Market Conditions: Zillow Now Lists “Pre-Market” Foreclosure Properties: Good Idea Or Bad?
I know all of you Crib Chatterers are savvy real estate watchers who know where to go to get information in Cook County on properties in distress.
But even for the savvy, finding out information about a property usually means figuring out the PIN number and visiting various different websites until the full story of the property unfolds. There are usually several different steps needed to piece everything together.
But apparently Zillow is fixing all of that.
Two days ago, the real estate web site launched a new feature which will show properties that are in distress but have not yet come onto the market.
They are called “pre-market” foreclosures.
These could be properties that have a lis pendens filed against it or properties where the bank has actually already taken back the deed but has not re-listed it for sale.
From the Chicago Tribune:
Anyone who logs in with a free account will have access to the information, which will also include completed foreclosures that have not been listed for sale.
The homes listed in ‘pre-market’ inventory will be properties where a foreclosure has been filed against the borrower but the action is not resolved. Among the details available for each property will be the address, the date and amount of the original mortgage, the unpaid balance and the dollar amount past due. It also will show the party that initiated the foreclosure action, an estimate of what the foreclosure sales price might be, based on the sales prices of nearby foreclosures, and details of where it is in the process. If the home was previously listed on Zillow as a for-sale home, that picture will be used. Otherwise, there will be a satellite view of the neighborhood.
The borrower’s names will not be listed.
When the additional information was added to the site late Wednesday night, it included 11,000 pre-market single-family homes and condominiums just within the city of Chicago.
It’s one stop shopping for all the properties that are under distress.
Will you be signing onto Zillow just to use this service – at the least, to see how stable a neighborhood or building is where you might be buying? (not to mention looking for future foreclosures that may be coming on the market)
Or will it be an easy way to invade your neighbors privacy? (and don’t tell me you aren’t going to look up your own block to see what is going on there)
Zillow to show homes in foreclosure, before they are listed [Chicago Tribune, Mary Ellen Podmolik, Oct 25, 2012]
I like the new Zillow service. I logged in last night and found dozens of “pre-foreclosures” in Sheridan Road highrises and around the neighborhoods in 60660 and 60626.
It really doesn’t invade anybody’s “privacy” because mortgage borrowers don’t have any privacy anyway. Mortgages, foreclosures, and bankruptcies are public record- you just have to take the trouble to search for them. Right now, you can look up the purchase history of a property- who bought for what price- and what loans the property has against it, as well as information on foreclosure, at Cook County records as most of us know. It just that the new Zillow service saves a lot of labor and time.
I’m not a fan of Zillow. I have found their Zestimates to be way off for downtown properties. They count parking spaces with separate pins as units which artificially lowers the estimate. If they can’t get that straight, I wonder how they will get pre foreclosures correct. How will they monitor those who have a lis pendens file but pay up or renegotiate the loan. Remember lots of people stop paying as leverage for a short sale or refi. Many of these properties will never hit the market. I think that for ordinary, unsophisticated buyers, it just give them too many false leads.
A few thoughts:
a) As an owner in a highrise, its a nice easy way to see the health of the building.
b) I’d be less concerned with nosey family members and friends than getting spammed by “foreclosure help” mail or unsolicited offers. Your friends and family likely already know you have financial hardship, or you have told them about your strategic default. I’d be more concerned about some creepy flipper dude knocking on my door during dinner saying “hey, I saw you defaulted on your mortgage. I’ll give you a good deal!”
c) I can see how this would be helpful for bank owned properties. If a bank want to unload some inventory without it ever getting on the MLS, a flipper could find a property through Zillow and approach the bank directly.
d) Zillow has taken a stance that foreclosures sell for less than non-foreclosures. The opposite of Sabrina’s “foreclosures set the market” theory.
“I wonder how they will get pre foreclosures correct. How will they monitor those who have a lis pendens file but pay up or renegotiate the loan.”
They’re using the same public data the rest of us use- but it’s just in one stop shopping.
If you pay up or renegotiate, then you are no longer in distress. How many do that? I’d like to see the numbers. I’m assuming it’s less than 5%. Maybe only 1% to 2%. Anyone know?
Good luck trying to buy any of these. If it’s bank owned you can’t get through to anyone who can talk to you about buying it. The banks will sell them when they feel like it. And if it’s not bank owned the owner has already received dozens of solicitations from realtors who want to help them do a short sale.
Laura: I think it will be especially helpful for those who are interested in buying in a specific building.
There are still mid-rise, courtyard type buildings all over the north side where, if you look closely at the public data, you would find half of the building’s units have lis pendens filed against the units. But how many buyers even bother to check about what is coming down the pike?
With this new service, you can know before you even go look at a property how many in the building are going to have trouble later. It could help buyers avoid troubled buildings.
Sure, this data is cool, I like data.
However, I renew my view that most of the market doesn’t care too much about foreclosures, and that they don’t have that negative of an effect on the rest of the market.
