Struggles of a Bank Owned Market

Our industry is getting more and more difficult and the struggles we face as real estate professionals are more and more disheartening. We have seen many properties go onto the market; you know, the non-short sale and the non-bank owned properties. I feel very bad for these homeowners because the only properties that are selling in our market are the bank owned properties. These are apples to oranges comparisons, but the reality of the buying public is that they think they are comparing apples to apples.

The struggles are compounded by the fact that we have not had a "normal" market sale in several months. There are simply NO comps to do appraisals. The last sale I had as a "normal" market sale was early October. The house was absolutely beautiful and since the homeowner had a lot of equity, they were able to sell it at a reduced price. I can't tell you the number of phone calls I have received from appraisers requesting the details of the purchase. The main reason is that the only comps they can find are bank owned properties, which throws their comps out the window.

Buyers are looking for the "deal" and bypassing quality and amenities. It is all about the price and nothing else. I recently heard about one of our local real estate agents purchased a foreclosed home (As-Is of course) only to find extensive electrical and plumbing problems. She thought the price of the house was too good to pass. She may have saved $150,000 off from normal market prices, but she received an estimate to do the repairs at a cost of $160,000; exceeding the so-called savings she received on the purchase. Walls had to be removed to gain access to the plumbing. Carpets had to be replaced. Replace kitchen and bathroom cabinets, new appliances, even a new garage door.

It is also unfortunate that our MLS system does not provide details of the purchase; such as the condition of the property. Typically, the MLS will display one photo of the bank owned property, but doesn't account for the reconstruction costs involved. Many of these properties have had their electricity turned off for one year, which in Florida means automatic MOLD! But yet, the buyers continue to drive down the values of the "good" properties by comparing them to the Bank Owned properties. Another feature the MLS does not display is the fact that many of these foreclosed properties were NOT sold with a clear title. This is at times a HUGE cost to the buyer at the closing table; only to find liens for HOA's still exist on the properties. It is not uncommon to find a $50,000 lien on a foreclosed property.

Even with this, the only homes that are now selling are the Bank Owned properties. This places an unfair disadvantage for the homeowners that need to sell and are NOT upside down on their mortgage. As long as this trend continues, our market values will continue to plummet.