Archive for the 'Auctions & Foreclosures' Category
How Did the Banks Get Agents to Shoulder the Load?
July 6th, 2008 Categories: Auctions & Foreclosures, Real Estate Ramblings
In Virginia when you sign a listing agreement with a seller it states that the “seller retains full responsibility for the property, including all utilities, maintenance, physical security and liability until title of the property is transferred to purchaser.” Seems simple enough or is it in today’s market?
When an agent goes to meet with a prospective seller to talk about listing their home it would never cross the sellers or our minds to suggest that we will have all of the utilities transferred to our name to make it easier for the owner. Nor would we agree to take on the responsibility for cleaning their home or keeping the yard mowed. However, every day lenders are asking agents to do this and agents are saying YES.
Why? We don’t own the property or have any financial interest in it and still agents are willingly taking on the financial burden just because the banks ask them to. Many agents I’ve talked to who handle a large numbers of foreclosures are shelling out thousands of dollars in expenses to maintain a property. In some cases reimbursements are slow and if work needs to be done they are required to call the lenders “preferred” contractor. If an emergency repair is needed and the preferred contractor isn’t available they risk not being reimbursed by the lender unless they can verify the gravity of the emergency.
On top of the out of pocket expenses, the listing agent often has to wait until the end of the transaction to find out if the lender is going to ask them to reduce their commission to help the lender meet their NET. How did this trend start? Was it one agent who said yes and then the banks began to play the other agents one against another for a cut of the business? Was it an entire brokerage that agreed to it and then everyone else had to follow suit?
If lenders require that the utilities be on (at minimum electricity should be on for safety reasons) then why don’t they set up corporate accounts with the major utility companies in the area where they have large pockets of foreclosures? Why don’t they have a direct 30 day billing cycle with their approved contractors? Why are they relying on agents to take on the accounting and financial burden of selling their properties for them?
The practice is contradictory to our own listing agreements and yet hundreds of agents across our area are willingly taking on the burden. It shouldn’t be a Realtors® responsibility to go into debt in order to sell a foreclosure listing. Wouldn’t it be better if ONE MILLION plus Realtors® would stand up and say “we’re mad as hell and aren’t going to take it anymore” and let the lenders take the responsibility of paying the bills on the properties they own?
| Discussion: 8 Comments »
Condo Special Assessments-A New Twist in Today’s Market
July 3rd, 2008 Categories: Auctions & Foreclosures, Buyers Corner
When most people think of special assessments for condos they think major common area improvements. In the Northern Virginia area condo owners often see them when it is time to repair the balconies, upgrade the amenities or redo the lobbies but in today’s real estate market we also see special assessments for another reason.
Delinquencies and foreclosures are sapping associations of much needed income to keep current on the everyday bills. A few years ago condos in Arlington and Alexandria were flying off the market faster than they could be built. Unfortunately among the buyers who were excited about a new home close to the metro there was a large group of investors out to make a few dollars with a quick flip.
When the market made its dramatic turn the first properties to be hit were condos. Hundreds of flippers suddenly found themselves with units worth less than the paid for them even at pre-construction prices. So what is the first thing they stop paying? They stopped paying the condo dues resulting in large deficits for the associations. Associations in desperation to try and collect some of the dues hire attorneys to put liens on the condo in hopes of collecting some of the past due funds.
However this just adds to the money worries by larger legal bills. Putting a lien on the property isn’t going to do the association any good. When the property goes to foreclosure there isn’t any money to pay the back dues and the lender isn’t responsible for any past dues. When the property is sold the lender will pay the dues from when they owned the property but while it sits on the market the debt continues to rise.
For a buyer today looking at a condo purchase they need to pay careful attention to the association budget. They need to make sure that the see the latest budget that shows the real numbers. Most lenders will not pay a special assessment and a buyer could get a surprise after closing to find themselves with fees to be paid that they weren’t expecting. Today’s market is full of twists and turns. A special assessment because your neighbors aren’t paying their bills is a new one to watch out for.
| Discussion: 2 Comments »
What is Hot in Northern Virginia Besides the Weather?
