This Expert says " the feds are out of bullets" so far as having more things to do to help the economy. It appears to her that there will be a major correction sometime early next year. As you watch this video draw your own conclusions.
A lot of her facts and conclusions are hard to refute. The points about the big state and their troubles(debts)that will contribute to more job losses, is scary. After watching this you cannot help but feel that maybe the administration is headed in the wrong direction. Like James Carvel, during the Clinton election, said " It's the economy stupid". Well it is for certain and the folks know that for sure.
Well, when the consumer fails to spend for fear of bad times ahead, then I can only say that it a Leadership issue or rather a lack of leadership( from our President). If confidence is lacking with the American people...well the "buck stops"(and starts) with the President.
Tuesday, December 8, 2009
Sunday, December 6, 2009
Tom, "Your Great Home" deal guy find some super Chico deals
Northern California real estate deals are showing up on a regular basis. More and more high end homes are now in trouble, as a new wave of non sub-prime loans home owners are underwater. This is bad news for the owners but a great chance for investors/home buyers to buy premium properties at very low prices. Investor and home buyer are finding some of the best buys in Chico, California. These homes in Canyon Oaks are a small sample of whats out there.
ck this video out --
Fast sales in this gated community with a beautiful Golf course and club house have shown that even in a down market buyers are willing to pull out their check books for a good deal.
If you are intrested you should move fast as these homes tend to sell rather quickly. New homes are showng up every day on the market as owners bail to save their credit taking the short sale route to save something, so contact me if you'ed like to take a look see.
ck this video out --
Fast sales in this gated community with a beautiful Golf course and club house have shown that even in a down market buyers are willing to pull out their check books for a good deal.
If you are intrested you should move fast as these homes tend to sell rather quickly. New homes are showng up every day on the market as owners bail to save their credit taking the short sale route to save something, so contact me if you'ed like to take a look see.
Saturday, December 5, 2009
Moody's: Option Arms show "Dismal Performance!"
The total count of Option ARMs outstanding are highly concentrated among a few states. California, having a large[er] number of troubled home(TARP) loans, would make you think that more distressed "homes for sale", will soon be in your local MLS. The upper priced homes in Chico will surly be in play ,if this trend hold any longer... Contact you realtor for "Good deals".
[The Option ARM] sector shows “dismal” performance, with more than 40% of borrowers 60 or more days past due on payments. And many of these loans have yet to experience a recast event, when initial minimum monthly payments jump as much as 60%, according to sources interviewed by HousingWire for an upcoming issue.
“Even though borrowers with Option ARM loans have the option to make monthly payments typically lower than the accruing interest on the loan, many borrowers are choosing a different option–not making any payment at all.”
...
Negative equity is a key driver of weak performance — as well as a more predictive measure of default than unemployment — particularly among Option ARMs.
...
Negative equity is a key driver of weak performance — as well as a more predictive measure of default than unemployment — particularly among Option ARMs.
“There is little hope that most of these [delinquent] borrowers will start making payments again if no principal is forgiven,” Moody’s said. “Forbearance does not eliminate the obligation to repay the loan principal, it only delays it. And many delinquent borrowers are potentially so far underwater that it would take close to a decade for them to attain any positive equity in their home.”
For their borrowers, modifications that lower the interest or extend the term, just delay the inevitable - and really makes the borrowers into renters.
[The Option ARM] sector shows “dismal” performance, with more than 40% of borrowers 60 or more days past due on payments. And many of these loans have yet to experience a recast event, when initial minimum monthly payments jump as much as 60%, according to sources interviewed by HousingWire for an upcoming issue.
“Even though borrowers with Option ARM loans have the option to make monthly payments typically lower than the accruing interest on the loan, many borrowers are choosing a different option–not making any payment at all.”
...
Negative equity is a key driver of weak performance — as well as a more predictive measure of default than unemployment — particularly among Option ARMs.
...
Negative equity is a key driver of weak performance — as well as a more predictive measure of default than unemployment — particularly among Option ARMs.
“There is little hope that most of these [delinquent] borrowers will start making payments again if no principal is forgiven,” Moody’s said. “Forbearance does not eliminate the obligation to repay the loan principal, it only delays it. And many delinquent borrowers are potentially so far underwater that it would take close to a decade for them to attain any positive equity in their home.”
For their borrowers, modifications that lower the interest or extend the term, just delay the inevitable - and really makes the borrowers into renters.
