As buyers shop for a new home in Prince William County they have a choice to make. Do they look at all available properties in their target neighborhood or do they only look at homes that are being sold by "private owners?" If they decide to exclude foreclosures will their pocketbooks pay the price? If you look at data from one Prince William County neighborhood you can see a clear difference in pricing between foreclosures and "private owners" and someone is getting the message.
Looking through the MLS at homes under contract you see the short sales and foreclosures are moving. You also see a few sellers who have faced up to the reality of the market and decided to price their homes competitively are getting them sold.
On the other end of the spectrum in the same neighborhood you find properties that are not moving. Despite the market trend downward in price they still are holding on to 2007 (or 2006) pricing. The sellers have not adjusted to the downward trend that continues into 2008. There is a real price gap between the homes that are selling and the homes that are still on the market.
As a buyer are you willing to pay the extra money to buy a similar home in the same neighborhood? It is a tough question. Not every buyer should buy a foreclosure and not every foreclosure is a good deal. However, in a declining market buying a home that is overpriced is a bad move no matter how you spin it. There are agents working in the market today who have made the decision not to show foreclosures and others who have not counseled sellers as to the impact foreclosures may have on pricing their home for sale. Unfortunately this strategy isn't good for either buyers or sellers in our current market.
Buyers need to know about every home that is for sale in a neighborhood and make an informed decision about whether a well priced home owned by a bank makes good economic sense for them. Sellers need to know that if they live in a neighborhood where there is high percentage of foreclosure properties on the market that this will affect the resale value of their home.
In this Prince William County neighborhood it is obvious that the agents who are working with clients looking for a good deal are selling the foreclosure properties. However the listing agents may not be doing their sellers any favors by pricing their homes above the price point for the neighborhood. It is a tough call to make but it can't be said often enough in our current market that proper pricing will sell homes!
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Unfortunately, Cindy MANY foreclosures priced correctly or incorrectly have major problems with them like missing appliances and maintenance issues. I agree that the pool of all houses should be looked at by buyers but "some" of the REOs and foreclosures are major headaches.
I agree that all houses should be looked at, but I agree with Gary that some of the REO's and foreclosures I have been in required extensive work, while others were fine. It just depends upon the house.
Gary-every house is different. In this neighborhood the foreclosures are in good shape, appliances are there and except for paint or perhaps some carpet cleaning the houses are move in ready. I wouldn't even begin to say that a first time homebuyer with no skills take on a true fixer.
Matthew-I admit I've been in a few foreclosures that as soon as I opened the door I knew there were issues. We have so many newer neighborhoods built in the last 5 years where foreclosures are a great deal now compared to when they were first sold. They are in good condition and a buyer who is paying attention can get a deal!
There are so many foreclosures on the market right now. Some are indeed great deals! I have walked into some that were beyond belief!
Bill and Barbara Jo-I've been in them with collapsed ceilings from backed up gutters to pristine with stickers still on the appliances and everything in between. There are deals to be made as long as the banks or the sellers understand the market. So far I'm finding the banks to be a bit smarter than the sellers when it at least comes to making counter offers.
Your right that you cant ignore them, more than not, Im seeing in the mls, listed under corporate owner in disguise. REO properties- are taking over.
Dee-Dee-yes they are out there in a lot of different ways to label foreclsoures. Our local MLS does provide an opportunity for agents to use a drop down box to choose "foreclosure" but if you actually search by that field you get a fraction of the actual foreclosure properties. Owners need to realize that they are impacting their pricing and if they want to see they are going to have to come down out of the stratisphere.