June 13th, 2008 Categories: Auctions & Foreclosures, Buyers Corner, Focus on Prince William, Local Market Updates
Sales in Prince William County would be the answer. Sales may be stagnant in other parts of Northern Virginia but buyers are flocking south to Prince William to take advantage of the lower prices and great bargains in the area.
Check out the total sales comparisons between 2007 and 2008 in two zip codes in Prince William County.
So why the sudden interest in Prince William County? Obviously it is due to the significant price drop which has happened over the past year.
Neighborhoods in 22191 include both the newer subdivisions of Port Potomac, Belmont Bay, Rippon Landing and River Oaks. Older neighborhoods such as Georgetown Village, Marumsco Woods and Newport have been some of the hardest hit with foreclosures. Neighborhoods in 22193 include Dale City, Lake Terrapin, Winding Creek Estates and Pearsons Landing.
Does this mean that Prince William County is out of the woods yet? No as there are still a significant number of properties for sale and there is anticipation that more foreclosures will be coming on the market through the summer. However as new properties are listed the expectation is that we will see additional price reductions in certain neighborhoods in Prince William County creating even more values for savvy home buyers.
For investors, who are looking to buy and hold for a few years, and particularly buyers who are looking for a new home that falls well within the limits of a FHA or VA loan there are terrific homes and neighborhoods to explore. From the starter home in Lake Ridge to the luxury mansion in Haymarket you can find a deal in Prince William County.
If you are interested in exploring your options in Northern Virginia give me a call. I’ll travel the highways and back roads of Prince William County looking for a deal for you.
| Discussion: 5 Comments »
Another Get Rich Quick Real Estate Scheme
June 10th, 2008 Categories: Auctions & Foreclosures, Buyers Corner
This morning in one of those can’t sleep moments I turned on the TV and the latest infomercial on how to make a fortunate buying foreclosures was running. It was one of the many that the unsuspecting public hears everyday. The premise in all of them is the same. Approach a homeowner facing foreclosure and save them by buying their home for what they owe. To make them feel better about their financial situation tell them “you aren’t in foreclosure your house is.” Then you can turn around and sell the home and pocket an enormous sum of money in 30 days.
Anyone who has worked with a “pre-foreclosure” knows what is owed on the property is often more than the current market value of the property. So the idea that you can walk away a short time later with a profit is simply ludicrous. Second if the home is in “pre-foreclosure” in order to buy it at less than owed is called a short sale and it requires lender approval. The property is not being sold for pennies on the dollar but at today’s market value. There is no huge profit waiting for you when you lock up the property and there isn’t another buyer you can assign the contract to, the bank won’t allow it.
Now I’m all for anyone who wants to make money in this market. I’m an investor and am on the lookout for properties that would bring positive cash flow as an investment and a positive return on my money in the long term. In today’s market this is the strategy that is going to make buyers millionaires. It won’t happen overnight and it won’t happen in a year. It happens one property at the time over period of time. It is a strategy that involves finding a good value in an area where you want to live in or where you can see a positive cash flow as a rental property.The infomercial gurus aren’t getting rich flipping properties in today’s market. They are getting rich selling books and workshops. Don’t be misled about how to make money in buying foreclosures. Talk to an agent who is in the trenches in your area. Talk to a financial advisor or an accountant. Don’t buy into the infomercial hype. You could end up being the next homeowner facing foreclosure and when your house is in foreclosure you are too!
| Discussion: No Comments »
One Bad Apple Doesn’t Spoil the Whole Bunch-Or Does It?
May 21st, 2008 Categories: Auctions & Foreclosures, Buyers Corner, Focus on Prince William
On a regular basis the local press focuses on the negative aspects of the current market in Prince William County. Buyers call to ask about the area and say we have heard the Prince William County is a “bad place to live.” It is an assumption that keeps many people from making an exploration through the great neighborhoods and communities that stretch across the entire county.