Friday, December 4, 2009
Northern California Home owners grab new Loan Modification
Many North state Chico Home owners in an effort to modify mortgages are heading into overdrive in a bid to make sure that having received trial loan modifications can have that workout made “permanent.” Very few , if any, to date have been able to qualify for a permanent loan modification.
So far, most criticism on the Home Affordable Mortgage Program, i.e., HAMP, has centered on why so few borrowers with trial modifications are converting into permanent modifications. The common refrain from loan servicers is that they haven’t been able to get paperwork from borrowers to help finalize the loan modification — important because servicers get paid for each mod, and need to prove that borrowers actually face hardship.
But at ForeclosureRadar’s blog, Sean O’Toole raises a different, potentially more problematic issue: “Permanent” loan modifications last for only five years. He posits that reason for the low uptake of the loan modification program:
Maybe borrowers have figured out that this program is really only another exotic mortgage like one they fell prey to when they bought or refinanced the house that resulted in their current predicament. HAMP and the administration’s newly announced campaign isn’t digging borrowers out of a hole. It’s only digging them a new one, and delaying the inevitable.
To be sure, the five-year period tries to give borrowers a lifeline—a chance to get their life back on track. In five years, the thinking behind the plan goes, more borrowers may be financially whole again, able to make their mortgage payments, or, if housing prices have stabilized, some may be able to refinance or sell their homes.
But what about those borrowers who have loans modified who aren’t ever going to be able to afford their higher payments, which is what they’ll have to pay after the five-year modification expires? Are loan mods just creating a new batch of loan resets and delaying the inevitable foreclosure for borrowers who bought too much home, or who were sold a loan that they didn’t understand and couldn’t afford? Mr. O’Toole is blunt in his criticism:
The new hole offered by HAMP is all the downside with none of the upside.
The downside: exotic re-financing, by which they make payments affordable today, but leave homeowners in the same boat down the road when payments ratchet back up after 5 years.
The bonus downside: there is no reasonable expectation that home values will appreciate anywhere near enough to get these loans above water before the 5 years is up, or before the homeowner runs into a real life event like job loss, divorce or job relocation — leaving them stuck in an upside down prison of debt.
The column in today’s NYT by Floyd Norris raises the same prospect, while offering a little more leeway to the administration. While he writes that it’s “conceivable that this process is doing more to drag out the foreclosure crisis than to alleviate it,” he adds:
“[P]erhaps we should not be too critical of anybody involved in the modification effort, either the administration or those trying to arrange modifications. The mess was made years ago, when bad loans were made and the ready availability of credit was driving house values to unsustainable levels. Cleaning it up is not going to be a pleasant experience for anyone.”
So far, most criticism on the Home Affordable Mortgage Program, i.e., HAMP, has centered on why so few borrowers with trial modifications are converting into permanent modifications. The common refrain from loan servicers is that they haven’t been able to get paperwork from borrowers to help finalize the loan modification — important because servicers get paid for each mod, and need to prove that borrowers actually face hardship.
But at ForeclosureRadar’s blog, Sean O’Toole raises a different, potentially more problematic issue: “Permanent” loan modifications last for only five years. He posits that reason for the low uptake of the loan modification program:
Maybe borrowers have figured out that this program is really only another exotic mortgage like one they fell prey to when they bought or refinanced the house that resulted in their current predicament. HAMP and the administration’s newly announced campaign isn’t digging borrowers out of a hole. It’s only digging them a new one, and delaying the inevitable.
To be sure, the five-year period tries to give borrowers a lifeline—a chance to get their life back on track. In five years, the thinking behind the plan goes, more borrowers may be financially whole again, able to make their mortgage payments, or, if housing prices have stabilized, some may be able to refinance or sell their homes.
But what about those borrowers who have loans modified who aren’t ever going to be able to afford their higher payments, which is what they’ll have to pay after the five-year modification expires? Are loan mods just creating a new batch of loan resets and delaying the inevitable foreclosure for borrowers who bought too much home, or who were sold a loan that they didn’t understand and couldn’t afford? Mr. O’Toole is blunt in his criticism:
The new hole offered by HAMP is all the downside with none of the upside.
The downside: exotic re-financing, by which they make payments affordable today, but leave homeowners in the same boat down the road when payments ratchet back up after 5 years.
The bonus downside: there is no reasonable expectation that home values will appreciate anywhere near enough to get these loans above water before the 5 years is up, or before the homeowner runs into a real life event like job loss, divorce or job relocation — leaving them stuck in an upside down prison of debt.
