Friday, July 11, 2008

Foreclosures up 129% in Oregon in June '08

RealtyTrac released their June report today, and things continue to get worse for Oregon.

Total foreclosure filings totaled 2047 in June 2008, up 133% from the 880 filings in June 2007.

Notice of default (NOD) were up 73% from 541 in June '07 to 938 in June '08.

Notice to sell (NTS) are up 215% from 303 in June '07 to 953 in June '08.

Finally, bank owned properties (REO) are up 333% from 36 in June '07 to 156 in June '08.
My take on this data is that as financing has become harder to find and prices have started to decline, more and more owner's are unable to sell or renegotiate their loans are the houses are going to auction.

Bank owned properties are increasing significantly due to the increase in houses going to auctions, and the lack of credit for the usual players who typically buy the houses at auction. Other sources have told of houses at auction bringing no bids, either due to lack of capital for buyers, or a belief that the houses are overpriced.

For those buyer's who are interested in buying a foreclosure, this article "How to buy a foreclosed home" in the San Francisco Chronicle is one of the best descriptions I have seen recently about the pitfalls and traps of trying to buy a house in any stage of foreclosure:
As bank repossessions continue to mount, it's a question that is being asked more and more often. The answer is, foreclosures are available and reasonably priced - but don't expect a screaming deal.

"More than 50 percent of our customers come in wanting a great deal on a foreclosure," said Pat Lashinsky, CEO of Emeryville's ZipRealty, a brokerage with more than 2,200 agents in 19 states. "The percentage that actually do (find one) is significantly less. When you find a good deal, there are five or six or seven offers, and you're up against professional investors."

Finding a foreclosure is straightforward, according to a range of industry
experts: Decide on a budget and geographic area; get prequalified for a mortgage; work with a buyer's agent; check the MLS - the same steps you take in buying a nonforeclosed property.

But there are potential obstacles in navigating the unfamiliar territory of the properties known in the trade as REOs - short for real estate owned by banks. "It takes a certain breed of borrower to buy a foreclosure," said Joe Metz, a Realtor-broker with Re/Max Active Realty in Fremont. "I hold a lot of REOs open on weekends. I can tell if a buyer is new to the whole thing; they just get really upset with the condition of the house."

That's because banks don't do more than a very basic clean-out of foreclosed properties. They don't paint. They don't replace carpets. They don't remodel.

"We explain that if you want a staged house, you'll pay 50 grand more for it," Metz said. "This is a deal. These are all things that can be corrected with your checkbook."

Here are more factors to consider in buying a foreclosure:
-- They're discounted, but not giveaways. Banks usually determine an asking price after hiring several real estate agents to give opinions about a property's value.

"Banks are getting very aggressive on pricing," said Glen Bell, a Realtor with Keller Williams Realty. "We're seeing them priced at 10 percent to 15 percent less than non-REO properties. Reducing prices to attractive levels has become their strategy ... to unload assets."

However, it's important to remember that banks, and the people who work for them, are skilled at analyzing prices and market conditions.

"Our experience is the bank has a number (the asking price); they will hold that for a while," Metz said. "If they don't get that number for three or four weeks, they will lower the price a little more. Banks are very smart about how they do this. They move them very quickly and for about as much as anybody could get."

-- They can draw multiple offers. Don't think that you're the only one with the brilliant idea to buy a foreclosure at a discount. "We've seen multiple offers in about half of our sales and pending transactions," Bell said.
Anybody have any brushes with foreclosure's they'd like to share?

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JS said...

"Anybody have any brushes with foreclosure's they'd like to share?"

Yeah, stay away from 'em. :) I bought a house last week in the Hawthorne District. Before that my wife and I entertained short sales and foreclosures. Short sales are a disaster. Foreclosures aren't much better. In early spring banks were asking way too much. Also, they weren't paying buyer agent fees. By late May and June it seemed like they were starting to figure it out and make some corrections. But if you make an offer it goes into a black hole. You can get your agent to give them a time limit to respond to your offer but they'll ignore it. Also, they're asking what they think is fair market value and it might very well be in the ballpark. But then you go look at the place and you realize the previous owner grabbed everything that wasn't nailed down before getting kicked out. So you'd have to put another $20K or so into it. For the headaches involved you're not really getting any killer deals with foreclosures.

Kirk Coburn said...

Agreed with js. It is a pain in the ass to get them and not worth in in my opinion. Better to just find a regular home that is priced competitively enough to get some bites. They're out there.