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Cruise around Lancaster and Palmdale with Realtor Donna Oehler, and you’ll see a troubling combination: new houses still going up, new houses just hitting the market, and ‘for sale’ signs blooming like wildflowers on the lawns of older homes. Forclosures are mounting, inventory is bloated and sales have slowed dramatically: in the boom, as many as 150 houses would sell in a single day in the Lancaster-Palmdale area; on a recent day, only 30 homes were sold.
As is any Realtor, Oehler is an optimist: ‘I honestly think this is a great time to buy -- as long as you’re not looking to own for just a year,’ she says. ‘You’ve got motivated sellers, and a lot of homes to choose from.’
She wishes unmotivated sellers would take their listings off the market. ‘We’ve got a lot of people who are scared and they are panic selling. They don’t need to sell.’
Then there is her niche: the most motivated sellers -- homeowners in pre-forclosure. She calls up Realty Trac numbers on her computer: 1,127 pre-foreclosures in the area, 188 going to foreclosure auction, and 587 foreclosed and owned by banks. ‘A lot of what I see is 100% financing and they’re defaulting in the first 18 months. To be honest, most of these people shouldn’g have been in these houses in the first place.’
Read on for more, including: Donna’s Short Sales Pricing Strategy and Evidence of Cash-Back-at-Closing Mortgage Fraud Schemes.
Oehler specializes in a difficult niche market: short sales, which take place when a homeowner in danger of foreclosure sells a property -- with bank permission -- for less than the outstanding amount on his mortgage, and walks away without paying the difference. Most realtors avoid short sales -- commissions tend to be lower, starting at 5%, and banks often reject them after weeks of wrangling and paperwork.
“But I like this niche -- I like working with investors (the potential buyers) because they’re not emotionally involved.” But it is hard to attract buyer interest in older homes that haven’t been renovated when builders are offering up to $30,000 in free upgrades in brand new houses. “I’m listing my short sales at 10% below market value just to get people to take a look at them.”
And despite the inventory glut, the big builders are still building. “They’ve slowed down, but they are still building. I haven’t heard of anybody who has stopped building.”
There is a seamy side to real estate in the Antelope Valley. Donna, who tends to represent sellers of existing homes, cites one risk of buying in new developments in a rapidly growing region: you don’t know what kind of neighbors you will have; She says a single investor bought 14 homes in one development and rented them all to low-income tenants who qualified for government-subsidized Section 8 housing -- not necessarily the neighborhood a new home buyer would expect.
Even seamier: outright mortgage fraud. In one scheme, the buyer, posing as an investor who hopes to remodel a house, borrows more than the purchase price to get cash back at closing, but never remodels, never moves into the house, never makes a mortgage payment, and let’s the house go into foreclosure. “I know off the top of my head three properties that are loan frauds,” she says.