All Forum Posts by: Sean OToole

List services, and property data providers, calculate (estimate) equity using two computer models - value and debt.

First you need an estimate of the property value, commonly known as an automated valuation model, or AVM. The most well known of these is the Zillow Zestimate, but they've been used by banks and others for years. This is also your first point at which some degree of error can be introduced, as AVM's are typically based on public record sales, and public records don't include attributes like view, curb appeal, and other less tangible items that can effect price. AVM's therefore tend to be very good in large subdivisions of homogenous homes with regular sales activity, and get increasingly bad as surrounding homes get more diverse, or there are fewer sales on which to base the estimate.

On the debt side, each loan made against a property is public record, including the loan amount, and often, the basic terms of the loan are available as well. The trick then becomes figuring out which loans are still open and outstanding (using either a model or by sorting through reconveyances, or both), and what the balance on those loans is (not public record at all, can only guess). Where the models have the most trouble is with home equity lines of credit (HELOCs), as that loan could be open and have a zero balance, or the borrower could have used the entire line.

Overall estimated equity is a great tool for narrowing the field to properties that are likely underwater, owned free and clear, fully encumbered, etc, around which many real estate investing strategies, including most creative financing strategies are based.

It was probably a competitor trying to scare you out of the business. ;-)

I personally think having a great real estate attorney is a required part of being in this business. I had mine review my contracts, disclosures... and my marketing efforts. Note that I have typically found that more expensive attorneys cost less. 30 minutes of time from a $500/hr attorney that knows the business cold is a lot cheaper than 5 hours from a $250/hr attorney that has to research everything because they don't know anything.

While I would consult an attorney, I do like @Shaun Reilly 's suggested three sentence reply, and I would limit my response to that. Assuming, of course, that your letter was nothing more than an offer to buy the house. If you were offering to do a short sale and give them cash outside of escrow, or some other nefarious scheme, then you definitely need an attorney.

I was intrigued by the topic of this thread, but having read it, it doesn't seem to have anything to do with "Big Data".

If you combined ever assessor record, every recorder record, every MLS record, every appraiser record, and every property management record in the US for the last 30 years, you're not really in the realm of big data. You could use big data tools for that if you want to, but you certainly don't need to.

Maybe the OP could clarify the goal. Sounds like maybe he was suggesting something similar to what McDash did for lenders - aggregate anonymized loan level data from every participating lender on every loan they made including payment history (still not big data btw). The participating lenders benefited from being able to benchmark their loan performance against others and gain insights on what loans were or were not performing well.

Could be cool for investors as it would give insight into real rates of return, real expense ratios, what product types perform best, vacancy rates by area and product type, lates by area and type, etc.

If that is the goal, I think the primary challenge will be defining a common dataset across real estate investors, and then getting those investors to consistently report their data in that format. There are far fewer loan servicing platforms then property management platforms which simplied the job for McDash. Also took far fewer participating lenders to get to 70%+ of the loan population, so again far easier for McDash. And major lenders likely have much deeper pockets, again making it a far better market.

Given the lack of consistent platform, the large number of investors, their relatively smaller financial interest, and their lesser degree of technological sophistication, my guess is that this idea is not viable at this time as a separate company. If I ran a property management software firm and was getting the data for multiple customers anyway, I would absolutely consider adding a benchmarking feature. Plenty of precedence for this, even quickbooks has some weak features along these lines.

Note that McDash is now owned by LPS, who is now calling themselves "Black Knight Financial". Interesting name choice after their role in robosigning, etc.

I also wouldn't rely on the title company for checking something like this... they are great, but they make mistakes, otherwise there would be no reason for title insurance.

Looks like you are in Pierce County, WA. If so you can do a recorder search yourself online here: https://armsweb.co.pierce.wa.us/RealEstate/SearchEntry.aspx. Try variations on the owners name, as there are sometimes typos in the name, and that won't invalidate the sale. Also this is one of the values of using a foreclosure service, they abstract the address from each notice such that if there is a foreclosure on a property they should have it even if there was a typo in the owner name (typos on the APN and address are a whole separate issue though).

Best,

Sean O'Toole

Founder/CEO

ForeclosureRadar.com is the only service that tracks the daily activity at the courthouse steps in all the states they cover. This includes all postponements, sales, and cancellations. ALL of the other services mentioned here with the exception of CRR that serves So Cal, do not offer that. In addition ForeclosureRadar.com is not a "list reseller" and does not get it's data from either Corelogic or FINIS as stated above. Instead ForeclosureRadar.com abstracts data from the county recorder offices. ForeclosureRadar.com has > 90% market share among trustee sale investors in CA, and is also widely used in AZ, NV, OR, and WA.

Best Regards,

Sean O'Toole

Founder/CEO ForeclosureRadar.com

Hi Derek - I figured you'd be retired now given how well bitcoin has done. Hopefully you didn't listen to me and backed up the truck and bought as many as you could. I certainly should have listened to you on that one. I still don't see how it ends well - a point on which I may be just as wrong. ;-)

Hope you are doing well. Thanks for the nice welcome!

Best bet is to ask the bank and/or trustee. If there is a real deal on the table, they'd typically rather see that through then foreclose. Was less true in years past, but its so politically incorrect to foreclose these days they'll probably give you a little time if you ask nicely, and your reason is legit.

Best,
Sean O'Toole

Founder/CEO PropertyRadar.com (formerly ForeclosureRadar.com)

If you are looking to buy and hold, one great thing to look for in CA is folks that got loan mods between 2009 and 2010. Many of those dramatically reduced payments, far below rents in many cases, yet left the homeowner upside down. With the recent price increases here, many of those are now near equity - though perhaps without enough to sell without a short sale. I'm seeing quite a few investors work with the owners to take over so the owner can move on, through subject-to, wrap, or lease-option deals. One I saw the property rented for $3500, the payment was $1800, and there was $20k of equity the owner would have lost to commissions anyway.

To find these, look for folks that were in foreclosure in 2009, 2010, and whose foreclosure was cancelled (or no NTS after NOD), but the property was not resold (you can do that for free by going to the county recorder and looking at them one at a time). Almost all of these were due to non-principal balance reduction loan mods.

Best,
Sean O'Toole

I got such a surprise on a commercial loan I took last year. An assignment of rents clause is pretty standard, but their's actually read that they could take the rent even if I was making payments.

While you'd have to ask the bank to give you a copy of the note, it should be fairly easy to preview the Deed of Trust or mortgage by just going to your local title company and search for DOT's made by the lender you want to use. Make sure its for a similar loan type (sometimes docs are different for fixed and adjustable, other times its just a rider).

Best,
Sean O'Toole

Founder/CEO PropertyRadar.com

Agree with much said above, including free resources, and checking with your title co. Note that on "absentee" owner, on "non-owner occupied" lists there are two basic approaches to identifying those properties / owners. One is based on whether or not the owner takes the "homeowner tax exemption" that is common in many states and reduces property taxes on owner occupied properties (not by much though). The second is based on whether the owners mailing address is different than the situs (property) address.

Couple of things to note about both approaches. Folks can't take the homeowner exemption on second homes, so in vacation areas, you'll find many of the "non-owner occupied" properties to be occupied by the owner, but just as a second home. You also have to be careful on the different mail address approach as there are areas without home delivery of mail where P.O. boxes are used instead.

Most absentee and non-owner list providers combine both approaches which inflates their lists and makes them worthless in some markets (like vacation areas). Our new product PropertyRadar offer each separately so you can fine tune by using one or both. You can also combine that with about 100 other criteria like equity (good for both free and clear and subject to opps), length of ownership, etc.

Best,
Sean O'Toole