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South Bay real estate agent Leo Nordine knows two things: how to surf big waves and how to sell foreclosed houses. He didn’t want to share his favorite South Bay surf spot with L.A. Land (‘Just tell them it’s Malibu’), but he let loose on the foreclosure market. And it wasn’t pretty.
‘It’s worse than everybody knows,’ he said today, relaxing in flip-flops on the deck of his Hermosa Beach home office. ‘Real estate is boom and bust. There’s no such thing as a soft landing.’ He added, ‘It’s going to drop like crazy this year and next year.’
Nordine made his reputation, and a large pile of money, selling bank-owned foreclosed properties in the 1990s. He has sold neary 3,000 houses, including up to 300 in a single year. He knows what he’s talking about. In a separate post, I’ll give you some of his selling secrets.
Nordine believes prices peaked in mid-2005 and will decline 30% over the next two years. He currently has 59 bank-owned properties for sale, ranging from a $309,000 two-bedroom in Compton to a $4.8 million five-bedroom in Brentwood.
‘The market will bottom out in two years,’ he said. ‘Save your money. Then the banks will be underpricing everything. That’s when you want to buy.’
The problem now, he said, is that his clients, the banks -- often using automated pricing formulas and inaccurate appraisals -- are overpricing foreclosed properties. ‘They’re giving me prices that are too high. It’s the same at the beginning of every REO cycle.... And the overpriced stuff is sitting on the market.’
REO, or ‘Real Estate, Owned,’ is the bank designation for foreclosed property.
Another problem: Because of automation and outsourcing, big banks are slow to recognize the inaccuracy of their pricing models. ‘The banks are worse now,’ he said. ‘Some of the REO managers are in India now. And everything’s automated. The computer generates the list price.’
Thoughts? Comments? Anybody want to guess Leo’s favorite surf spot?
Photo Credit: The Malibu Surfing Assn.