Buyers Rapidly Losing Interest in Foreclosures | Hound Dog Real ...

It took a while but it seems that home buyers are finally beginning to tire of the real estate owned (REO)/foreclosure nonsense. Here in Atlanta, lender or ?corporate? owned (the industry desired more appealing term than foreclosure) homes are a major part of the inventory. Statistics on this issue can vary widely but suffice it to say that REO?s and short sale properties will continue to impact metro Atlanta for years. Investors and speculators make up the majority of distressed property purchasers, focusing mainly on the under 200K price point ? close to 50% of sales in 3rd quarter ?11 were considered distressed. But the wise primary residence buyers are learning stop wasting time and to steer clear of distressed and foreclosure property.?

We?re seeing buyers finally understand that these REO properties are not usually worth the aggravation. The reasons are many and it?s taken a while for the realization to sink in due to the media making it appear that banks and FNMA are all but giving them away. They?re not ? at least not where most folks want to be. The list below hits some of the main reasons and it assumes that we?re talking about homes in the desirable Atlanta real estate markets.

Why foreclosures aren?t the bargain everyone thinks they are ? in no order:

• Many times there are other parties involved that need to approve a price/sale (mainly mortgage insurance companies).
• These homes are appraised and broker price opinions are prepared. Appraisals are targeted at 90-120 days out so typically these homes are listed with the expectation of being reduced.
• Reductions are a scheduled process. At regular intervals, price will be reduced. This often is done independent of actual market trends.
• There is always going to be a narrow range that will be considered acceptable for offers. If a home is 100K, there may be a 3%-5% variance off of that. If the offer doesn?t fit, it?s rejected.
• Asset managers rarely concern themselves with current comps, trends or anything else ? if it?s not something that fits into the charts, they move on.
• Many asset managers carry over a hundred properties, are usually remotely located and don?t regularly communicate with listing agents. ?Almost everything is done via the web so quality interaction is minimal
• REO agents deal with a myriad of requirements when listing these homes, this is a pure business. They are paid to move homes, get more homes based upon performance so don?t expect them to limit availability to avoid wasting time.
• Many of the REO homes don?t follow ?typical? protocol. While you can have inspections, not all will complete repairs; some will not move if appraisals come in low; most will mandate terms of the contract and most important, you buy it ? you own it.
• Speaking of owning it ? you have no idea of what that home looked like before acquisition. There might be fresh paint and carpet, but what?s inside the walls, HVAC vents and in other areas that you can?t see.? And homes sitting, buttoned up, in the hot humid Atlanta area?MOLD. Several foreclosure videos that you might find helpful.
• Since these are sold ?as is-where is? and you are required to sign a blanket release of seller liability, if you have issues down the road, you own them.
• Speaking of owning, consider potential title issues (remember the robo-signing?) and the fact that most of these homes transfer with deeds below the quality of a warranty deed. Remember, the seller has no knowledge of anything before they took possession. In some cases, getting title insurance has proven to be a challenge or ridiculously expensive.
• And what happens when it?s time for you to sell that home? Will the next buyer be accepting of the potential for a ?zombie? title or deed issue?

This list is based upon my experience both inside the ?system? and from outside occasionally trying to get a deal done. The bottom line? Why are you buying a home? If it?s to live in, then buy the home that you like in the area that you like. Once you find it, deal with the circumstances that present themselves ? better deals are often made with owners than with banks. ?As always, successful buyers are prepared, work with skilled agents, have a clear objective and act decisively when opportunity presents itself.

This entry was posted on Thursday, February 9th, 2012 at 22:56 and is filed under Distressed & Foreclosure Property, Featured Article, Home Buyers, Market Conditions, Metro Atlanta Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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Source: http://hounddogrealestate.com/2012/02/09/buyers-losing-interest-in-foreclosures/

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