I think its a fairly useless feature with the exception of those looking to do a short sale, might help them find a few more buyers
If you pay up or renegotiate, then you are no longer in distress. How many do that? I’d like to see the numbers. I’m assuming it’s less than 5%. Maybe only 1% to 2%. Anyone know?
I’m on the board in our high-rise and we track these. Right now, about 40% of units that ever had a lis pendent are ever foreclosed upon. Most owners have renegotiated and reified. The rest of our building is healthy (no investments, 30% or less rental, good reserves) and owners are just not paying to negotiate a short sell or refi. Very few ever make it to foreclosure. I know several well to do owners to were successful at this tactic. They had a lis pendens filed and were able to negotiate with the bank for a refi with better interest rate. When they got it, they paid the outstanding balance and a small negotiated down penalty. The interest rate on the new loan was better. I think recently banks have become more amenable to short sales and refis in good areas and buildings. For this reason, I don’t think that using pillow will even tell you the health of the building. It may actually show the opposite (sophisticated owners who are forcing the banks hand).
Oh, and Gary is correct — good luck getting most of these. I’ve been in market to purchase short sales and foreclosures as rentals. The only ones I’ve been able to scoop are those that need complete rehab (bank is not interested in keeping these on the books). The banks sell when they choose and are increasingly looking to sell in bulk to private equity/hedge funds and other LLCs. I have a former banking friend who runs a fund and he can access units that I, an ordinary buyer, cannot.
I see a bunch going to auction. Any idea who is going to these auctions? Investment firms? Individual buyers? They don’t advertise these auctions / properties going to auction so I can’t imagine there being much interest from individuals
Won’t there be a release of the lis pendens in the ccrd database?
Banks don’t have much of a reason to sell when they can keep these properties on their books, inflating their value internally, and making it look like their portfolio is worth much more than it’s actually worth.
“Banks don’t have much of a reason to sell when they can keep these properties on their books, inflating their value internally, and making it look like their portfolio is worth much more than it’s actually worth.”
That’s incorrect. Banks definitley do not want these properties on their books.
“The banks sell when they choose and are increasingly looking to sell in bulk to private equity/hedge funds and other LLCs. I have a former banking friend who runs a fund and he can access units that I, an ordinary buyer, cannot”
Right, the plan is to do SFH rentals. Buy 4,000 homes, rent them out, securtitize the rental payments and sell to main street to recoup invesment. Sound familiar? The only issue right now is determing the prepayment risk. Nothing exists to model off of and you know a lot less about renters thatn you do about folks with mortgages.
“Zillow has taken a stance that foreclosures sell for less than non-foreclosures. The opposite of Sabrina’s “foreclosures set the market” theory.”
So has most of the market.
Oh and this place is borning lately. I think it’s a sign that market has turned.
boring, that is…
“Inquisitive (October 26, 2012, 11:31 am)
I see a bunch going to auction. Any idea who is going to these auctions? Investment firms? Individual buyers? They don’t advertise these auctions / properties going to auction so I can’t imagine there being much interest from individuals…”
I am not certain what you mean about “a bunch going to auction”? Every foreclosure which is not settled ends in a judicial sale which is an auction, and public notice of a sort is given. I don’t know how active the Illinois court sale market is since a successful bidder (other than the lender) is obligated to deposit 10% at auction & must pay balance within 24 hours. That seems difficult to do blindly since you don’t know whether borrower might pay up or go BK before sale and owners are not required to assist prospective purchasers who want to do due diligence (ie determine interior condition etc). I have seen cable TV shows about real estate cowboys blindly bidding at court auctions in Phoenix AZ – does anyone know if Cook County foreclosure sales attract more buyers than a few years ago?
I totally agree with Laura & Sabrina. Why should only the biggest traders have access to accurate listing info, and get to cut the best deals?
http://blogs.wsj.com/developments/2012/10/02/new-york-firm-to-buy-fannie-foreclosures/
“The facts are friendly, every bit of evidence one can acquire, in any area, leads one that much closer to what is true.”
Zillow is all-around clueless when it comes to condos.
“Zillow is all-around clueless.”
I fixed that for you.
“does anyone know if Cook County foreclosure sales attract more buyers than a few years ago?”
City of Chicago SFH/condo/TH Foreclosure Auctions % of REO (those that went to bank)
1Q2010 95.2%
2Q2010 94.3%
3Q2010 95.6%
4Q2010 95.1%
1H2011 92.4%
2H2011 94.0%
1H2012 90.8%
Cook County SFH/condo/TH Foreclosure Auctions % of REO (those that went to bank)
1Q2010 95.8%
2Q2010 95.0%
3Q2010 96.4%
4Q2010 95.7%
1H2011 93.1%
2H2011 94.5%
1H2012 92.3%
Thread hijack…sorry…but it’s tangential to topic.
I stopped paying my mortgage 5/2010 (layoff hardship). Balance $240K (incl fees). Bank waived right to file personal deficiency judgement in exchange for reduced redemption period. Cook county Judge approved. Sheriffs auction was this past August and it sold for $40K to 3rd party investor. I approached investors and purchased for $52k all cash via my 401K.
