Peter Kedzior

Times are tough, we all know that. Times are even tougher when it comes to selling a home. Huge inventory, cut-throat pricing, scarce buyers... Naturally some may think they can practically steal some of the least desirable homes around - bank owned/impenetrable/foreclosures. Not so fast... Yes, the number of bank owned homes is huge and will stay so for the foreseeable future. They are mostly in bad or very bad condition and corporate sellers would not (in most cases) pay for any repairs, even if required for the property to be appraised. Yes, cash is king but let's have some perspective here. Bank owned properties are listed at basement bargain prices to begin with. In many cases, the price comes at 10% - 30% less than comparable, other homes in the area.

There are bank-owned properties that have been sitting on the market for 4, 6 or even 8 months and have never been under contract. Let's not assume the seller will take any cash offer. There are procedures to adhere to and guidelines to follow. The massive and impenetrable bureaucracy of corporate sellers has their own rules that may seem foolish and illogical to us, humans. Well, there is human logic and bank's logic. So if a house is in poor shape, has been on the market for 6 months and would never appraise, don't think you can get it at 50% off (the current list price). Not yet... Perhaps, after 2 or 3 more price reductions, you will get your deal of a century. In most cases, all what you can hope for, is a "mere" 30% off. Obviously, if there are no other buyers willing to bid on the same property...

This has been my experience after dealing with bank owned properties in the northwest suburbs of Chicago in the last 3 years. Perhaps asset managers (as we call agents of corporate sellers) are more lenient in other areas. Or perhaps not. After all, if someone is ready to sell the property at 50% off, why not price it 30% or 40% lower? It is a good advise for all buyers, not only corporate ones... Learn more on my website dedicated to bank owned homes in northwest Chicago area.

In the second week of February 2011, 40 single family, bank owned homes were either listed or re-listed in the northwest Chicago area MLS. It was 25% increase in foreclosure activity compared to previous week. There were 12 new foreclosed houses listed, 24 price reductions and 4 homes were re-listed after deals were cancelled.

© 2011 Midwest Real Estate Data LLC

*This representation is based in whole or in part on data supplied by Midwest Real Estate Data LLC for the period February 12th through February 19th, 2011. Midwest Real Estate Data LLC does not guarantee nor is it in any way responsible for its accuracy. Data maintained by Midwest Real Estate Data LLC may not reflect all real estate activity in the market

By: Peter Kedzior, REO Specialist | Coldwell Banker Residential Brokerage | Arlington Heights, Illinois | www.PeterKedzior.com

What started as a curious case of one bank employee who admitted he used to approve thousands of foreclosure cases every month without even reading most of them, now turned into a nationwide scandal involving possibly hundreds of thousands of homes in the process of foreclosure. As most of us have heard by how, three major banks: J.P. Morgan Chase, Wells Fargo, Bank of America and GMAC all announced a temporary halt on foreclosures while the extent of “flawed paperwork” is being investigated.

This practice must have been so widespread that Congress in an unusually expedited manner voted a bill that would make foreclosure documents that meet legal standards in one state, exempt from verification procedures in any other state that requires court approved foreclosure proceedings. This bill now faces a veto, since President Obama doesn’t want to make it easier for banks to bypass state laws regarding proper verification of foreclosure cases.

The extent of this scandal is not fully known yet and every day brings new developments. Many banks in addition to halting pending foreclosures, are also removing foreclosed properties from the market fearing their documents are so flawed that no title insurance company would cover them, once sold. It is almost certain that the number of foreclosures coming to the market will slow down in the next weeks and months. The enigmatic “shadow inventory” of foreclosed homes that are not yet listed for sale, will grow even more. As a result, it will take even more time to clear all “distressed homes” from the market and clear the way for home values to grow again.

The most recent S&P/Case-Shiller Home Price index that was released today, provides long-awaited positive news about U.S housing market. Countrywide, home prices went up 3.6% in 2009. The last available data for second quarter of 2010 also show a substantial increase in home values at 4.4% over the first 3 months of 2010. That would be a very positive sign if not preceded by last week's spade of bad news about recent home sales and inventories. Most experts agree that July 2010 S&P/Case-Shiller Home Price index will reflect the negative effect of expiration of tax credit. The supply of unsold homes have been steadily rising since May. Nationwide, it would take 12 months to sell all listed homes - twice what is considered a normal inventory, balancing supply and demand.

June 2010 was also a very good month for the greater Chicago metropolitan region. Prices rose 2.5% compared to May 2010 level and Chicago was in the top 5 among cities that posted gains in June. Recent home sales in Arlington Heights are available at our website: http://www.Homes-ArlingtonHeights.com. Featured there are also current foreclosures in northwest suburbs of Chicago.

What recently have you done to speed up the economic recovery? Yes - I mean you. Each and every of us needs to do our part. Mostly, by spending money. The big problem with getting out of the current recession is that so many people decided not to spend their money on things that move the economy forward, so called "durable goods". Things like vehicles, appliances, electronics and, yes - homes. Without consumers spending, this economy will go nowhere.

Yes, I know - people are scared to death watching the unemployment numbers. Let's put it in perspective though - there are countries in Western Europe that haven't seen unemployment that THAT low even in the good times. Still, people in those countries have been buying cars and homes. They are still doing that, even in Spain, where close to 20% of people are without jobs. Frankly speaking, spending your money on durable goods is probably one of the best ways to help your unemployed neighbor.

So, don't ask what U.S. economy can do for you, ask what you can do for the U.S. economy!