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Short Week is L-O-N-G on results!!!

Investors are helping our economy. As we talked about yesterday, someone needs to help push the housing market in the right direction. It looks like we are having an impact, albeit small. With enough success pulling properties from bank inventories, we will assuredly help forward progress!

In just 3 days at just 3 auction sites, 18 properties were sold to 3rd party bidders. And again, Cherry Picker Investment clients were among the successful!!!!

The properties sold were:

Cook County

4901 Hollywood Drive Country Club Hills Winning Bid: $ 54,900

510 Sunset Ave La Grange Winning Bid: $249,000

1475 Rebecca Dr #112 Hoffman Estates Winning Bid: $ 18,000

360 W. Illinois #410 Chicago Winning Bid: $150,000

15530 Calypso Orland Park Winning Bid: $140,500

2625 N. Clark #1006 Chicago Winning Bid: $62,100

3073 Kingston Ct Streamwood Winning Bid: $ 26,000

4012 S. Indiana Ave #4S Chicago Winning Bid: $ 46,801

3425 W. Shakespeare #2B Chicago Winning Bid: $ 15,000

115 N. Dover #18 Chicago Winning Bid: $ 17,000

984 Crabtree #203 Prospect Heights Wining Bid: $ 29,751

Dupage County

6412 Halsley Dr Woodridge Winning Bid: $ 92,300

2335 S. Main St Lombard Winning Bid: $ 37,000

835 Wheatland Aurora Winning Bid: $ 87,800

Lake County

13 E. Washington St Round Lake Park Winning Bid: $ 23,072

1524 Greystone Dr Gurnee  Winning Bid: $176,000

1935 Strenger Lane Riverwoods Winning Bid: $127,683

McHenry County

1823 Kings Gate Lane Crystal Lake Winning Bid: $139,293


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Do you know you own 31% of foreclosed homes?

In September 2011, there were roughly 800,000 homes that had been repossessed, still in inventory. Of those 800,000, 248,000 were inventory for the federal goverment due to government backed mortgages through Fannie Mae or Freddie Mac. That means that 31% of Real Estate Owned (REO) properties were actually owned by US taxpayers. This is an alarming number. However, maybe even more alarming is the fact that the federal government issued a plea to you, yes you, to come up with a solution for handling and unloading the properties. See below:

Request for Information:
Enterprise/FHA REO Asset Disposition
The Federal Housing Finance Agency (FHFA), in consultation with the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development, is issuing this Request for Information (RFI) to solicit ideas for sales, joint ventures, or other strategies to augment and enhance Real Estate-Owned (REO) asset disposition programs of Fannie Mae and Freddie Mac (the Enterprises) and the Federal Housing Administration (FHA). The agencies are exploring alternatives that will facilitate the current and future disposition of REO, improve loss recoveries compared to individual retail REO sales, help stabilize neighborhoods and local home values, and where feasible and appropriate, improve the supply of rental housing.

This doesn't instill a whole lot of confidence. While certain private sectors may be more capable of dealing with strategy, certainly no one has any experience with the magnitude. The biggest issue in unloading the properties is that it cannot all be done at once. Economics 101 tells you that if supply is up, price goes down. 
So by opening the flood gates and letting the properties be expelled all at once, you are actually driving down the price. This certainly would not bolster this cardinal market sector nor even bandage the economy. However, if they are slowly released, the burden also rests on the taxpayer. Who do you think pays for the maintenance of the vacant homes, taxes, etc. Good guess, you do.

So, it remains to be seen, but the options ain't pretty. We need some truly ingenious taxpayers to come to the table. I wonder if they would be wililng forgive your government-backed debt in exchange for procuring a solution.

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Do You See What I See?

Depending on where you focused your attention this Fall season of 2011, you either are excited about the Chicago Bears, distraught that the BCS rankings haven't favored your team, upbeat the the Chicago Cubs may yet land a talented replacement to lead the team, pleased that the Chicago Blackhawks are first in their division, surprised that Mayor Rahm Emmanuel got his first budget passed with a unanimous vote, or concerned that the pace of foreclosures is increasing as we move into a typically slower time of year.

Then of course, you may be thrilled that distressed real estate, namely bank-owned property and foreclosure activity, is providing a greater opportunity for owner-occupant buyers, investment buyers, rehabbers, developers and even investors to acquire houses, 2-4 flats, mutli-family buildings, commercial properties and even vacant land at near-unbelievable prices.  No matter what you were focusing on this Fall, the market for distressed properties exists and is not showing signs of going into hibernation.