The column in today’s NYT by Floyd Norris raises the same prospect, while offering a little more leeway to the administration. While he writes that it’s “conceivable that this process is doing more to drag out the foreclosure crisis than to alleviate it,” he adds:
“[P]erhaps we should not be too critical of anybody involved in the modification effort, either the administration or those trying to arrange modifications. The mess was made years ago, when bad loans were made and the ready availability of credit was driving house values to unsustainable levels. Cleaning it up is not going to be a pleasant experience for anyone.”
Chico Homes for Sale: Creating A Business Model from the Current Distressed Asset Marketplace
Many savey North State investors are buying/Investing at unbleavable bargin prices in one of Northern California best Real estate market. One of the hottest cities is, Chico California,home of CSU and Enloe hospital. However, as my dad use to say there is more than one way to skin the cat.
This following interview provides a great(Business model)way for investors to make the most of this market:
Mosca: As you know, every downturn and recovery offers opportunities for investors to adapt and respond to the economic conditions. Investing in distressed assets presents what is perhaps the best investment strategy in most of our lifetimes. Do you agree?
Walker: The opportunity to purchase property is greater than it has ever been. The opportunity for an increase in values is there. The opportunity to buy low and hold the properties for a period of time and see a increase is better than it has ever been at least in the last 20 years or so.
Verhaaren: I agree with Blaine that there is a market window now that probably hasn’t been seen for 20 years. Last time there was something comparable was when the Savings and Loan crisis happened and the Federal Government set up the RTC, Resolution Trust Corporation, to liquidate assets from the failed Savings and Loans Institutions. Today, there are a lot of similarities with the banking community. We all know of the bailouts that have taken place over the last year with the Federal Government and the large banks, but there are a lot of community banks, over 100 at last count, that have failed, too. Once these banks fail, the FDIC ends up like the RTC with the assets and have to do something with them. The FDIC has several channels that they have been using to liquidate these assets. We’ve spent the last 12 months acquiring assets through these channels. The FDIC is hoping that by bringing in professional management to take an interest in these pools that ultimately the recovery for the FDIC and the taxpayer will be higher. We have participated in all of those channels.
Mosca: When you talk about professional management, you are talking about gentlemen like yourselves who have access to the assets and are getting them to institutional and entrepreneurial investors. Investors from across the globe can get their hands on investments like this, right?
Verhaaren: That’s correct. To bid on the structured sales you have to go through a qualification process. We and others have done that. Once you become qualified, you can bid and participate in these structured sales in what I have referred to as these managers. Once you are qualified, you are qualified to be a manager of these large pools. You then as a qualified manager bid at auction and the pools go to the highest bidder at that point but you have to participate through a qualified manager. We have bid on 3 separate pools and we use funds from investors that we have aggregated as the source of capital to acquire the assets.
Mosca: If I can, Blaine, is the bottom line here that if you are not in a position like Rob’s company and yours to get direct access, you can now -- because of this show -- have access to these investments because we are introducing our audience to companies like yourself that are now in the disposition process of these assets?
Walker: We are involved in a pool that was originally about $1.1 billion on the retail side for the total value of the loans. We’ve taken all of those loans and put them on a virtual deal room site [click on the ‘Best of Times’ picture at IncomePropertyInvestmntTalk.com]. So far we have liquidated about $125 million in loans on a wholesale basis. There is an opportunity for an investor to come on the virtual deal room and bid on individual assets or bid on multiple assets, at least on the notes themselves. We are also in the process of reducing a lot of those notes to REOs and we have over 300 of them currently in REO process or being modified so that we can also sell them in an auction type situation.
Mosca: Scott, you have extensive experience in dealing with REOs. What is your take on today’s marketplace? Some argue that all investments today are distressed. What is your take on the market?
Griffith: There is certainly pressure on community banks. At this stage as they are trying to write down their loans to match up with their capital requirements and getting tremendous pressure from the FDIC to protect them, there are great opportunities as properties go into distress either before or after the bank takes possession. We formed a company called Rescue, LLC that goes in and consults with banks and helps them reposition their assets prior to taking them over. The banks decide whether or not they should take them over or find another way to outlet them at a remarkable price compared to the rest of the open market because they don't want to take them on their books. They don't want to hold reserves to match up with them. We are finding that over the last two years prices continue to go down because essentially they are creating oversupply in the marketplace and with the other pressures such as jobs it’s just opening up the market to tremendous opportunities for the investor to get in at great prices.
Mosca: I wrote in a recent blog that just because a deal is labeled a ‘deal’ doesn’t make it so. Do you agree?
