Redondo Beach Foreclosures and Short Sales

REO Townhouse Listing Redondo Beach CA
I just noticed that there are two, yes count them 2, Redondo Beach foreclosures (REOs) listed for sale right now. A few years ago, a large part of my business was foreclosures, short sales, and other distressed properties but not so much anymore. So, I couldn't help but wondering, "Where have all the foreclosures gone?" Even the (previously) popular website foreclosureradar.com seems to be gone or at least rebranded as something else.

For the purpose of this post I am referring to actual REOs (bank terminology for "Real Estate Owned") listed for sale that the public can buy. There's been quite a bit of confusion because Zillow and others display "pre-foreclosure" properties along with actual listed REOs that you can see.

What many of the public portals, and some brokerage websites, consider to be "pre-foreclosure" homes are actually properties that have had "NODs", a Notice of Default, filed. A notice of default is the first step in the foreclosure process. What the public doesn't really understand, and what is creating a lot of confusion, is that in most instances these "pre-foreclosure" properties are NOT available listings that they can see, make offers on and actually buy. In fact, often these home owners have no intention of selling and may even be downright belligerent when approached. And I can't say I blame them because even though NODs are considered public knowledge, let's face it, it is also somewhat of an invasion of privacy to some extent.

A typical question I get, somewhere along the line, from most of my first time buyer clients (after they get frustrated with the lack of inventory) is "what about a foreclosure?". Unfortunately, a foreclosure is not the answer to their housing prayers and most of them "get it" fairly quickly.

ZIllow Pre-Foreclosure Map Redondo Beach CA
I'll get to the actual numbers shortly but here's a few reasons why we are seeing fewer and fewer retail REOs hit the market and why there are fewer short sales as well:
  1. With increasing home values, the number of truly "underwater" homeowners has significantly declined and fewer are likely to do a "strategic default" because, well its just a bad business decision.
  2. Many homeowners have negotiated loan modifications with their lenders making them less likely to need to do a short sale. On the other side of the equation, lenders are also less likely to approve a short sale because they know (as we all do) that values are going up. 
  3. Institutional investors have bought up huge pools of REO inventory and distressed notes and are, no pun intended, banking these.
I started this writing with the comment that I noticed there are 2 REOs on the market right now. Well actually I knew they were there before but just was taking some poetic license. Here's what I have noticed about REO listings  and to some extent short sale listings the past few years. They are not particularly good deals. Or even deals at all. In fact they are often over priced if anything.

Pictured upper left hand is an actual REO foreclosure listing at 2225 Curtis Ave Unit A in North Redondo Beach. It is a 4 bedroom, 2.5 bath attached 2 on a lot townhouse built in 2004. It was initially priced at $1,012,000 when it came on the market 55 days ago. Considering the condition and the other inconveniences of buying a foreclosure, not really any kind of deal. In fact, you could buy a detached 2 on lot in pristine condition for that price or lower.

As of April 2nd, the list price was lowered to $899,900 which is much more reasonable and as close to a "deal" as you will find in North Redondo Beach these days - foreclosure or not. I would expect to see it in escrow by the end of next week and I'll be curious as to what price it closes for.

The other current REO listing is a 3/2 SFR at 2517 184th St in the El Nido area which is listed at $589K. Pretty much market value. Apparently it was in escrow once and I'm sure will be again quickly.

For the curious, there are no REO foreclosures in South Redondo Beach, Hermosa Beach, or Manhattan Beach CA and two in Torrance.

Here's the recap of REO foreclosures and short sale closed escrows in North Redondo Beach as captured through the MLS since 2007:

2007 REO 01 SHORT SALE 02
2008 REO 26 SHORT SALE 14
2009 REO 39 SHORT SALE 32
2010 REO 20 SHORT SALE 43
2011 REO 35 SHORT SALE 54
2012 REO 28 SHORT SALE 83
2013 REO 09 SHORT SALE 29
2014 REO 03 SHORT SALE 11

Year to date closed REO foreclosures 90278 02 and SHORT SALES 03.

* Currently there are 2 active Short Sale listings in North Redondo Beach and 2 in escrow but until these close we do not know how the actual price so the data was not included in this analysis.