Real Estate Investors: How To Search For “Diamonds in the Rough”

If you're a real estate investor in the DC metro area including Loudoun County, you're most likely looking for the "diamonds in the rough" in the local area that will provide you with the greatest future return on your investment. Well, thanks to FranklyMLS.com and Jeff Royce, author of Our Fairfax, there is a good tool available to real estate investors looking for potential "diamonds in the rough" and a video tutorial on how to go about using it.

In a nutshell, it works by comparing the asking price to the assessed value of properties for sale. The greater the difference between the two, the more chance there is of the property being a great deal and investment.

You can narrow down your search by the type of property, price range and geographic area all the way down to a specific subdivision by using keywords. You can also search for only REOs or short-sales or only one or neither.

To see how it works and how to do it, check out Jeff's video tutorial on his blog, "Our Fairfax".

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Happy Turkey Day!

Fannie Mae Suspending Foreclosures Through January 2009

Fannie Mae just announced that it will be suspending foreclosure sales through January 9, 2009 in order to focus on its streamlined modification program, which it announced on November 11. 

Here's an excerpt from the press release:

"The temporary suspension of foreclosures is designed to allow affected borrowers facing foreclosure to retain their homes while Fannie Mae works with mortgage servicers to implement the streamlined modification program scheduled to launch December 15. Foreclosure attorneys and loan servicers will be instructed to use the additional time to reach out to borrowers who have defaulted on their loans and continue to pursue workout options. The initiative applies to loans owned or securitized by Fannie Mae.

The streamlined modification program is aimed at the highest risk borrower who has missed three payments or more, owns and occupies the primary residence, and has not filed for bankruptcy.

Fannie Mae will be working with foreclosure attorneys and servicers to reach out to the more than 10,000 borrowers the company estimates would be affected during this period. Borrowers who have Fannie Mae loans that are scheduled for foreclosure between November 26, 2008 and January 9, 2009, will be contacted directly by the attorney handling the foreclosure. If the home is occupied, Fannie Mae has instructed servicers and attorneys to suspend the foreclosure."

This is good news for the most troubled of home owners with Fannie Mae loans. This is also good news for the future of the foreclosure real estate market should some of these folks work out their loans and avoid foreclosure because it will help diminish some of the future bank-owned/foreclosure real estate market inventory. Though how much of an effect it will truly have is yet to be seen.

Hat tip to RealEstateZebra.

Foreclosure Freeze “Icing” Loudoun Real Estate Market

President-Elect Obama said he wants to put a 90-day moratorium on foreclosures once he takes office, but Countrywide/BoA, Chase and Citi aren't waiting until January 20 to start "freezing" foreclosures. The effect of this is already being felt in Loudoun County as less new foreclosure/bank-owned properties are coming on the market.

For example…I just did a search for active bank-owned and short-sale town home listings in Ashburn Village and found that over 90 percent of them were short-sales. The ratio has recently been about 60/40 (foreclosures to short-sales)

One effect of this is that buyers will be further frustrated with the purchase of a home. Short-sales take 3, 4 sometimes 6 months for a response and only about 20 percent get approved so they work for only a select few buyers that have that kind of flexibility and patience. With the rising number of short-sales and diminishing number of foreclosure listings and traditional resales on the market, buyers are left with less "real" inventory to choose from than they have in years.

(Short-sales are not "real" listings in my book because the seller doesn't even know if the short-sale will be approved by the bank while listing the property)

What will happen when the "freeze" ends? We'll see more foreclosure properties hitting the market once again. As much as this may sound like a bad thing, it's actually a good thing. We have to get through the bank-owned property inventory one way or another before we can see the market rebound. Plus, it will give buyers more "real" inventory to choose from.

Countrywide Cancelling Short-Sales and Freezing Foreclosures

Countrywide announced that they are cancelling many short-sales already in process and freezing foreclosure sales until further notice. This will affect a number of folks including…

1. Home-owners about to try to negotiate a short-sale with Countrywide
2. Home-owners in the middle of negotiating a short-sale with Countrywide
3. Buyers waiting for approval from Countrywide on their offer on a short-sale listing
4. Buyers will have less inventory to choose from due to the freeze on foreclosures (post about this topic coming shortly)
5. Real estate agents/brokers who get some or most of their business from Countrywide in the form of foreclosure listings

In my humble opinion, this will only delay the inevitable and prolong the recovery process. Getting through this inventory is necessary in order to move on and get to better times that lie ahead. But I don't have a great tan so who am I to speak…