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Will New Foreclosures Make Homes Affordable Again - YouTube
Channel: Kristina Smallhorn
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- The foreclosure
headlines have already hit.
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People are talking about
waves of foreclosures
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that are gonna hit the market.
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But what does that really mean for you
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if you're trying to find
a more affordable home?
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Well, today we're gonna
be going over the numbers,
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and I'll be explaining what
this wave of foreclosures
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that the media is reporting,
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actually really means for you right now.
[17]
CNBC comes out with this article
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that says mortgage
services brace for fallout
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as COVID bailout comes to an end
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and they have now extended the
bailout plan one more time.
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Now, granted,
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this has been one of those things
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that have been kicking down the can,
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they just keep kicking it down the road.
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And now I know this is a really good plan
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for somebody that is
having financial hardship,
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but it's also caused a big problem
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with the supply of homes
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that would have been
on the market normally,
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because these people
would have not been able
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to pay for their homes,
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so they would have put
their house on the market
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and now we have a decreased supply.
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There's many other factors as well,
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but this is definitely one of the reasons
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why we don't have a supply of
homes like we normally would.
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And that caused that huge increase
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of home prices through
the past year and a half.
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At the beginning of the forbearance plan,
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there was about 7.2 million
people that participated in it.
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And that represented
about 14% of homeowners
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throughout the United States.
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Well now, it's only about 2.2 million,
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which is still a really high number,
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but it isn't near the amount that,
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the big you saw at the beginning.
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And I will admittedly
say that at the beginning
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of the pandemic,
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when I saw those original numbers,
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I'm like, holy cow, this is bad.
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And I thought we were gonna
see a lot more foreclosures
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hitting the market and
home prices dropping.
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And I happened to be very
fricking wrong about that,
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but I wasn't the only one.
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Suze Orman said it as well.
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So,
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(rustling of clothing)
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Now that they have
extended the amount of time
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that you can apply for the forbearance,
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that means that even at
the end of this month,
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somebody would be able to call
up their mortgage provider
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and say, I need to be
on the forbearance plan.
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And that mortgage company can
give them six to 18 months
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without having to pay a mortgage.
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Those payments are tacked
to the end of the loan.
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I know I've seen in my comment section,
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they're like, once this ends,
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everybody's gonna have to
pay that big chunk of money.
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No, that's not how this works.
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With federally backed loans,
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they do not work that way.
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The payments were tacked to
the end and mortgage providers
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as crazy, I know as you think this sounds,
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they really don't want
you to be foreclosed on.
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This is a very hard process
for them to go through.
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They've made a lot of mistakes
and learned a lot of lessons
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from that last housing crash.
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And they're not amped to do that again.
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And even in the CNBC article,
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they have said that if somebody
was still having problems
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and they wanted to
restructure their loan terms,
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they were willing to
work with those people
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because they don't want to
have to go through this.
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It was a real big nightmare the last time.
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So when will the wave of
foreclosures hit the market
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and you'll actually see them.
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Well, before those foreclosures,
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there are short sales
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and that's what I would start doing.
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If you're in this of trying to find a home
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and you want a deal,
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I would start really looking
at all those big websites
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and just type in short sale,
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click that first.
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And when you start seeing
like just a couple,
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and then there's 10, then there's 20,
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then you know that all of a sudden,
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the market is now shifting in your favor
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and you can start getting some deals,
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"I'm buying a house."
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These are people that are
already in financial distress
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and they're willing to work with you.
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Now, the process of a short sale
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is just not short because
it does take a lot longer
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to close on these specific types of homes.
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If you are dealing with a home seller
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that is in the short sale process,
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ask them what the bank has said.
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And if they've turned in
all of their documents
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back to the bank,
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and if the short sale has been approved.
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If you've gotten to that point,
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you're gonna be a lot easier to get to
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through that whole short sale process
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and have your loan approved
to purchase that home.
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I would definitely consider
working with a real estate agent
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that is fluent and understands
the short sale process
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because us as real estate agents,
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know that, I have been
through this before.
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You spend a lot of time on
the phone with those banks
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to try to get these houses
closed for you and the seller.