For those that aren’t familiar with Prince William County, the first thing to realize is how big the county is. It stretches from the Potomac River at the eastern border and to the west the start of the Blue Ridge Mountains. That is a total of 348 square miles. To put this in perspective Prince William County is about ¼ the size of the entire state of Rhode Island. To try and say that the entire county is a bad place to live would be a stretch of grandiose proportions.
So how do you put a “bad market” in perspective in a county as large as Prince William is? You break it down into small and manageable sections and then you start to decide if the market is really bad or is it a great opportunity for a smart buyer to find a nice home at a reasonable price? Every buyer has a choice to make. They can wait for the market to “hit bottom” not knowing where the bottom is, they can stay closer to town and pay more for smaller space or they can decide that a deal is a deal and look past the press.
In the past few weeks my buyers have found great deals in Prince William County, in neighborhoods that have been overlooked by other agents because of the “stigma” attached to the county. Buyers are not only buying foreclosures but they are also buying new construction and waterfront condos too. It isn’t an all or nothing proposition when it comes to what you can find.
So in the case of Prince William County the bad press makes potential buyers relocating to the county think that the entire 348 square mile area should be avoided. This is as far from the truth as still believing that the world is flat. With its rich history, diverse neighborhoods and substantial commuting options buyers need to consider whether they may be shorting changing themselves by not taking a look around. Don’t let the press scare you away. It might not be the place you decide you want to live but you might be surprised by what you find.
| Discussion: 2 Comments »
An Optimists View Of Northern Virginia Short Sales
April 3rd, 2008 Categories: Auctions & Foreclosures, Buyers Corner
Yes Virginia short sales do get to closing. Is it the easiest route to homeownership? No the easiest way is to find an owner who is aware of the current market conditions in Northern Virginia and prices their home to reflect the market. Can a short sale work for buyers who are looking for a good deal and have patience to work through the process? Absolutely!
As an agent who has worked both sides of short sales there are some tips that I’ve learned along the way. For buyers who are considering making an offer on a short sale you need to be aware that no matter what you include in the Virginia Regional Sales Contract the lender will have their own addendums which will supersede just about everything you put in the contract. This doesn’t mean that you shouldn’t write a contract with the terms and conditions that meet your circumstances but it does mean you need to be prepared to be flexible about closing dates, inspections and closing cost credits.
If you are firm that it is your way or no way because this is a “buyer’s market” then a short sale will leave you feeling frustrated and angry. The processors handling short sales don’t really care about what you want. They are running the numbers to see how much they can walk away with at the end of the deal. It is strictly about the bottom line for them.
For agents who are thinking about making an offer on a property listed as a short sale there are a few key questions to ask before you write the offer.
Does the agent have permission from the owner to talk directly to the lender?
Has the agent been in touch with the lender and have appropriate contact numbers?
Has the owner completed the short sale package from the lender?
Has the owner prepared their hardship letter?
How many loans are currently on the property?
If more than one loan are they from the same lender?
Who is the lender (s)?
Have you done a pre-settlement statement for the lender?
How long do you estimate that the lender will take to provide an answer?
While buying a home listed as a short sale may be more time consuming in the end you will get a home a good price without some of the problems associated with properties already owned by the lender. If you are interested in learning more about purchasing a short sale or have a home that you are considering listing for sale give me a call. I’ll be glad to talk to you about the process and see how my team can help.
| Discussion: 2 Comments »
Prince William County Foreclosures-Starting To Move
March 20th, 2008 Categories: Auctions & Foreclosures
No one in the Northern Virginia area is going to deny that of all of the localities Prince William County has been hit the hardest by the sub-prime mortgage industry. The cost of homes throughout the county were lower than closer in Fairfax, Arlington and Alexandria Counties and with significant new construction the area became ripe for “flippers” and for buyers who relied on more volatile loan programs in order to afford a home.