Griffith: Exactly. The market has changed. This is not the time to be watching. It is using an old paradigm to try to decide on your investment now. You need to look at in today's market conditions and looking toward the future, not toward the past.
Walker: Scott makes a good comment when he said you have to look to the future. You can still use good investment philosophy and look at a property that’s currently performing and look at those properties to make sure that all of the fundamentals are in place. The thing that has changed drastically is the old cap rates that dropped down into the five to six percent range have now come back into the 8, 9, 10, and 12 percent cap range. The market has changed drastically because of the tremendous increase we saw for three or four years but it has now settled back down so you have to go back to the fundamentals in the housing market. As an example, you have to look at what the income levels are, the affordability index, what can people really afford to buy, and we got away from that with a lot of the financing mechanisms that were put in place and allowed for people who didn't have the income ratios, didn't have the job history to get into houses that they probably shouldn’t have been in.
Griffith: As the bank’s realize that their mortgage worth is under stress, they are starting to have to look at the value of the traditional model of going out and having an appraisal in the file and relying on it since the market is trending down with pricing. The banks are forced to reevaluate; they are calling up brokerages for help. This is a great opportunity for the investor because many of these properties are in a stage where they are in transition, being dissolved, possibly turning over, or maturing. The opportunity exists for an investor to go in and actually partner with the bank or attempt to work with the bank to help get it off their books before they actually have to take it on their books. There are some great opportunities to try and get in between the transaction early in the process and keep the bank from having to take title.
Mosca: Rob, Scott offered many different, powerful ways to take advantage of these opportunities. From your perspective, in terms of valuating and pricing, is there more to it than just price alone?
Verhaaren: One thing I hear spoken about all the time is, “I bought this for “x” cents on the dollar.” That’s not necessarily the way to look at it. It’s interesting and it makes it for a good story but is that from the peak of the market, is that from what the owner paid for it, or is that from what the bank lent on it? What’s important now is what it is worth now. To get to that is a time consuming process. My partner likes to say we are in the information business, not really in the real estate business. The more you know, the more data you have, the more information you have on the market and the surrounding area the better off you are going to be in terms of having the information you need to make a good buy. It is not always obvious. It’s very difficult to understand multiple markets in multiple areas. It’s important to focus on a particular area, gain as much market information as you can, and that will put you in a position to better understand value.
Walker: As start looking at any of these assets you need to be aware that real estate is unique. You need to focus on the type of property. Location and type of property are critical. You may buy a house for $5,000 to find out that you paid $20,000 too much because the house has to be torn down, it’s in an area where you have to maintain it and pay the taxes on it, you have to do the clean up, etc. As an investor you need to decide what type of property you want to be investing in. An investor has to be wise in what they are doing. It’s a great market out there but you have to take into consideration the type of investment you want to be in, the market you want be in, and the location in that market so that you are buying wise. The fundamentals in investing haven’t changed. You still need to buy a good property in a good location, you have to make sure it is priced right, if it is an income property you have to make sure that the income stream is good, the renter base is a good, the quality of the tenant, quality meaning credit worthiness, time and business,
Mosca: We live in a DIY society today, but can, or should, investors do all of this leg work by themselves?
Griffith: It’s a time you need to go and find an expert to help you do this. I look at the people trying to seize the opportunities at these auctions and realize that an amazing number of them are not spending the time or not hiring someone to spend the time, and paying more then the market should bear or that they should pay for it given the economy we are in and the situation of the work that may be required to make it an income stream or to make it able to sell to someone else. A lot of education is necessary. It’s just like when you build a home; you don’t expect to save all the money that a builder would make on the project because they built many homes. The same is true if you don’t do your homework and go into one of these transactions and try to buy them. You are going to have to learn your lessons in the hard knocks.
Walker: My basic philosophy is you make your money when you purchase the property and what Scott said is you seek out expert help. Even as we look at properties, when we want to bid on these FDIC packages, we use experts in the various areas where the property is located, real estate licensees, realtors within the area that are experts in that area to help us evaluate the property values.
Mosca: Are BANK REO transactions any longer than the typical transaction or is timing and negotiation similar to your standard real estate transaction?
