Lennar Corporation, the nation's third-largest builder, made headlines in February with their winning bid on 5,200 homes in a distressed mortgage offering. Lennar's $243 million winning bid secured a 40-percent stake in real estate loans with an average balance of $555,000 with 90 percent of the assets non-performing.
According to a recent column in The Wall Street Journal, the return on capital should be at least 20 percent, and could be far higher.
Lennar's purchase is noteworthy because the third-largest homebuilder is not building but buying homes. This is a prudent move as Lennar is not committed to the long process of building when the economic outlook of the country is still unsettled. Yet the company is still able to capitalize on today's scarce inventory and sell the newly acquired homes at a premium.
San Diego County has its own flipping-for-profit operation underway. Each day, on the steps of the county courthouse roughly 100 foreclosed homes are auctioned off with about 30 foreclosed homes finding willing buyers.
Many of those homes will be put right back on the market for a profit. The professionals involved have decades of experience in the process and are aware of the risk.
But the reward is great. Investors are securing profits of 30 percent and greater on the resale of these homes.
The professionals have been active at the court steps since early 2009. They confidently bid on these foreclosed homes — mostly because of the current shortage of available housing. The average market time in 2010 for a non-short-sale home is 37 days, down from about 60 days in 2008. Today's homebuyers often come in with low initial offers. But when the listing agent discloses that multiple parties have already offered, buyers raise their bids to secure the home.
Similar to Lennar's cautious optimism, North County homebuyers are fighting hard not to overpay in a newly competitive market. Buyers are looking hard at comparative sales — even after they are already in escrow — just to confirm that their decision was sound.
Homebuyers have been forced into bidding wars due to lack of available property. And buyers are likely to cancel escrow once the thrill of winning wanes and the home's appraisal comes in below their triumphant bid.
There is a glimmer of hope in the luxury home market. Homes priced in the $1.1 million range have seen only a handful of sales each month for almost two years. The oversupply of homes pushed prices down more than 20 percent since 2005. At one point in 2009, there was nearly a two-year supply of luxury homes on the market.
But the number of luxury homes has lessened recently; there remains roughly a 10-month available inventory. Buyers are still securing discounts when negotiating. But as the amount of sellable inventory descends into the six- to eight-month supply range, homeowners can expect to gain ground at the negotiating table, and soon may be back in a position to walk away from a low-ball offer.
Carlsbad short-sale homes remain the constant contradiction, as the average time from offer to closing is 180 days. A short-sale transaction takes longer because the homeowner must get the bank to agree to accept less than what is owned on the property.
Of the 63,850 Carlsbad households that have some type of loan on their home, 6,764 are estimated to owe more than their property is worth. Homeowners that are upside-down should seek educated, unbiased council at the first sign of financial distress. Homeowners are encouraged not to expend any money up front for professional service.
Homeowners facing hardship should talk with an approved, not-for-profit counselor at the U.S. Department of Housing and Urban Development (HUD)
(800) 569-4287.
According to a recent column in The Wall Street Journal, the return on capital should be at least 20 percent, and could be far higher.
Lennar's purchase is noteworthy because the third-largest homebuilder is not building but buying homes. This is a prudent move as Lennar is not committed to the long process of building when the economic outlook of the country is still unsettled. Yet the company is still able to capitalize on today's scarce inventory and sell the newly acquired homes at a premium.
San Diego County has its own flipping-for-profit operation underway. Each day, on the steps of the county courthouse roughly 100 foreclosed homes are auctioned off with about 30 foreclosed homes finding willing buyers.
Many of those homes will be put right back on the market for a profit. The professionals involved have decades of experience in the process and are aware of the risk.
But the reward is great. Investors are securing profits of 30 percent and greater on the resale of these homes.
The professionals have been active at the court steps since early 2009. They confidently bid on these foreclosed homes — mostly because of the current shortage of available housing. The average market time in 2010 for a non-short-sale home is 37 days, down from about 60 days in 2008. Today's homebuyers often come in with low initial offers. But when the listing agent discloses that multiple parties have already offered, buyers raise their bids to secure the home.
Similar to Lennar's cautious optimism, North County homebuyers are fighting hard not to overpay in a newly competitive market. Buyers are looking hard at comparative sales — even after they are already in escrow — just to confirm that their decision was sound.
Homebuyers have been forced into bidding wars due to lack of available property. And buyers are likely to cancel escrow once the thrill of winning wanes and the home's appraisal comes in below their triumphant bid.
There is a glimmer of hope in the luxury home market. Homes priced in the $1.1 million range have seen only a handful of sales each month for almost two years. The oversupply of homes pushed prices down more than 20 percent since 2005. At one point in 2009, there was nearly a two-year supply of luxury homes on the market.
But the number of luxury homes has lessened recently; there remains roughly a 10-month available inventory. Buyers are still securing discounts when negotiating. But as the amount of sellable inventory descends into the six- to eight-month supply range, homeowners can expect to gain ground at the negotiating table, and soon may be back in a position to walk away from a low-ball offer.
Carlsbad short-sale homes remain the constant contradiction, as the average time from offer to closing is 180 days. A short-sale transaction takes longer because the homeowner must get the bank to agree to accept less than what is owned on the property.
Of the 63,850 Carlsbad households that have some type of loan on their home, 6,764 are estimated to owe more than their property is worth. Homeowners that are upside-down should seek educated, unbiased council at the first sign of financial distress. Homeowners are encouraged not to expend any money up front for professional service.
Homeowners facing hardship should talk with an approved, not-for-profit counselor at the U.S. Department of Housing and Urban Development (HUD)
(800) 569-4287.