Before closing I spoke to 2 attorneys who said this was kosher and I was safe. Still transferring title into land trust because I’m a little paranoid. Comps in my hood are between 80k-120k so I’m very happy.
Did I screw Freddie Mac? Yes. Do I care? No.
2 questions:
(1) Why didn’t the bank buy my condo back at the foreclosure auction?
(2) Is it standard in cook county for judges to NOT allow banks to pursue personal deficiency judgements?
What say ye?
I’m on the board of our HOA and this is helpful for keeping track of what’s going on with our owners, especially the ones who are majorly delinquent and claim they’re also not able to pay their mortgage (according to Zillow they’ve been paying). I’m sure that in some places it will be a good tool for the average buyer, but not in the larger markets where investors are getting the first pick of the best stuff.
Sabrina, I noticed all those in midrise and courtyard buildings, which leads me to something else I notice.
I walk around Edgewater and Rogers Park a lot, and I can tell you that Zillow hasn’t captured nearly all the distressed condo properties in the area. I see many buildings that were converted and/or rehabbed late in the Rampage that are now mostly empty, often with building permits still pasted to the windows, yet these places aren’t on the Zillow map. I count at least a half dozen buildings in Rogers Park alone that appear to me to be mostly unoccupied, and I really can’t think that these units are not distressed- in foreclosure or pre-foreclosure.
I’m thinking in particular of a double courtyard building in the 1400 block of W Lunt, right next door to the Heartland Cafe, for you Rogers Park readers who might know anything about the place- two attractive pale brick courtyards joined together. The south building appears to have only a half-dozen or so occupied units. One 3rd floor unit at 1434 was on the market for a long time, then either sold or was taken of. I checked recent sales and did not see it.
So there is much more distressed property, I believe, than Zillow was able to capture. Anyone who is serious about a particular place might want to spend a couple of hundred extra dollars and have an attorney do some discovery on the building to see just how many delinquencies, foreclosures, and liens against the association a building has before buying. It could save many thousands of dollars in surprise costs down the road.
Based on my own recent experience, going to the “sheriff’s sale” (which btw no longer actually takes place at the Cook County Sheriff’s office) is an exercise in futility. There may be a list of dozens or even hundreds of properties on the “auction list” but only a few are actually put “on the block.”. Really frustrating when they announce “no more bids today,” after you sat there all morning waotoing for one specific place to be offered.
Does anyone here know the “secret” to a successful bid at one of these sales?
“I’m thinking in particular of a double courtyard building in the 1400 block of W Lunt, right next door to the Heartland Cafe, for you Rogers Park readers who might know anything about the place- two attractive pale brick courtyards joined together. The south building appears to have only a half-dozen or so occupied units. One 3rd floor unit at 1434 was on the market for a long time, then either sold or was taken of. I checked recent sales and did not see it. ”
regarding that specific property, I know for a fact it was on the market as a commercial bulk sale about a year ago (for around 50k a unit), not sure what happened with it
Thank you, Sonies! That is interesting info. Was just over at Zerohedge reading how hedge funds and other large investors who bought these bundles of REOs are now looking for an exit. I wonder how many of these properties will make it back onto the market by next year’s selling season.
“Oh and this place is borning lately. I think it’s a sign that market has turned.”
Vlajos- the market “turned” 6 to 8 months ago. Where have you been?
There’s just nothing on the market because everyone else is still underwater and can’t list. The market turning and prices going up are two different things. The “market” will be “boring” for the next decade. That’s what a normal housing market is. Boring.
“There’s just nothing on the market because everyone else is still underwater and can’t list. The market turning and prices going up are two different things. The “market” will be “boring” for the next decade. That’s what a normal housing market is. Boring.”
Almost everything in this statement is wrong.
All_cash:
Congratulations and nicely done – you did exactly what large borrowers routinely do (they focus on buying bank position @ similar discount before sheriff sale to save on costs)! I defer to HD re how often CC judges allow borrowers off the hook re personal deficiency judgment – iirc it’s very common to release borrowers from 1st mtge liability but far less common to release borrowers from personal liability re 2nd + mtges (HD??)
The bank decided it was better to take the loss immediately in full on your loan rather than kick the can down the road – they had an ability to credit bid at sheriff’s sale (ie bid any amount up to the judgment amount at no cost) but bank would then incur new exposure to liability for anything that happened before or during their ownership along with cost of managing, maintaining and selling your unit down the road.
In the past 12 months, prices seem to be going up but only due to the lack of inventory. I know of a SFH in Evanston that went on the market on Friday for $500 that had an accepted offer by Saturday before there was even an open house. Same thing is happening in Park Ridge and specific neighborhoods in the city. It’s pricing more of the middle class out especially out of good school districts. However, in areas where there’s lots of distressed inventory, prices are not and should not be going up at all. If anything they will go down more as more of them come to the market in the next 12 months.