Posted by Daniel Ripper on October 2, 2009 at 7:02pm
While most of the REO agents in my area sit, twiddling their thumbs waiting for this Tsunami/Shadow Inventory/Wave to hit, I've been blessed with keeping a flow of inventory hitting the market making me one of the more "popular" agents on the block. While this is good for my business, keeping me and my staff busy, I've had the unfortunate experience of dealing with buyers agents who are unhappy, frustrated, or just downright negative. They continously complain, threaten me, tell me how to run my business, even demand me to accept their clients offers! The sad part is some of these agents are within my office! Its a shame agents have to go this low. I simply just take a deep breath and stay focused.Initially I thought it was just me, I mean I'm a down to earth guy, really laid back (don't let the picture fool you) but after talking with some of my peers in the same boat, they were experiencing similar reactions. Recently at the 5 Star an agent on the panel was going over productive ideas and one of them was "don't let the buyers agents control you". I was relieved to know that many of the REO agents are going thru the same issues.If you're a buyers agent on this site and are trying to get into REO, until you get that first listing, here are some tips:1. follow directions. Usually a good listing agent will leave instructions on the MLS. For a better response on your offers, please have your contract packages complete.2. have your lender contacts ready. If a listing requires a specific prequal from a direct lender, have your client in touch with that loan officer immediately. With the shortage of inventory, it is very competitive and timing is a huge factor.3. understand the REO market in your area. If your buyer is an FHA first time homebuyer with 3.5% downpayment competing with investors offering cash 20% over list, your buyer does not stand a chance.4. understand the thinking behind the offer accepted. Just because your FHA, 3.5% downpayment offer was 40% over list price, and didn't get accepted, understand why. Banks usualy have a couple of BPOs done from local agents and a appraisal. Its how they get their list price. Just because your client offered 40% over asking dosen't mean they will accept your offer. We know it won't appraise and don't want to deal with it later in the transaction.Staying in control keeps my staff and I busy as we can spend all day arguing with buyers agents who are not even in contract with us. I hope this helps for everybody on this site. OK I'm done venting. Thanks for reading!
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A nationwide rise in homeowners’ “negative equity” is convincing more people to walk out on their mortgages, even if they have favorable credit ratings and can afford to pay their loan, according to recent studies.Two reports – one by researchers at Northwestern University and two other colleges, the other by the national credit bureau Experian and the consulting firm Oliver Wyman – are offering a clearer picture of “strategic defaultees” than has been previously available.According to Experian and Wyman, numbers of strategic defaults are far greater than you might expect. Nearly 600,000 borrowers nationwide fell into this category in 2008, more than double the number in the previous year. That number also represents 18 percent of all serious delinquencies from last year.So what kind of people turn in the keys and walk out on their homes, even when they can pay the mortgage? It’s not who you think – not entirely, anyway.The Experian report looked at 24 million U.S. credit records and found that borrowers with the highest credit ratings are 50 percent likelier to strategically default than lower-rated homeowners. The defaultees often have no adverse credit history, going from a record of perfect payments to no mortgage payments at all.It’s not longtime homeowners; the Northwestern report said borrowers who bought more than five years ago were less likely to default. Surprisingly, though, “young people” don’t account for that many walkouts, either. “The young are more dependent on the loans market and thus face higher reputation costs from defaulting,” the report says.Above all, though, the studies agree that negative equity – being severely “underwater” in a mortgage – is the biggest factor in strategic defaults. “The homeowners who walk away know full well they are damaging their credit records, but are making a calculated decision that sticking it out over the long-term would be worse,” writes Boston Globe real estate reporter Scott Van Voorhis.Not all underwater borrowers are equal, however. The Northwestern study says homeowners never walk out if their negative equity totals less than 10 percent of the home’s value. Once that shortfall reaches 50 percent, though, a significant number of borrowers will default strategically.The Experian report agrees. Strategic defaults are much higher in boom-and-bust markets with jumbo loans, like California – where walkouts have risen 6800 percent since 2005 – and Florida, where they’re up 4500 percent. (By contrast, walkouts nationwide rose 9 times since 2005.)There is one upside in the statistics: According to the Northwestern report, moral sensibilities keep the walkout numbers lower than they might be otherwise. Eighty percent of borrowers “think it is morally wrong to do a strategic default,” and even “amoral people can choose not to default when it is in their narrow economic interests to do so because of the social costs this decision entails.”But as unemployment and foreclosure inventories continue to rise, it remains to be seen just how much of a deterrent the “social costs” of strategic default will remain.
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Posted by Linda Landry on August 2, 2009 at 8:19am
What is the difference between underwater and upside down? Both are negative equity right? Technically, I guess the answer is yes and no. Underwater is the current term for homeowners (better known as a mortgagor) who owe more for the loan than the value of the property. Upside Down is the term commonly used when a vehicle has less value than the loan intact.Being upside down in a vehicle loan has been common place for years and no one seems to scream 'help I'm upside down and I can't get out'. Of late many mortgagor's have become underwater in their loans as property values plummet and they cry out 'no help then I'll abandon ship!' Countless have abandoned their property and shirked their commitment/responsibility. Certainly, there are those who had no choice due to unforeseen circumstances such as job loss/transfer or medical bills/death in the family. However, countless just bailed.We are accoustomed to a vehicle depreciating in value the moment we drive it off the lot. Seems like a fact of life we've accepted. Especially regarding new vehicles. It is the price we are apparently willing to pay for the new car smell and the warranty of a mechanically trouble free few years. We suck it up and we pay up. Typically real estate property appreciates. This is a factor least considered when choosing property as there are more emotional factors to consider. Similar to marriage we dream of rearing children, raising pets, entertaining guests and family and watching grandchildren romp in the yard. In other words the plan is to stay, seemingly, forever. The norm has been for property values to increase and for folks to rest assured that when the time came in three, five, or even twenty years their investment would be recouped....and then some.What a shock to realize in this current market that is not the case. Even for those who remain and maintain their property. There property is 'devalued' due to the appraisals of comparables often abandoned and in disrepair. Their equity dissipated into thin air and often went into the negative. The philosophical difference was lack of preparedness due to the concept of the investment. More mortgagors than not expected their investment to appreciate. Typical vehicle purchasers are conditioned to know their investment will depreciate. With a vehicle there is the belief that there is NO equity; an accepted fact.Perhaps we should consider our residential purchases with more of a matter of fact approach. Perhaps looking at a residential property for the purpose it serves and for how it's financial responsibility fits in our budget are better ways to evaluate the expenditure. Additionally, consideration for re-sale value needs to be foremost in our minds when choosing a property or financing. There is always the possibility to necessitate leaving earlier than expected. We can learn from the current economic crisis and do what is possible to allow a palatable exit.Negative equity exists; even in property. We've all had the privilege to see it first hand. Let us learn from all the mistakes and minimize the pain for our future.
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