Lately I've been showing a lot of foreclosures. I would say about 90% of them need work. And when I say they need work, I mean they need kitchens replaced, basements gutted and finished, and a lot more. These are properties that have been left in total disrepair, or have been destroyed by previous homeowners.
There are a lot of foreclosures coming on the market in our area. And there are Buyers interested in purchasing them. The problem is that it is nearly impossible for the average Buyer to purchase one of these properties.
For example, right now I have a Buyer that is interested in making an offer on a foreclosure property. The comps show that the home is listed at current market price. However, in submitting an offer, how can any Buyer make an offer at market value, full list price, for a home that might need $20,00 - $30,000 of work?
I know the bank is going to come back, not even with a counter offer, declining our offer. They will state that they have an appraisal and comps to support their price.
The problem with banks and bank owned property is that they just don't give any merit to the fact that people have to put several thousand dollars into one of these houses just to make it liveable. This is particularly the case with short sales.
Further compounding the problem, lenders don't offer the necessary programs to make these types of purchases realistic.
It has always been difficult for appraisers to make "condition adjustments" on appraisals. In my opinion, if banks are going to try to get the full appraised value, they need to be willing to give or lend Buyers the money for necessary repairs.
It sounds crazy, but what Buyer can come up with a down payment, closing costs, and then still have the money to make major repairs?
How would you solve the Foreclosure Conundrum?
Clients always ask me: Are you on the web?
See for yourself.
Tim McIntyre, GRI, Ellicott City Realtor, Catonsville Realtor
Helping Clients Buy, Sell and Invest in
Howard County, Carroll County and Baltimore County
for more than 25 years.
tmcintyre@cbmove.com 410-480-3555
www.timsellshomes.com
Where there is a problem there is an opportunity. Perhaps if the lenders would take some great real estate classes on how homes sell they will get educated about this. The problem started way back when foreign coin landed here and once again lenders went crazy and made very poor choices there. They got a bit greedy and the whole job market just about crashed as a spin off.
Now we are still dealing with lenders not makeing good decisions. If the lender was a seasoned agent they would know that there is like a 1 to 10 deduction in price in a strong Buyers market for homes that are not move in ready. Such a shame that the previous owner out of frustration most likely committed waste to the properties. When will all this craziness end?
HOw about getting the lender some real estate 101 info, Realtor.org should have some that might just explain to them in very simple terms what it takes to sell a home and remind them they are lucky to have a buyer interested.