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It is a better way for a homeowner
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to let go of a property
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if it does happen to be
in a short sale process,
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but it's not gonna be as
bad as it was in 2008,
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because there has been
such an increase in equity
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throughout the market.
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Now, the people that short sale,
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first, are probably gonna win quicker
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and most likely a lot of those people
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may not even have to short sale at all
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because of the fact that they
have gained so much equity.
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But in some cases,
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you are gonna see a lot more short sales
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hit the market first,
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before you ever see any kind
of wave of foreclosures.
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So one practice that was
eliminated during the pandemic,
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was something called love letters.
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And it was basically
telling the home buyer
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to try to convince them the home seller
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to sell them the house
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because of the fact that they had a family
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and this would be perfect for their kids.
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And it's minutes from the school,
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they would write these love letters out.
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It's now been considered
against fair housing,
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but that doesn't stop you as a home buyer,
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reaching out to home sellers to ask them
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to purchase their house.
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If it's not already
currently on the market,
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you cannot ask your real estate agent
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to send this letter to the sellers.
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But, if you happen to
go into your local area
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and see the pre-foreclosure,
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you can write out a letter
to these home sellers
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so they don't even have to
go through that process.
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You can actually be helping people
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get out of their houses
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before they are underwater altogether.
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So, just think about
making out some letters
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and start sending them out
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and give them your full address
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and how they can contact you
so it doesn't look creepy.
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But this would be a perfect way
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to get yourself a real
estate deal in this market
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as it starts to shift.
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And that way you can help somebody out
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to get out of their house
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if they're underwater
with their home payments.
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So now that 72% of the people
that participated in the plan,
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we still have another 28% that's left.
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Again, that's 2.2 million people.
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And that still seems
like a very high number,
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but in the last housing crash,
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when we had a wave of foreclosures,
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there were over 6.3 million foreclosures
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in the United States in a decade.
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A normal amount would
have been 250,000 a year.
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That is not a little number.
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And it's this number,
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even though it's huge, 2.2 million,
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it's a fragment,
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a fragment of what we were back in the day
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when we had the last crash.
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I think if we're waiting
for a big windfall
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of reduced prices as these hit the market,
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I think a lot of us are
gonna be sorely disappointed.
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Now, that doesn't mean
there's not gonna be deals
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to be out there,
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because there's always
deals to be out there,
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especially when you have
more supply of homes
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on the market.
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People are going to be a
little bit more negotiable
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than they were a year ago,
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because as you know,
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right now,
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sellers have been holding all the cards
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and it'd be nice for a home buyers
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to be able to have a little
bit of negotiation room
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because there hasn't been any.
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And some of the things I've seen
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have been absolutely freaking ridiculous.
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And I'm sure you've heard it as well.
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I hate to be the Debbie Downer
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when it comes to this wave of foreclosures
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that is coming on the market
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because anybody that's done
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like a thimble full of research
about foreclosure process,
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it doesn't take like a blink of an eye.
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Just to look at the split kind of thing.
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It's, takes weeks, years, months,
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to get foreclosed
properties onto the market.
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Not only that once a foreclosed property
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is in the bank system,
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a lot of times,
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they're sold before they
even hit the market.
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So, will they be available
to the average American?
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We don't even know that yet.
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So, the likelihood of
these hitting the market,
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like let's just say in the next few months
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and causing this big crash
of the housing market,
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I think is kind of a hopeful wish.
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I hate to say that,
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but it's not going to happen the way
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that some of these
articles are portraying.
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We're not gonna see it like
we did in 2008 and 2009,
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because when those houses hit the market,
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it was because they had a backlog of homes
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that people hadn't been paying on
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and they kept giving out
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these ridiculously stupid subprime loans.
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You can basically state,
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well, yeah,
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I think I make around 350,000
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and they took your word for it.
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Now, tightening on credit history
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and the way that they
approve people for loans,
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is way harder than it was back then.
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You need more than just electric bill
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like you did in 2008 to get a house.
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Now, an interesting statistic
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that came out of this,
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is that Black Knight
had said that estimates,
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said that 575 plans
will expire in September
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and at the beginning of October
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meaning mortgage services will
be facing the daunting task
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of dealing with about
15,000 trouble loans a day.
