Mammoth Lakes Foreclosures
This blog post is long overdue! We have been very busy with selling foreclosures these past six months but are now in a lull, so it is finally time to write about what our real estate market has been doing in Mammoth Lakes, CA. Let's start off with some statistics for Mammoth condos and homes since 1/1/08:
- Total # of foreclosed properties sold in Mammoth Lakes: 26 condos and 5 homes (with 4 more condos in escrow)
- Total # of foreclosures as a % of total sales: 13.5% for condos and 10% for homes (foreclosures do not account for a high volume of sales as they do in many other areas of the state where they account for over 50%.
- Current # of foreclosure listings in Mammoth: only 2 condos (out of 290 total) and 1 commercial building.
- Average time on market for foreclosures: 95 days for condos and 37 days for homes (this includes time in escrow - so the 5 homes sold as soon as they were listed) vs. 153 days for fair market condos and 184 days for fair market homes.
- Average sale price as a % of original list price: 88% for condos and 97% for homes (vs. 87% for fair market condos and 84% for fair market homes).
The appetite for these REO's has been high and there are still plenty of buyers with good credit and cash who are snapping them up quickly. Though they are not a majority of our sales, REO's definitely have affected list prices. Even if the property you want is not a foreclosure, it can be a tool to negotiate your offer if there has been a foreclosure nearby.
This first rash of foreclosures came to an abrupt halt over the Dec '08 holidays as banks, asset management companies, REO agents and, more importantly, homeowners in default, needed a break. We were surprised when we would start getting emails from asset managers (who initially act as the 'seller' of the property before they get upper mgt approval from the bank) over weekends.
The word on the street is that the foreclosure pipeline will be ramping up again very soon and will probably produce more REO's than 2008. Most foreclosures have been localized to the new condo-hotel-like projects that were launched before the peak of the market in late '05 / early '06. The lucky ones flipped (sold soon after they bought) right at the peak. The unlucky ones bought at the peak with the same intent but got caught without any buyers to complete the flip. 18 of the 58 short sale and foreclosure properties (31%) were/are at Intrawest-built projects (The Village, Solstice, Cabins, Juniper Springs Lodge, Sunstone, Eagle Run). We may even see some at the new Westin Monache in 2009 and even more at the Village.
RE/MAX of Mammoth's involvement
Our broker was prescient enough to pay attention and go after foreclosures way before the first one was listed. He encouraged us to watch the local paper for notices of default, attend auctions at our escrow building, and to read articles and blogs about short sales and foreclosures. Listing foreclosures is the tough part - the main REO listing agent in our office must network with banks, attend their training classes, transfer utilities into her name, convince tenants to move out, hire contractors to fix up damage, change locks, and then when the property gets listed and into escrow...train other agents how to write and submit the offers, work with many different escrow companies, and finally usually give up some commission back to the asset management company. But now, those of us in the office are reaping the rewards from capturing this niche:
- Total # of foreclosed properties sold in Mono/Inyo counties: 40
- Total # of foreclosures that RE/MAX of Mammoth has represented: 29 listings + 14 sales (54% of the 80 total transaction 'sides')
- Total # of foreclosures that Tara & Dennis have represented: 8 (19%)
Selling foreclosures is a whole different ball game than dealing with normal sales and homeowners. Banks are unemotional and are trying to raise cash quickly, so they are pricing these assets very well. We have learned how banks work and how to write the offers that will get accepted and how to handle the new negotiating and escrow procedures. We are happy to share what we have learned - just call or email us.
A few words on short sales
Because of the recent lull in the REO market, the only apparent 'good deals' on the Multiple Listing Service (MLS) are short sale listings. Seller can list their properties at whatever price they want because it will not be up to them whether it sells at this price or not. Everything is completely up to the bank(s) who have the loan(s) on the property. Short sales have typically not been successful up here because either:
(1) the bank finally approves it 4-8 weeks later and the buyer has since moved on to another property or
(2) because the seller does not qualify for a short sale, meaning they do not qualify for 'hardship', however the bank defines it.
I am currently negotiating three short sales - one went very quickly, one took 4 weeks for bank approval and the other is in week 2 of waiting for bank approval.
Out of 290 condos listed on the market today, 17 are listed as short sales (6%) and 6 more have offers accepted by the sellers but are awaiting bank approval. Short sales can be good deals, but only 3 have successfully closed escrow since the downturn. So if you want to make an offer on a short sale listing, be patient but also keep watching for new listings while you are waiting for bank approval.
When you search online for listings or get a listing handout at a real estate office, be sure to read the fine print or ask about the 'listing type' - short sales may show up as "SSL" (vs. the traditional "RLA" - residential listing agreement). Sellers and their agents should sign a 'short sale listing' addendum when the property is listed for less than what is owed on it.
Overall Market
In this economy, most everyone is suffering. It is interesting how often I hear people asking the once-taboo question, 'how is your business doing?' There is a Obama-esque feeling that we're all in this together and we need to keep discussing and processing the pains and sufferings of those homeowners who can no longer afford payments due to a pay cut, loss of a job, high medical bills or a high interest-only loan that sounded good at the time. Up in Mammoth, most properties being foreclosed upon are investor-owned who tried their hand at flipping or who relied on claims of higher rental income. What a lesson we are all learning.
The flip side is that there are good buying opportunities now and even greater buying opportunities soon ahead. If you are interested, register your name with us so that you get our email blast for the latest foreclosure listing. And also be sure to check our www.MammothLakesForeclosures.com website frequently (which we update any time there is a change).
Most of our clients right now are skiing families who have a kid or two on the Mammoth ski team who come up about 3 weekends per month during the ski season. They assign importance to getting in the car and having forced quality time with their kids on the car ridge up and back. And they get to ski, sled, ice skate and hang out in their mountain condo/home together as a family.
-Dennis C. & Tara P.