Over the last few months the indicators show that buyers have begun to see the value in the foreclosures and properties are starting to put them on their buying list. Do the sales over the last few months indicate that inventory is starting to move? Perhaps but let’s be realistic and admit that there is a lot of inventory in Prince William County to move. New construction is still being completed, owners are on the move and there will be more properties currently listed in other categories that may move to the foreclosure column over the next 30-60 days.
As an agent who is working with buyers who are a looking for a “good deal” foreclosure properties are starting to come into the picture. Six months ago the jury was still out on the question “can you find me a good foreclosure property” today the tide seems to be turning to answering that question with a qualified “yes.” Qualified being that not all foreclosure properties would fall into that category and buyers must always understand the issues that are involved with buying a home as is.
This past week one of my buyers ratified a contract on a foreclosure property and at a nice discount over the list price. We will keep our fingers crossed that the process continues forward without any surprises. I have two more that we are working diligently with the banks to get to the ratification stage and we have encountered properties with multiple offers on them! Each of these sales ARE more time consuming than the average sale but for buyers who are savvy enough to see the value and are patient enough to work through the process they may find themselves with a great new home.
If you are a buyer who is interested in foreclosure properties give me a call. I’m willingly to go the extra steps it takes and work through the process of getting you into a foreclosure property if that is the best deal for you.
| Discussion: 4 Comments »
Northern Virginia Foreclosures-What Don’t You See
March 15th, 2008 Categories: Auctions & Foreclosures
How many foreclosures are there really in Northern Virginia?
This is a question that is getting harder and harder to answer every day. Looking at the MLS will give you some data, not all of it marked by agents in a way that makes it easy to find, the county tax records give you a different set of numbers and then you count the homes that are headed to auction this weekend and not in the MLS you get yet another answer.
So what does this mean for a buyer who is seriously interested in buying a foreclosure property? For most of the clients I talk to it is a matter of timing. We can only look at what is listed either in the MLS or one of the other public foreclosures sources. Obviously looking at the tax records can help identify homes that might be coming into the system in the near future but we have no idea when or at what price those properties may be offered for by the banks and mortgage companies.
For example in Prince William County if you search the Real Property Assessment site for the month of December 2007 between the prices of $200,000-$300,000 you will find 507 sales recorded in the county database. The MLS only shows 134 properties sold in that same period of time and in the same price range. The highest portion of sales was banks “buying” properties as part of the foreclosure process. Now what makes this study interesting is the second part of the analysis.
Checking a few of the properties that were sold back to the banks I then checked the MLS to see if the properties had been listed and if they were what was the list price. I then compared the current list price to what the county records show the banks bought them for in December. Now we start to get a glimpse of the percentages of value that the banks will consider to sell one of the properties. It also gives buyers and agents an idea of how aggressive you can be on your offer price on foreclosures.
| Address | Bank Price | MLSPrice | Status |
|
WINCHESTER CT
|
$167,995 | $114,900 | SOLD |
| 10129 IRONGATE WAY | $181,900 | $119,800 | ACTIVE |
| 10111 IRONGATE WAY | $177,000 | $145,000 | ACTIVE |
| 7813 WEST POINT | $184,500 | $108,900 | CONT |
| 8851 TEAKWOOD CT | $200,000 | $124,000 | ACTIVE |
| 10120 SHILOH CT | $193,500 | $114,000 | SOLD |
Obviously this list is not an exhaustive study there are a lot more properties at a variety of price points to review. Since I am currently working with buyers who are writing contracts on foreclosure properties looking at the price differential is important to determine how significant a difference in price can we expect to have the bank accept. I have one accepted offer now that is 50K below the MLS list price.