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That's a lot of loans,
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but like I said,
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they have learned from their mistakes.
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Even though there's going
to be a lot of backlog
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of these houses,
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they've learned how to
process some of these loans
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and how to work with homeowners
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when they've gotten to this point
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and they're not in the business
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to try to foreclose.
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They really don't want to do that
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because it costs them a lot of money.
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And thankfully so,
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because that's going to help
maintain some of the levels
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of the cost of houses,
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but that doesn't really help you
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if you're actually trying
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to purchase an affordable
home right this very moment.
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But there is some things you can do.
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And I've mentioned this
in previous videos.
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So, I don't know if you guys
have ever seen the website
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called HUDhomestore.com.
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It is a website that has
foreclosed properties
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and once they put them on the market,
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they're not given out to investors first
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and they put them on the market
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for like 10 days before an investor
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can ever make an offer on it.
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So you get first dibs on it
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and it doesn't cost you anything extra.
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You do have to work with a HUD
approved real estate agent,
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but almost every single big chain
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has HUD approved real estate agents.
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The second thing you can do,
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is you can look on other foreclosure sites
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and instead of the big ones
that you see on the internet.
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Another company you may want to check out,
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is foreclosure.com.
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That has foreclosures that you do not see
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on the big websites.
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And I'll actually put a link
in the description for that.
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There is a monthly fee,
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but I was able to get you guys
a little bit of a discount
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on those monthly fees
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and the first seven days are free
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so if you find a house
within the first seven days,
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kudos to you.
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The other thing you can do,
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is you can actually talk
to some other local banks
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and see if they have any
foreclosures that are coming up.
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You can kind of get in close
with them and just say,
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that you're looking for a house
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and that you have the money available.
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This would be really good
if you are a cash buyer,
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much more than it would
be if you are a somebody
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that's trying to get a loan.
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But if you have a great
relationship with a local bank,
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maybe they'll be willing to tell you
[650]
what's coming on the market.
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Now, here's a really good tip
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if you are looking for more foreclosures
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and that is to work with a agent,
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an agency that does
nothing but foreclosures.
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We have several here in
our area and that brokerage
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is solely just foreclosures
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and they could be HUD foreclosures,
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they could be just bank foreclosures,
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they can be REO properties,
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get with those people first.
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Work with those agents,
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if you haven't gotten one already
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so that way you can know which
ones are hitting the market
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like as soon as they hit the market
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and you can be the first in line
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to get yourself a good deal.
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Not only that the people
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that work in that office know how to work
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with those banks directly,
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so you're more likely to
have that done and approved
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a lot quicker than it would
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if you were working with an agent
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that doesn't understand
foreclosed properties.
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Some other good news that's come out
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since all of this has started
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with the increase of home prices,
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is that just recently,
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we're starting to see a
little bit more of an uptick
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of supply of homes that
have hit the market.
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And it doesn't seem to be
as much of a buying frenzy
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as it was, let's just
say three months ago.
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And with that,
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the interest rates are still wicked lows.
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In some cases, they're under 3%.
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I saw the other day at like 2.7%.
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So if you're on the
fence of buying a house
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and you happen to find one
that you absolutely love,
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at 2.7%, I mean,
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that's like record lows.
[730]
I don't even have that.
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I probably should refinance.
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Ooh, and refinancing is down right now
[736]
because of the fact that
everybody refinanced before.
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And if you haven't refinanced yet,
[741]
and you were thinking about doing it,
[742]
this would be a great time to do that.
[744]
Get your paperwork together.
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Get them all together and
get yourself refinanced.
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The rates are too good not to.
[748]
Now, I know if you've been
looking for affordable house
[750]
for quite some time,
[751]
these headlines can be extremely exciting,
[754]
but we have a long way to
go before we make housing
[756]
more affordable.
[758]
To watch more videos on some of the ways
[759]
that I've come up with
[760]
to solve the affordable housing crisis,
[762]
go ahead and click this video right here.
[764]
My name is Kristina Smallhorn,
[766]
your real estate whisperer
[767]
and I tell you all this,
[769]
because good real estate
information matters.
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