Griffith: It is going to depend a whole lot on the sophistication and the preparation the bank has done for the getting rid of the property. Many of the banks have what they call special ‘asset groups’ but the truth be known, they are learning their way through the process. They haven’t had the opportunity in many cases even to write the asset down to where the value should be so they are faced with the dilemma of being in a position of negotiating on what probably is the fair price and they should be getting rid of it and getting it off their books and dealing with the consequences of having to go back to the bank and explain to federal regulators why they took a loss from where they carried it on their books. That has a huge impact upon the timing. If they have it on their books at the correct pricing for where you are, it should look like every other transaction you do. If they have to go back and play some politics internally, it’s going to stretch out the process
This following interview provides a great(Business model)way for investors to make the most of this market:
Mosca: As you know, every downturn and recovery offers opportunities for investors to adapt and respond to the economic conditions. Investing in distressed assets presents what is perhaps the best investment strategy in most of our lifetimes. Do you agree?
Walker: The opportunity to purchase property is greater than it has ever been. The opportunity for an increase in values is there. The opportunity to buy low and hold the properties for a period of time and see a increase is better than it has ever been at least in the last 20 years or so.
Verhaaren: I agree with Blaine that there is a market window now that probably hasn’t been seen for 20 years. Last time there was something comparable was when the Savings and Loan crisis happened and the Federal Government set up the RTC, Resolution Trust Corporation, to liquidate assets from the failed Savings and Loans Institutions. Today, there are a lot of similarities with the banking community. We all know of the bailouts that have taken place over the last year with the Federal Government and the large banks, but there are a lot of community banks, over 100 at last count, that have failed, too. Once these banks fail, the FDIC ends up like the RTC with the assets and have to do something with them. The FDIC has several channels that they have been using to liquidate these assets. We’ve spent the last 12 months acquiring assets through these channels. The FDIC is hoping that by bringing in professional management to take an interest in these pools that ultimately the recovery for the FDIC and the taxpayer will be higher. We have participated in all of those channels.
Mosca: When you talk about professional management, you are talking about gentlemen like yourselves who have access to the assets and are getting them to institutional and entrepreneurial investors. Investors from across the globe can get their hands on investments like this, right?
Verhaaren: That’s correct. To bid on the structured sales you have to go through a qualification process. We and others have done that. Once you become qualified, you can bid and participate in these structured sales in what I have referred to as these managers. Once you are qualified, you are qualified to be a manager of these large pools. You then as a qualified manager bid at auction and the pools go to the highest bidder at that point but you have to participate through a qualified manager. We have bid on 3 separate pools and we use funds from investors that we have aggregated as the source of capital to acquire the assets.
Mosca: If I can, Blaine, is the bottom line here that if you are not in a position like Rob’s company and yours to get direct access, you can now -- because of this show -- have access to these investments because we are introducing our audience to companies like yourself that are now in the disposition process of these assets?
Walker: We are involved in a pool that was originally about $1.1 billion on the retail side for the total value of the loans. We’ve taken all of those loans and put them on a virtual deal room site [click on the ‘Best of Times’ picture at IncomePropertyInvestmntTalk.com]. So far we have liquidated about $125 million in loans on a wholesale basis. There is an opportunity for an investor to come on the virtual deal room and bid on individual assets or bid on multiple assets, at least on the notes themselves. We are also in the process of reducing a lot of those notes to REOs and we have over 300 of them currently in REO process or being modified so that we can also sell them in an auction type situation.
Mosca: Scott, you have extensive experience in dealing with REOs. What is your take on today’s marketplace? Some argue that all investments today are distressed. What is your take on the market?
Griffith: There is certainly pressure on community banks. At this stage as they are trying to write down their loans to match up with their capital requirements and getting tremendous pressure from the FDIC to protect them, there are great opportunities as properties go into distress either before or after the bank takes possession. We formed a company called Rescue, LLC that goes in and consults with banks and helps them reposition their assets prior to taking them over. The banks decide whether or not they should take them over or find another way to outlet them at a remarkable price compared to the rest of the open market because they don't want to take them on their books. They don't want to hold reserves to match up with them. We are finding that over the last two years prices continue to go down because essentially they are creating oversupply in the marketplace and with the other pressures such as jobs it’s just opening up the market to tremendous opportunities for the investor to get in at great prices.
Mosca: I wrote in a recent blog that just because a deal is labeled a ‘deal’ doesn’t make it so. Do you agree?
Griffith: Exactly. The market has changed. This is not the time to be watching. It is using an old paradigm to try to decide on your investment now. You need to look at in today's market conditions and looking toward the future, not toward the past.
