All Forum Posts by: Frank Z

Originally posted by "**********":

As of May, one in every 483 U.S. households either lost the home to foreclosure, or received a default notice of default.

Many cure the notice of default. But yes, the situation is bad and foreclosures nation wide are up 48% from may last year.

1 in 483 != 1 in 11. Off by a magnitude of about 44x.

I read that AP doom and gloom, too, flipper.

I love this little bit of chicanery:

So the headline number is that they are up 48% nationwide. But in 20% of states, they are actually down from last year. Interestingly, those states are not mentioned or highlighted. Neither are the states where the rate is about the same. Only the worst states are highlighted. I'd love to know the number excluding Nevada, California, Arizona, Florida and Michigan.

Also, 48% sounds really bad. But think about that number. 1 in 483 is .2% (.002) of homes. Annualized, that's 2.4% (.024). Not good, but hardly the all-out meltdown they'd have you believe.

Then there's this:

Bubble areas...bubble burst. The article also goes on to say (although they also do this in the negative) that 40-50% of those who are foreclosed on don't lose their homes because they're able to sell or refinance.

The real number that matters is mentioned at the very bottom of the article.

Keep in mind that, of that 1.23% about half will cure the default no harm no foul.

Again, not good for a lot of folks, but the sky is really not falling. In fact, when the financial press starts to jump on the bandwagon on anything it's always a sign that it's already mostly over.

Originally posted by "dafly":

If they are right about 1 in 11 homes in some state of foreclosure then that means on my short stint to the highway that I pass at least 3 homes that are in some state of foreclosure.

I didn't see 1 in 11 homes being in some state of foreclosure. I saw this:

Big difference. Loans aren't houses, houses can have multiple loans, and trouble isn't foreclosure.

Originally posted by "tiredout":

seems to me that its the usual spring fever buyers?

Wouldn't the whole "seasonally adjusted" thing take care of those expected blips?

From one Frank to another, thanks for your guidance.

I should have been more clear about "ruining my relationship" with the agent. We have no personal relationship beyond a "Hello" when seeing each other around town. I worked with her in buying my first residence 10 years ago. She has been working in the foreclosure realm for many years, her agency gets a lot of the distress property listings in the area, and she has expressed willingness to slip me leads before they hit the public realm. She knows I'm green, and I don't want to ruin my chance to be known as reliable.

Point taken, though. This is about me and my ability to make money now. The future will take care of itself, and I need to focus on the present situation. I have a tendency to think too many steps ahead. I think it's one of the ways I talk myself out of success, and I will work on that.

Thanks for the other investigative and salesmanship advice, too. Just what I needed to hear.

Long story short, I'm looking into my first foreclosure purchase to rehab and flip. This is all hypothetical because I don't even know if I'll be making an offer yet.

Potential property is listed with an agent I'm friendly with. I know she can't give me much information on the seller's situation. This hasn't gone to the sheriff sale yet, so I have no hard number what's owed. Luckily all mortgages deeds and tax liens are online in my county for pennies a minute to access so I have a rough idea.

Purchased for 46,000 in 1983 (41,000 mortgage). That Mortgage was paid off with a 2005 86,000 refinance ARM at 9.125% that got adjustable last November. Just spit balling (assuming she's 60 days late and paying penalties as such), I can't see her owing much less than 85,000 after 28 payments.

I haven't been inside the house yet (it just came on my radar this morning and I did a drive by to make sure the roof wasn't caving in and the windows weren't falling out), so I have no idea on repairs.

Even the worst houses in the area are going for 150,000-160,000 on the actual retail market. She's asking 180,000. That's not going to happen with me on a foreclosure flip in a soft market.

My question is this: When I pin down mathematically what she owes (and get a title search done to make sure there's nothing I missed), how low can I go without getting blown off and ruining my relationship with the agent?

Say she does owe 90,000 and it also needs some repair. Am I a jacka** if I offer $110,000 or 120,000?. She gets a nice chunk of change even after commission and tax despite her bad financial decisions, and I take on a property that needs repairs in a depreciating market. How about $100,000?

I don't want to pay too much just to save someone's feelings or maintain a friendly relationship with the agent, but I also don't want to come across as a low balling joker either.

Do you guys totally disregard the asking price when determining the offer?

Forget REI. As a responsible homeowner living within his means this bailout makes me irate.

Originally posted by "biggerpo":

My guess . . . if we don't see the bubble pop in oil before GW is out of office, the second the next president takes over (or is elected), we'll see things come back to reality. Once the traders know that we're in for a bit of stability (no more war mongering), we'll see a good drop.

Anyone else?

The average price of a gallon of gas was $2.30 when the short bus rolled into Capitol Hill in 1/2007. Of course traders are comfortable trading it up since then - they know no one's going to do anything about increasing domestic supply.

If people aren't allowed to harvest energy supply, of course rising demand will cause rising prices. I don't know why everyone is so shocked that age old basic supply and demand rules are in still in effect. It's the most basic of economic laws.

Maybe Barry Hussein can ring up Mr. Chavez and buy him a beer. That'll fix it. Please Mr. Dictator, lower your prices. Kumbaya foreign policy sure worked for Carter.

No wait, I know. Let's use the food supply for fuel. Brilliant.

I was in the USO (US Oil Fund) ETF for a while, but after going nuts trying to figure out the taxes I just sold it. My luck - this year it would have been worth the trouble. :cry:

Originally posted by "ncarey":

You forgot capital gains tax. :cry:

Actually there are a LOT of taxes not mentioned.

I've been pretty active in the stock market for the past couple years. You can be SURE I didn't forget Capital Gains Tax :D I was mainly going for listing the ones that were "hidden" (taken from pay / included in other payments) to make the point.

Originally posted by "ncarey":

People think they are in the 25 or 36% tax bracket when in reality they pay much more in taxes. AND everything you buy is more expensive because of the tax burden of the product producer. The compound effect of taxes is a phenomenal drain on the economy.

It really is unbelievable if you think about it. I guess that's why most people are more than happy not to.

As someone who is finally feeling somewhat competent to dip his feet into the REI waters, I find this kind of "nuts and bolts" information very helpful (and encouraging).