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Please, take my house

By , Wednesday, July 9, 2008.

With preforeclosures getting mixed in with listings at sites like Yahoo! Real Estate and Trulia, bargain hunters may be disappointed to find that many properties that turn up in search results aren't actually for sale, and the dollar amounts that accompany these properties may represent a borrower's indebtedness instead of an asking price (see story).

While you may not be able to buy a home in Miami Beach, Fla. or Hermosa Beach, Calif. for less than $100,000 -- despite what your initial search results at a listing site might lead you to believe -- that doesn't mean you can't pick up a house in a place like Detroit for less than a realtor's commission. That's right -- the sales price on some properties may actually be less than what the realtors on both sides of the transaction collect in commissions.

Working on another story this week, Detroit broker Jan Bond told me he'd recently handled a closing where the home sold for about $1,000, and the buyer's agent and listing agent each earned $1,500. That's $3,000 in commissions paid on a $1,000 sale. How does that work, you ask?

Bond specializes in real estate owned properties, and some lenders who are trying to get homes off of their books pay a minimum commission of $1,500 to agents on each side of the transaction, he said. When you consider the potential costs associated with owning a foreclosed property -- taxes, maintenance, legal liabilities -- it makes sense that in some instances, banks would be willing to take a loss to get rid of a property (on top of whatever money they're losing on the defaulted loan). Unlike a homeowner, a bank can't just walk away from a home (although Bond said he'd heard of one instance where a lender was trying to "donate" an unwanted REO property to the city). Bond thinks that if banks were smart, they'd up their minimum commissions so brokers and agents could do more to market their low value properties.

So how often do minimum commissions come into play? With a standard 6 percent commission, the minimum Bond described would kick in when the sale price is $50,000 or less. There are quite a few properties out there in this category. Head over to the REO Web page of troubled alt-A lender IndyMac Bank, and you'll find nearly 300 properties the lender has repossessed and is asking $50,000 or less for.  There are more than 50 homes priced at $10,000 or less -- most of them in depressed communities in Michigan such as Detroit. Countrywide Home Loans' REO department has more than two dozen houses on the market with list prices of $1,000 or less in Detroit alone, about 300 in Michigan priced at $20,000 or less, and nearly 500 under $50,000 in the Great Lakes State.

The cheapest property on IndyMac's books is a three bedroom, 1,216 square foot manufactured home in Davisburg, Mich. offered at $1,800. Another typical bargain basement property is the 1,400 square foot, brick three-bedroom in Detroit pictured above. Built in 1927, the asking price is $2,800. 

The good news? That other story I was talking to folks in Detroit for was about a report from PMI Mortgage Insurance Co., which projects a reduced risk for price declines in Detroit and other markets that didn't see runaway appreciation during the boom. PMI calculates the chance that prices will be lower in a given market two years from now, and sees a reduced risk of that happening in 326 of the 381 metropolitan statistical areas (MSAs) analyzed (see story).  

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Submitted by Richard Johnston on July 9, 2008 - 9:59pm.

Anybody who moves to Los Angeles has what I call a 'Sticker Shock'. This is when they ask what a typical 3/2 is selling for in the San Fernando Valley. I say its around $400K.

There response is, "Do you know what I can get in ______ for $400K?"

Sincerely,

Richard M. Johnston, GRI, ABR, e-Pro
RE/MAX OTB ESTATES
BANK OWNED SPECIALIST - REO
800-820-8924 Toll-Free
818-730-4128 Direct (Mobile/Text-SMS)
818-989-4992 Fax
Richard@estates.la
http://www.estates.la
http://estatesla.blogspot.com/

 
Submitted by on July 10, 2008 - 4:04pm.

It is a shame that some of the big sites are using properties that are in default and displaying them as actual properties for sale. A little confusing for the consumer.

Jeff Manson
American Dream Realty
46 Hoolai St.
Kailua, Hawaii 96734
808-792-7040
Personal: Hawaii real estate agent
Company: Hawaii real estate search

 
Submitted by Richard Soto on July 15, 2008 - 5:04pm.

