by Bill McBride on 8/01/2008 03:32:00 PM
Friday, August 01, 2008
For the last few years lenders have been bidding the amount they were owed at foreclosure sales on the court house steps. Since the lenders were usually owed far in excess of the current property value, almost all foreclosure sales went to the lender. This is a typical court house steps sale (just 37 seconds):
However, recently, some lenders have changed tactics and are now bidding less than what they are owed. Realtor Jim Klinge presents these recent examples:
2629 Wilson St., Carlsbad $647,785 owed, $394,273 opening bid (39% off) HSBCUnfortunately the lenders aren't publishing these lower bids in advance, but this will definitely attract more investors to the court house steps! Jim writes:
2916 Rancho Brasado CSB $868,112 owed, $690,914 opening bid (20% off) U.S. Bank
7071 Cordgrass, Carlsbad $1,541,249 owed, $880,000 opening bid (43% off) WaMu
3570 CallePalmito, CSB $1,756,702 owed,$1,425,500 opening bid (19% off) Wachovia
[If] banks publicized their opening bids weeks in advance, they could build some momentum at the court house and blow out their inventory with very little in closing costs, and no liability.This is definitely bringing out some investors (flippers). In the following video, Jim's client purchased this house for $444,125 and sold it for $525,000 in about one month. The lender was owed $631,523.
This property was purchased at the steps of the county court house on 6/19/08, put back on the market for sale the next day, and closed on 7/29/08 for $525,000.
This is a significant change in lender tactics.