If you are considering buying a foreclosure property remember that most properties are sold “as is.” Making sure that you have budgeted not only for the purchase price of the property but the repairs as well is an important part of your consideration to determine whether a foreclosure property is the right home for you.
| Discussion: 4 Comments »
Will This Affect the Resale Value of My Home-Foreclosures
February 22nd, 2008 Categories: Auctions & Foreclosures, Selling Thoughts
Earlier this week I posted “Will This Affect the Resale Value of My Home” looking at the issue with power lines and water towers as possible issues with the resale value of your home. Today I’m going to look at a serious issue in many Northern Virginia neighborhoods, foreclosures and how they may affect the value of your home.
Foreclosures vary from community to community. In some areas you might not be able to tell a home is in foreclosure from any other for sale in the neighborhood. In others you may find signs that announce the property is a foreclosure or see homes that who obvious signs of neglect. So how do you know whether a foreclosure in your neighborhood is affecting the value of your property? One of the key components of determine the value of your home when it is being sold is a professional appraisal. In a neighborhood where foreclosures are few and far between the chances are an appraiser will not need to use a property that has sold as a foreclosure as a comparable property and there won’t be any issue. However in a neighborhood where there have been a signicant number of foreclosures, appraisers have to include those sales in their comps. Most appraisers will try and discount the value of a foreclosure property but where they are a majority of the sales in the neighborhood then they will affect the value of your home.
If you live in one of the areas where there are a large amount of foreclosures you can expect to see a slight drop in your value. It may not always be about lower prices but also about buyer’s feelings about the area. If they perceive the area is showing signs of neglect they will automatically discount the value of your property even if it is in top shape and you will need to make a tough decision about pricing your home to reflect an issue you have no control over.
A secondary affect of foreclosures in areas with HOA and condo associations is the impact of the uncollected dues and fees on current homeowners. Usually before a property goes into foreclosure the owners stop paying their monthly HOA or condo assessments. Over time depending on the number of unit in distress the association’s budgets can take a hit and current owners may end up being tasked with making up the shortfall. As a result association fees rise and that increase in fees may make a property less desirable to a future buyer. Condo buildings are at the highest risk for lower values due to foreclosures as they are often the only comps an appraiser can use.
Foreclosures can affect the value of your home and you need to be aware of what is going on in your neighborhood. A professional Realtor® is the best source of information on how many foreclosures are currently in your neighborhood, how many have sold and current strategies for getting your home SOLD in today’s market.
More information on Northern Virginia Foreclosures
| Discussion: 4 Comments »
Fairfax County Foreclosures-Looking High and Low
January 8th, 2008 Categories: Auctions & Foreclosures
It doesn’t matter what price range you are searching if you are looking for a foreclosure in Fairfax County you can find it. There are properties on the high end of the market and there are properties on the low end of the market.
If you are looking for a high end home and money is no object then perhaps one of the million plus properties might be your ticket.
Better yet if you are an investor looking for a property to use as rental property then perhaps you want to look on the lower end of the dollar scale.
However no matter what price range you are looking for the requirements for purchasing a foreclosure property are going to be the same. The third party mortgage holders expect a buyer to submit a letter from a reputable lender stating they are qualified to buy the home. Some properties, for example those listed by Countrywide Mortgage, require that you are qualified according to their specific guidelines and by one of there mortgage consultants.
This is a critical step in submitting an offer for a property in foreclosure and one that you should undertake before you even begin to look at properties. Just as with buying any property knowing how much you can afford not only to buy but how that purchase may impact your lifestyle are important. When you are looking at foreclosure properties you also need to consider your finances for repairs. You may find a new property in pristine condition or you may find a property that will require considerable “sweat equity” to bring it up to livable condition.
So as you weigh your options and research whether a foreclosure property may be right for you, make sure you have talked to a lender so you understand and are comfortable with your financial situation. If you need assistance in connecting with a lender let me know and I will be glad to pass on some names for you to contact.
For more information on Northern Virginia Foreclosures
| Discussion: No Comments »