I believe the worse of this is the fillings: you think that (foreclosure) can happen, but you dont know... That's a quite scary.

Great Post

In Northern Virginia, we are seeing 3 to 6 offers on every bank-owned property that is coming to the market.

FHA underwriting metrics are becoming sporty, for instance, we are seeing (condos) the 60 percent owner-occupied ratio (owner/investor) as a restriction to funding.

FHA cash reserves required in condo associations has led to some large condo fee increases as local associations establish enough cash reserves for the respective community to qualify for FHA funding — one association increased condo fee by 18 percent to replace a funding short fall.

The buyers are savvy and demanding compelling value in the most sought after areas. We are seeing buyers with large cash positions simply waiting for the sellers to season the sales price towards compelling value.

Appraisal work product has become defensive at best and there is plenty of collateral damage that is being factored into the home that may have a distressed property adjacent to its property boundary. One home is $500,000 below last years’ value due to the close proximity of bank-owned properties — all real estate is local and all appraisals are local!    

Buyers: Set your value range. Let the market correct into this metric. Wait, but be prepared to move. Get your funding letter. Close in 30-days. Find a realtor who is hungry for value, not just a closing! Bank-owned properties sell at fair market value and this means .60/$1.00. Write offers. The banks will counter-offer!  

Sellers: The home needs to be a compelling value — great condition and well priced. FHA requires two appraisals. Conventional sale only one — and yes I suggest having the home appraised prior to the listing. The buyers are ready. They simply want a home that makes their heart beat faster at a defendable value!

The housing sector will recover — at the right price!

Joe Henry

Keller Williams/McLean

bankowned@mris.com

(571) 282-8249

With the expectation of more homes losing value I would expect that foreclosure would continue to be on the rise.  One would think that lenders would be working harder to save more of these homes.  At least that could help stabilize the prices of the REO's on their books.

I came across a site that offers help to homeowners by offering FREE services to help them with their loan workout.  The site is WWW.GETLOANMODOIFIED,com.  Hopefully more people will take the initiative to do something to help themselves instead of waiting around for the bank and or the government to come to them.  

Why would anyone want to buy property at this time?  The U.S. economy is in shambles and the government will not be able to convince the angry citizens to spend any more bail-out money, so the next wave of foreclosures will happen with no more government programs to offset them.

This spring season was the last chance for homeowners to get out, now prices in key markets like California will crumble even faster, and buyers will simply sit it out.

Lawrence Smith

Hey Joe Henry,  

Being in the real estate biz, I am sure you also are aware that these “bank owned” properties are more often taking “cash” buyers versus “loan” buyers.  And those "cash" buyers for the most part are investors, and flippers waiting to mark up that property for sale again. I have noticed that banks will pull or hold properties from MLS until like now multiple bidding wars have started truly shutting out the first-time home buyers.  

And this has also caused other buyers getting themselves caught up in the bidding frenzy by up their original offer amount hoping their offer would be accepted, only to find out a "cash" buyer out did them.

Buyers beware of the bidding wars, don't get caught up in them, let the market fizzle with these foreclosed homes. Many of these homes are pure junk that were thrashed and gutted. Many of these homes are not worth the price listed, AND if you are a owner-occupied buyer, it will be a challenge for a lender to include repair costs fixing the damage or rot many of these homes have.  

Go buy a newly built home instead, you won't find yourself in fraustration with a damaged goods home that may also have other underlying issues.

Dianne

It looks like this correction is still in full swing.  I think now is a great time to buy property.  It makes more sense now then buying when the economy is riding high along with house prices.

I disagree with some of the comments. I see buyers who are looking for specifics jumping at the chance to get in to the market. I, myself, am looking at multi-family as well as vacant land to work with and rent and lease....

While the dam on the forclosure market appears to be allowing some flow, there is another factor involved in the top foreclosure markets such as Southern Florida.  There are so many foreclosures in this area that some lenders are starting to actually hold properties off the market for fear of driving home values to even lower levels.  

With thousands of 3 bedroom, 2 bath, 2 car garage homes (bank owned foreclosures, auctions)  now on the market down here, prices have dropped to as low as $50,000 to $60,000. Those figures are common, not just a unique example.   In many special cases, new, unfinished homes are selling for even less.   This due to the many builders that went bankrupt and had to just abandon the properties.  There are entire streets of foreclosed homes that were started by a contractor that went belly up.    With that backlog who knows where home values will go?   This does not count those homeowners who financed their home with a 5-year adjustable rate mortgage.  They paid $300,000 to $400,000 for a home that is now worth one-third of that.

While they must continue to pay for the original purchase price at the higher rate.  Many families will have no choice and just walk away.

All this might be happening in the rest of the country with the exception of the coastal area in California, where the banks are holding REO homes, and not listing them nowhere.

Here in Orange County California exist the Gangsterism between the banks, and the real estate. Is really disgusting the game they play, and of coarse the lies/misleading.

To purchase a home here is the equivalent of becoming a "Knife-Catcher"

I must disagree with Diane's comments above.  I am one of those "cash buyers" and have been out bid by buyers buying properties via mortgage--three out of three attempts.  I am in Charleston, SC.

The banks are holding millions of homes and loans in SIVS off balance sheet that have been foreclosed on or are deeply in default they are not releasing them to the market. The true bottom is years away when all these homes have filtered through --20 cents on the dollar within 18-24 months

I know for a fact that some auctioned properties are gutted as Diane said.  I got one.  

What happened was the period between open for inspection and auctioning day was long enough for criminals to move in.  The property was vacated and the bank careless of what's going on.  Besides stolen properties, the druggies use the house for dealings.  TV4 of the SF Bay area recently had a report on this problem.  

If you are going to bid on a property, you need to know it well before you sign that contract.  The contract may prevent you and your Realtor from entering the house until after escrow closed.  That's too late.  

I inspected a duet house and did not know that the roof had a hole because the ceiling blocks the view.  It's 2-story high and one can't see it from the street.  Fortunately, I came back the next day and talked to the adjacent owner (sharing a common wall) who wished to have a more co-operative neighbor so that both owners can agree on repairing termite damage and tent the building.  He then told me that the roof was punched from inside out before it was vacated.    

I didn't bid on the duet and got the one with more problems.  It was frustrating to get out of the deal but it was taken care of.  

Be careful and check everything out thoroughly.  Use your senses, nose also.  There are mean people who would pour liquid or bad things with odor inside the walls.  If you have kids, buy a new house.  There are no drug needles in it.  A newer house has no asbestos in it either.

Best of luck to all.

Larry wrote:  Why would anyone want to buy property at this time?  

It's low interest rate that makes it possible for many.  Rate will go up as the U.S. cannot continue with low interest rate (0 - 0.25 fed rate) and not run into more serious economic problems down the road.  

If you do buy, make it something that you can live with even if price dips further.  Prepare for a 15% pain (or elation).  Do a budget and don't get in a bidding war.  If you estimate that you can repair it for a very reasonable amount, add an escalation amount to it.  The older the house, the more the contingency amount.  

I do home repairs and often add 30 - 35% to my estimates and, more often than not, the escalated figure was the right one.   Discount this in your bid.  Walk away when you must.  Get a lawyer if you are in a bad deal.  The banks are not easy to deal with.  (IMHO, you and I would never find a nice banker unless we have money.)  

The only people who will do OK from this are those who have gone without in the past and who have saved for their future and now have cash to spend......