From our vantage point, you may not see what we see.  Nothing wrong with that.  Yet, for those that are focused on foreclosures, bank-owned homes, short-sales, REOs, OREO properties and note sales, there is a strong possibility that this holiday season could bring some eye-popping real estate gifts.

"We are seeing a continuing growth in acquisitions of foreclosures in Cook, Lake and Dupage Counties," said Bardan Azari, Cherry Picker Investments, a foreclosure advisory firm serving cash investors.

So, if by chance you don't like what others see, just close your eyes until, say 2014.  Then maybe open them back up.

Michael Hobbs

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Cook County has led the way in both the quantity of foreclosures and, most likely as a result of its sheer volume, the number of those foreclosures that have been sold to 3rd party bidders at auction. But Cook County bidders are turning the eyes (and wallets) west to Dupage County.  Go where the getting is good! Go West young man! Whatever your mantra,  it would behoove you to take a look. Below is a list of properties sold at the Dupage County Sheriffs sale on November 15, 2011.

ADDRESS                BALANCE DUE         Zestimate           Winning Bid

1208 ORCHARD HILL  $ 283,253              $195,300               $126,700


708 MORRIS CT          $ 359,861              $288,000               $185,230


152 EAST LEE            $ 139,467               $746,800               $163,501


1855 SCARBORO DR    $ 159,513             $181,400               $ 97,029


4515 BLACKHAWK#101 $ 104,569           $ 94,300                $ 25,100


124 BYRD CT              $ 389,893              $454,700               $198,821


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Something to Ponder...

If you are tired of mulling over your financial situation, take a break for a moment and consider this. Time Magazine asked Bill Clinton, "Why are banks and corporations sitting on so much cash?". Regardless of your take on our 42nd president, he's got a point here. "Well, the banks have about $2 trillion in cash uncommitted to loans. They could loan in theory, at conservative ratios of 10 to 1, $20 trillion. Obviously if that happened, the recession would be over in 15 seconds. Pepperdine did a study showing that 40% of the small businesses said they would expand their operations and hire more people if they could get credit.  We've got to clean those bank books up. Right now, everybody's frozen. And by far, the biggest thing we could do is to have a more aggressive move on the home mortgage problem."

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Cook County Results Are In!!

Today alone, 9 properties were sold to 3rd party bidders at one auction. That is a record for as long as I've been keeping track. That is roughly 10% of the properties that were being offered at that particular sale. Only the future can substantiate its meaning. However, many banks are utilizing appraisals to set the bids for their properties. Appraisals offer an independent opinion of value were the property to sell on the open market. As we all know, today's market is quite different than 2007. Appraisals therefore offer a much more realistic approach than trying to reclaim the total debt amount. Nobody goes for that these days. We've all had the rug pulled out from beneath us. We want a deal! Today 9 people got a deal, and CPI clients were among them. The below properties were sold to 3rd party bidders today, along with their respective sale price.

2819 N. Nagle Chicago $120,501

4235-37 S. Calumet Chicago $26,396

440 N. Wabash #1408 Chicago $120,800

5821 W. Roscoe Chicago $123,000

5400 W. 90th Oak Lawn $56,101

841 Forestview Park Ridge $129,500

538 Manor Circle Schaumburg $53,000

600 S. Park Streamwood $95,217

157 W. Manchester Wheeling $54,001

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Year-end Doesn't Bring End To Foreclosures

Recently the total foreclosure activity in Illinois was announced, and although the numbers are lower than one year prior, they are clearly not about to end any time soon.  For those in the housing market seeking an end to the onslaught of distressed housing and declining prices, here was hope that 2011 would bring an end to morass and a fresh start in 2012.  So while 2012 will start a new year, the pace of foreclosures is not going to slow to a trickle.

What does all that mean?  "We foresee significant buying opportunities for real estate investors in Chicago and the surrounding suburbs," said Bardan Azari of Cherry Picker Investments.  Given the quantity of new foreclosure filings, the sun-setting of the robo-signing debacle, and the extended duration of typical foreclosure cases in judicial states, there is little comfort for a quick end to the foreclosure mess, instead it is more like a slow burn, heart-burn that is.

"As banks and lending institutions recognize that it is much more advantageous to unload their distressed real estate inventory at a foreclosure auction, we expect that the market can gain some traction due to the improvement in the turn-cycle of distressed inventory.  The worst thing that can persist is for banks to continue foreclosing on properties and keeping them in their REO inventory.  Everybody loses," said Bardan Azari.

So, for those already looking ahead for new year resolutions, it seems that 2012 is your next opportunity to acquire foreclosed real estate in Northern Illinois because one day soon (in the grand scheme of things) this too will be gone.

Michael Hobbs, November 12, 2011

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