Jeff, most people will advertise or do whatever they feel necessary to acquire leads. Its pretty sad.

Site: San Antonio real estate

Blog: San Antonio real estate blog

 
Submitted by Todd Hutcheson on July 18, 2008 - 4:04pm.

I bet that PMI report would have most areas in Florida still being at risk in two years.

Market is still going down despite what you hear in the media. Higher priced homes are selling so the average is higher, but the same home is less than it was last year.

Todd Hutcheson
www.SellOrlandoHomeFast.com

 
Submitted by on July 18, 2008 - 5:31pm.
Todd, here's the link to the PMI report. They only give the 50 biggest MSAs so can't say whether they project "most areas in Florida still being at risk in two years." But six of PMI's 14 riskiest markets are in Florida. As noted in the post above, PMI "projects a reduced risk for price declines in Detroit and other markets that didn't see runaway appreciation during the boom." Many markets in Florida definitely saw runaway price appreciation during the boom. A big reason PMI sees reduced risk of price declines in two years in 326 of the 381 MSAs they analyzed is because prices have already come down in many of those markets. Doesn't mean prices have stopped falling, or the risk is gone.

 
Submitted by Ki Gray on July 26, 2008 - 1:43am.

For properties where commissions are higher than the sales price I wonder if agents are buying any of these properties. It seems a tempting way to make some quick cash.

Site Austin real estate.
Search Austin MLS

 
Submitted by Glenn Ginsburg on March 3, 2009 - 10:25am.

In my market place the short sales list price are running in some cases at 50 percent of the appraised value. IMHO - this presents a incorrect view of the real estate market. As well as, being misleading to the public, because the agent(s) will not present the offer to the lender(s) for approval.

Glenn Ginsburg
A Delta Realty
Bonita Springs
Bonita Bay

 
Submitted by oliva barnand on June 11, 2009 - 3:32am.

Commission key aspects in real estate but all depends on hurry of selling, just need is lead.
Real estate Florida Real estate Tampa bay Condos Florida

 
Submitted by john cann on June 24, 2009 - 8:22pm.

wow this amazing that there is that many houses in the detroit area for this price. You would link that the agents would go ahead and buy them and sell in the furture for a big profit.
boulder mortgage

colorado springs mortgage

 
Submitted by Cheema Seema on August 16, 2009 - 11:47pm.

My house is just outside the town of Vineyard Haven. Our neighborhood is very scenic, in a wooded, country-lane kind of way, even though there is so much traffic on our country lane in the summer that you can't actually take a stroll on it. Take a stroll on it and you will be sideswiped by a Jeep Cherokee driven by a seventeen year-old boy from Greenwich who was absent the day in Driver's Ed they learned that driving while stoned, and "hit and run," are in fact bad things 000-974 exam.

Our house is an old farmhouse, and it has three bedrooms and two bathrooms, except the shower in the upstairs bathroom doesn't work 1Y0-259 exam. The shower per se works, but if you use it water streams from the ceiling down below into the living room, and then you have to stick a bucket underneath to catch the water 1Y0-456 exam. It's like living in a Frank Lloyd Wright house, only with much lower property values. So please limit yourselves to the downstairs
shower. Thanks!

 
Submitted by Brandom wright on August 18, 2009 - 3:01am.

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Take My House, Please
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So I'm sitting in traffic here on Martha's Vineyard, trying to get downtown to buy those turquoise-colored poison pellets to kill the mice that drop their tiny doo-doos all over my kitchen counters, and it hits me, bonk!, like the apple on Mr. Isaac Newton: The Obamas can have my house! You can have my house Best Real Estate Business!

My house is just outside the town of Vineyard Haven. Our neighborhood is very scenic, in a wooded, country-lane kind of way, even though there is so much traffic on our country lane in the summer that you can't actually take a stroll on it Real Estate Agent. Take a stroll on it and you will be sideswiped by a Jeep Cherokee driven by a seventeen year-old boy from Greenwich who was absent the day in Driver's Ed they learned that driving while stoned, and "House For Sale," are in fact bad things.