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What to Expect When You're Expecting

If you are new to the foreclosure game and expecting immediate satisfaction, you might want to think more in terms of a pregnancy. There will be good days and there will be bad days. There will be unsuitable mates and more unsuitable mates. And unlike the days of old when you purchased almost any property one week and sold it, some without any labor, the next week, there are new terms to this foreclosure game. One of the most noticeable changes is the length of time you'll be with property. Expect full term and no epidural- at least when you start out. Some other insights to note are:

Know who you are getting into bed with. If you are going to be saddled with a partner and/or a property for months (maybe years), do your due diligence. Does the property or the partner come with more baggage than you should take on, especially when you are dealing with your first born? Does the property have another mortgage? Does your partner have a bad habit of bailing 1/2 way through your term? Does the property or your partner have any history of disease or tax debt?

Be specific. Know your market-both where you what to buy and where you want to send your child. Are school districts important? Create and know your niche. Do you want to focus on single family homes in the western suburbs with good school districts. Focus on your first born, nurture her, learn from her, then think about the 2nd.

Don't overdo it. Using the example above, if your focus is single family rented homes, modern, kitschy and high end features, may not be your best option. Those imported wood floors will be easily scratched with big wheels and skateboards in no time.

Lastly, be realistic with your financial obligations. Don't take on full interior and exterior remodels starting out. That's like giving birth to a teenager.

Mostly importantly, it is a great time to invest in foreclosure properties. The success stories are there! The market is ovulating. But knowing the obligations and having realistic expectations is the key to a healthy, rich life. Focus on your first born, nurture him, learn from him, then think about the 2nd.  Who knows? One of your children may even get a football scholarship down the road.

 

 

 

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The Foreclosure Pipeline Is Filing Up Again

In a little noticed released earlier this month, CNBC noted that Bank of America is increasing its foreclosures. Bank of America is delivering more notices of default to borrowers in August, well over 200 percent more than in previous months. (A notice of default is the first stage of the foreclosure process in non-judicial foreclosures states, that is, where foreclosures do not go before a judge. The notice of default is usually sent when a borrower is 90 days or more overdue in payments, but that timeline has been extended significantly during this housing crisis, due to the so-called "robo-signing" processing scandal and the sheer volume of troubled loans, as noted by CNBC)

Given this shift in stance, the future holds the prospect of further downward pressure on prices as new foreclosures come to market and little to no change in the demand side of the equation...aka, there is not a corresponding increase in buyers. So when supply increases and demand doesn't, the impact is on price.

What does that mean, no recovery in 2012 and possibly (and maybe even likely) continued price erosion for the next year which further translates into more homeowners being underwater.

Yes, as foreclosures pile up, maybe it is time to consider demolishing all those foreclosures.

Michael Hobbs, October 1, 2011

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When 30% With Nothing Means A Lot

 

Last week, Corelogic released their analysis that approximately 25% of property owners with a mortgage were underwater and another approximately 5% were quite close to being under water. So, in essence, nearly 1/3 of all homeowners with a mortgage were in a position of no equity in their homes.

Essentially, these people were like most new car owners who immediately buy their asset and then learn that they are underwater for the first, say 3 to 5 years, because of the drop in value of their automobile as soon as they leave the car lot. Not that people really want to own another pretty looking, but pocketbook hurting asset...isn't one car underwater bad enough? Yet, in this case, since the house they live in is likely as much as 10x the sticker price of they purchase, there is significant discussion and concern in the industry.

So, when potentially 3 out of 10 properties are underwater, what do you think they recommend? Probably not the same thing as what 4 out of 5 dentists recommend. Based on anecdotal evidence, as the percentage of a given population enter into unchartered territory, the propensity for otherwise irrational decision making substantially increases. So, is it any surprise that although Case-Schiller may be reporting price increases the percentage of distressed real estate is not improving? For those with an eye on owing a car that doesn't necessarily decline in value right after you buy it, the answer to that question is a resounding yes.

Sometimes 30% with nothing means a lot.

 

Michael Hobbs September 30, 2011

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Hinsdale Foreclosure Opportunity

Big things come in small packages.

5599 Oak, Hinsdale

5599 S. Oak
Hinsdale, IL
Mortgage Balance due: 1,322,207
Zillow Zestimate: 1,166,700

Likely that you could acquire this property for less than $1,000,000.  Could be an opportunity if you are one of the school district focused buyers in Hinsdale.

