current inventory at 1,930 homes and an average of 167 homes selling over the last three months, inventory should continue to climb.

We feel these are important stats because; as the foreclosure starts go down there will be less distress sales on the market and will provide an opportunity for prices to stabilize.

Shasta County Housing Data

Below is a chart of Shasta County housing data compiled July 24, 2008. This chart is a good indicator of year of year inventory levels.

	New Listings	Active Listings	Sold Listings	Months Inventory
Jun-08	434	1933	151	12.8
May-08	408	1876	184	10.2
Apr-08	483	1830	166	11.02
Mar-08	425	1768	165	10.72
Feb-08	351	1775	115	15.43
Jan-08	412	1796	108	16.63
Dec-07	227	1901	119	15.97
Nov-07	324	1998	130	15.37
Oct-07	351	2140	160	13.38
Sep-07	383	2214	146	15.16
Aug-07	487	2249	214	10.51
Jul-07	517	2227	188	11.85
Jun-07	561	2157	243	8.88
May-07	579	2049	211	9.71
Apr-07	663	1910	205	9.32
Mar-07	533	1723	216	7.98
Feb-07	440	1689	179	9.44
Jan-07	492	1666	133	12.53
Dec-06	283	1784	213	8.38
Nov-06	320	1989	173	11.5
Oct-06	451	2059	186	11.07
Sep-06	493	2146	188	11.41
Aug-06	596	2154	199	10.82
Jul-06	590	1991	216	9.22

Currently we have 1936 homes active in the MLS which is off our 52 week high of 2249 in August last year. The market has been fairly stable with fewer homes coming on the market and fewer homes selling than this time last year. We currently have 398 homes under contract with the average days on market of 134 days.

The inventory stats are not far off of last year at this time. There are a lot of foreclosed home coming on the market but the sellers who do not need to sell are staying put. This is keeping the inventory numbers close to last years. We do expect numbers to climb through the rest of the year due to the spike in foreclosures and demand for homes to slow as the season winds down.

A good indicator of were inventory is going will be the amount of default notices we receive in the next few months, we will be watching closely.

Buying Bank Owned Properties

I’m sure you have seen the late night infomercials and heard stories about people making a lot of money from buying foreclosed homes. Generally they tell you how easy it is and that you can buy these properties from the bank for pennies on the dollar. It is true you can make a lot of money investing in foreclosures; however it is never as easy as the stories make it sound.

Most people do not know where or how to get started and often times get discouraged before they even buy their first property. We are going to start out with the basics on how properties become bank owned and how you can find them.

In California which is a deed of trust state there are a generally only two ways that lenders can get the property back from a borrower.

Deed in lieu of foreclosure – This is when a borrower will give the property back to the lender to satisfy a loan in default and to stop foreclosure proceedings. This is a lot less common then the property being foreclosed. There are several advantages for both borrower and lender. The main advantage to the lender is they get the property back much sooner than foreclosing and the borrower will avoid the public embarrassment of a foreclosure.

Auction – if a property goes up for foreclosure sale and no one is willing to pay the minimum bid then title will be transferred to the beneficiary (lender) and the property is now REO. It is not un-common for properties to not sell at auction. In most states to bid you are required to have certified funds, such as cashier’s checks or cash. The recent trend is borrowers will owe more than the home is worth. The minimum bid is typically close to what the foreclosing liens balance is plus fees & backed interest. So there are not as many deals at auction as you would think.

Once the lender is in control of the property they will work with an asset manager to get the property sold ASAP.

How does the lender establish a listing price?

The asset manager will hire a local appraiser or a BPO agent to give them their opinion of value. The asset manager will often order a second opinion of value to reaffirm the first. While they are doing that they will be looking for a local agent to market the property for sale. Sometimes this process can take a couple of weeks or even months.

Insider Secret: Most of the lenders will post a list of their REO properties on their website. See our list of lender websites to find REO properties before they are listed.

As soon as the asset manager has arrived at the listing price and contracted with a local agent to list the property, it will be posted on the local MLS. This is the point where most investors will find out about the properties and it can get pretty competitive depending on how good the deal is. The trick is to find out about these properties as soon as they are listed if not before.

Insider Secret: With our VIP Buyer Service you can receive these listings as soon as they hit the market. We will send all REO properties straight to your email inbox within minutes of being posted to the MLS. Sign up here!

Now you have a basic understanding of how to find bank owned properties. In the next posting we will discuss what to do when you find a screaming deal and how to make it an even better one.

We encourage your comments and questions.