Walker: Scott makes a good comment when he said you have to look to the future. You can still use good investment philosophy and look at a property that’s currently performing and look at those properties to make sure that all of the fundamentals are in place. The thing that has changed drastically is the old cap rates that dropped down into the five to six percent range have now come back into the 8, 9, 10, and 12 percent cap range. The market has changed drastically because of the tremendous increase we saw for three or four years but it has now settled back down so you have to go back to the fundamentals in the housing market. As an example, you have to look at what the income levels are, the affordability index, what can people really afford to buy, and we got away from that with a lot of the financing mechanisms that were put in place and allowed for people who didn't have the income ratios, didn't have the job history to get into houses that they probably shouldn’t have been in.
Griffith: As the bank’s realize that their mortgage worth is under stress, they are starting to have to look at the value of the traditional model of going out and having an appraisal in the file and relying on it since the market is trending down with pricing. The banks are forced to reevaluate; they are calling up brokerages for help. This is a great opportunity for the investor because many of these properties are in a stage where they are in transition, being dissolved, possibly turning over, or maturing. The opportunity exists for an investor to go in and actually partner with the bank or attempt to work with the bank to help get it off their books before they actually have to take it on their books. There are some great opportunities to try and get in between the transaction early in the process and keep the bank from having to take title.
Mosca: Rob, Scott offered many different, powerful ways to take advantage of these opportunities. From your perspective, in terms of valuating and pricing, is there more to it than just price alone?
Verhaaren: One thing I hear spoken about all the time is, “I bought this for “x” cents on the dollar.” That’s not necessarily the way to look at it. It’s interesting and it makes it for a good story but is that from the peak of the market, is that from what the owner paid for it, or is that from what the bank lent on it? What’s important now is what it is worth now. To get to that is a time consuming process. My partner likes to say we are in the information business, not really in the real estate business. The more you know, the more data you have, the more information you have on the market and the surrounding area the better off you are going to be in terms of having the information you need to make a good buy. It is not always obvious. It’s very difficult to understand multiple markets in multiple areas. It’s important to focus on a particular area, gain as much market information as you can, and that will put you in a position to better understand value.
Walker: As start looking at any of these assets you need to be aware that real estate is unique. You need to focus on the type of property. Location and type of property are critical. You may buy a house for $5,000 to find out that you paid $20,000 too much because the house has to be torn down, it’s in an area where you have to maintain it and pay the taxes on it, you have to do the clean up, etc. As an investor you need to decide what type of property you want to be investing in. An investor has to be wise in what they are doing. It’s a great market out there but you have to take into consideration the type of investment you want to be in, the market you want be in, and the location in that market so that you are buying wise. The fundamentals in investing haven’t changed. You still need to buy a good property in a good location, you have to make sure it is priced right, if it is an income property you have to make sure that the income stream is good, the renter base is a good, the quality of the tenant, quality meaning credit worthiness, time and business,
Mosca: We live in a DIY society today, but can, or should, investors do all of this leg work by themselves?
Griffith: It’s a time you need to go and find an expert to help you do this. I look at the people trying to seize the opportunities at these auctions and realize that an amazing number of them are not spending the time or not hiring someone to spend the time, and paying more then the market should bear or that they should pay for it given the economy we are in and the situation of the work that may be required to make it an income stream or to make it able to sell to someone else. A lot of education is necessary. It’s just like when you build a home; you don’t expect to save all the money that a builder would make on the project because they built many homes. The same is true if you don’t do your homework and go into one of these transactions and try to buy them. You are going to have to learn your lessons in the hard knocks.
Walker: My basic philosophy is you make your money when you purchase the property and what Scott said is you seek out expert help. Even as we look at properties, when we want to bid on these FDIC packages, we use experts in the various areas where the property is located, real estate licensees, realtors within the area that are experts in that area to help us evaluate the property values.
Mosca: Are BANK REO transactions any longer than the typical transaction or is timing and negotiation similar to your standard real estate transaction?
Griffith: It is going to depend a whole lot on the sophistication and the preparation the bank has done for the getting rid of the property. Many of the banks have what they call special ‘asset groups’ but the truth be known, they are learning their way through the process. They haven’t had the opportunity in many cases even to write the asset down to where the value should be so they are faced with the dilemma of being in a position of negotiating on what probably is the fair price and they should be getting rid of it and getting it off their books and dealing with the consequences of having to go back to the bank and explain to federal regulators why they took a loss from where they carried it on their books. That has a huge impact upon the timing. If they have it on their books at the correct pricing for where you are, it should look like every other transaction you do. If they have to go back and play some politics internally, it’s going to stretch out the process
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