 

Michael Hobbs, September 29, 2011

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Distress Doesn't Just Mean Foreclosure

For many property owners and real estate professionals, the term distressed real estate is most typically associated with Foreclosures. For some some, the term is also associated with short sales or even bank-owned properties, possibly REOs. But for many property owners, distress is also showing up as onerous property tax bills. Yes, that's right. Distress can also the experience of having much greater operating costs for a given piece of real estate than might otherwise be the case.

Most recently, Chicago and Cook County announced that property taxes are once again on the rise, this time by slightly less than 3%. Granted, 3% may seem harmless, but spread across all property in Cook County and that little 3% translates into $300 million dollars according to a recent article I came across in the Sun Times.

Therefore, while distress to many may mean foreclosure, or short sale, or bank-owned, don't overlook onerous property taxes on a given property. The more an area has suffered from economic decline, and therefore almost assuredly a concurrent drop in property values, the area likely suffers from a growing property tax burden which further disadvantages an area due to the higher percentage of property taxes as a percent of the total market value of the property.

I guess you could say 3% amongst friends isn't much if you are one of the top 3% income earners in the county who really are not affected by such small changes. For the rest of us, every dollar counts and obviously Cook County is counting on taking more of your hard earned income away from you.

Michael Hobbs, September 28, 2011

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Distress Doesn't Just Mean Foreclosure

For many property owners and real estate professionals, the term distressed real estate is most typically associated with Foreclosures. For some some, the term is also associated with short sales or even bank-owned properties, possibly REOs. But for many property owners, distress is also showing up as onerous property tax bills. Yes, that's right. Distress can also the experience of having much greater operating costs for a given piece of real estate than might otherwise be the case.

Most recently, Chicago and Cook County announced that property taxes are once again on the rise, this time by slightly less than 3%. Granted, 3% may seem harmless, but spread across all property in Cook County and that little 3% translates into $300 million dollars according to a recent article I came across in the Sun Times.

Therefore, while distress to many may mean foreclosure, or short sale, or bank-owned, don't overlook onerous property taxes on a given property. The more an area has suffered from economic decline, and therefore almost assuredly a concurrent drop in property values, the area likely suffers from a growing property tax burden which further disadvantages an area due to the higher percentage of property taxes as a percent of the total market value of the property.

I guess you could say 3% amongst friends isn't much if you are one of the top 3% income earners in the county who really are not affected by such small changes. For the rest of us, every dollar counts and obviously Cook County is counting on taking more of your hard earned income away from you.

Michael Hobbs, September 28, 2011

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Palatine Foreclosure Opportunity

 

For those that think foreclosures are only old, run-down properties...possibly here is an alternative from Bardan Azari.

Per the Cook County Assessor, this house is 4 years old, had over 3,000 square feet of living area and nearly 1/4 acre of land.

Granted, it is not new, never-lived-in, but it is almost-new.

623 N. Franklin, Palantine, IL, 60067

623 N. Franklin, Palatine

Properties in the area according to Zillow are going for more than $500,000 but this one might go for a less...especially since the first mortgage is about $450,000 and was last sold in 2005 for $690,000 per redfin.

And besides, it's a nice looking house.

 

Michael Hobbs, September 26, 2011

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Glenview Foreclosure Opportunity

 

Depending on who you talk to, there has been a bit of a 'blue-light' special going on in Glenview, to coin a K-mart phrase.  For single family homes built on spec, or those purchased at the top of market in 2007, it is not uncommon to see those end up in foreclosure and get sold at auction for upwards of half of their original sale price.  Hard to believe, maybe.  Actually happening, indeed.

Granted this current opportunity wasn't a new construction one, but it was right off of Wagner Road and Glenview Road just west of Harms Wood, and near GlenView golf course and Chick Evans golf course.

912 Polo Lane, Glenview Illinois 60025

912 Polo

Estimated 2011 Market Value (by Cook County Assessor): 1,663,240

Mortgage debt: $1,864,729

Auction Price, just over $800,000

Impressive purchase by a Cook County Foreclosure Auction buyer.  In speaking with Bardan Azari, manager of Cherry Picker Investments, he said, "that is a nice purchase for someone who wants that location and that sized lot in Glenview."

 

Michael Hobbs September 26, 2011

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