Foreclosure Freeze “Icing” Loudoun Real Estate Market

President-Elect Obama said he wants to put a 90-day moratorium on foreclosures once he takes office, but Countrywide/BoA, Chase and Citi aren't waiting until January 20 to start "freezing" foreclosures. The effect of this is already being felt in Loudoun County as less new foreclosure/bank-owned properties are coming on the market.

For example…I just did a search for active bank-owned and short-sale town home listings in Ashburn Village and found that over 90 percent of them were short-sales. The ratio has recently been about 60/40 (foreclosures to short-sales)

One effect of this is that buyers will be further frustrated with the purchase of a home. Short-sales take 3, 4 sometimes 6 months for a response and only about 20 percent get approved so they work for only a select few buyers that have that kind of flexibility and patience. With the rising number of short-sales and diminishing number of foreclosure listings and traditional resales on the market, buyers are left with less "real" inventory to choose from than they have in years.

(Short-sales are not "real" listings in my book because the seller doesn't even know if the short-sale will be approved by the bank while listing the property)

What will happen when the "freeze" ends? We'll see more foreclosure properties hitting the market once again. As much as this may sound like a bad thing, it's actually a good thing. We have to get through the bank-owned property inventory one way or another before we can see the market rebound. Plus, it will give buyers more "real" inventory to choose from.

 

How To Buy Freddie Mac-Owned Properties With Closing Costs Paid Plus a 1.5% Rebate

Freddie Mac is following in Fannie Mae's footsteps by selling their foreclosed properties directly on the open market. Freddie Mac's program is called HomeSteps and utilizes a network of real estate agents/brokers throughout the country to sell the properties and represent buyers. (Yes, the brokerage firm I'm with, Market Advantage Real Estate, and I are part of Freddie's network)

Freddie Mac's HomeSteps program is currently two huge incentives for buyers and buyer's agents/brokers:

• Freddie Mac will pay up to 3.5 percent of a buyer's closing costs*
• Freddie Mac is offering selling agents/brokers (aka Buyer's Agents/Brokers) a 1.5 percent bonus on top of the broker commission already being offered (which ranges from 2 to 3 percent of the sales price)*

*Please see Freddie Mac Terms and Conditions for more details.

How do these two incentives benefit you as a buyer?

The first one is a no-brainer. You get your closing costs paid up to 3.5 percent of the sales price. Since closing costs typically run in the 3 percent range, this incentive should cover all of your closing costs leaving only the down payment amount due at settlement.

As for the second one, let me explain…

If you hire me as your Buyer's Agent, I will rebate any amount of commission/bonus paid to my broker above 3 percent of the sales price back to you on any and all Freddie Mac properties you purchase that offer the rebate.

For example…If the commission being offered is 2.5 percent and the bonus is 1.5 percent, you will receive 1 percent back as a rebate. If the commission being offered is 3 percent and the bonus is 1.5 percent, you will received 1.5 percent back as a rebate.

Why "give away" my commission like that? Because I believe that making 3 percent of the sales price as a commission is fair and anything above and beyond that seems like a second-helping when you're already full. 

How do you search for Freddie Mac-owned properties? The brokerage firm I'm with, Market Advantage Real Estate, has made it easy for you. They've added a search feature that allows you to search for Freddie Mac-owned homes only. This will help filter out the "noise" and allow you to only search those properties owned by Freddie Mac. (The search feature may not be pretty, but we were focused on getting a functional resource out to consumers ASAP)

If you'd like more information about any of the Freddie Mac-owned properties you come across in your search or have questions about how the process works, please email or call me - danilo.bogdanovic@gmail.com - 703.582.5900.

How To Buy Fannie Mae-Owned Properties With Zero Money Down, No Mortgage Insurance

   

A little-known fact is that you can buy Fannie Mae-owned foreclosed properties with as little as zero money down with no Mortgage Insurance. Fannie Mae is selling their properties through a program called "HomePath" and they're selling them for 50 to 75 percent of what they were worth just a few years ago.

Fannie Mae also offers a program called "ExpressPath" which is a financing option provided by Fannie through a Fannie-approved lender. ExpressPath financing can provide qualified borrowers up to 100% financing on select Fannie Mae properties. 

How do you search for Fannie-owned properties? The brokerage firm I'm a part of, Market Advantage Real Estate, has made it easy for you. They've added a search feature that allows you to search for Fannie Mae-owned homes only. This will help filter out the "noise" and allow you to only search those properties owned by Fannie Mae. (The search feature may not be pretty, but we were focused on getting a functional resource out to consumers ASAP)

How do you find out more about ExpressPath financing? Just click here.

If you have questions regarding the process, don't hesitate to contact me directly or check out the FAQ section on Fannie's web site. Here's an excerpt:

How is buying a home owned or managed by Fannie Mae different from other home purchases?

Usually, when you buy a home, you deal with a seller who lives in the home. However, the homes sold by Fannie Mae are unoccupied. Fannie Mae has acquired these properties through foreclosure, deed in lieu of foreclosure, or forfeiture.

Can I buy a house directly from Fannie Mae without going through a real estate sales professional?

No. Fannie Mae depends on the expertise of local real estate sales professionals and accepts offers only through our real estate listing agents. You may work with any real estate sales professional to submit an offer to the real estate agent who has listed the property.

If you'd like more information about any of the Fannie Mae-owned properties you come across in your search or have questions about how the process works, please email or call me - danilo.bogdanovic@gmail.com - 703.582.5900.

Related Posts

How To Buy Freddie Mac-Owned Properties With Closing Costs Paid Plus a 1.5% Rebate

U.S. Foreclosure Statistics Show Mixed Signals

The most recent U.S. foreclosure statistics just released by RealtyTrac and CNN show mixed signals. September 2008 saw a 12 percent decline in foreclosure filings over August 2008, which is good. But it also was a 21 percent increase over September 2007, which is not so good.

Though the increase over last year is an important statistic to consider, the decline over last month is even more important because it's more relevant to how the current market is doing and where it's headed. If we see a continued decline in foreclosure filings as 2008 comes to an end, this will bode well for market in 2009. If not, the 2009 U.S. real estate market may not get off to such a great start.

What's interesting is that there's a quote in the CNN article that says,

The bad news: The housing market will be flooded with bank-owned homes. "We are estimating that by the end of this year, between one quarter and one third of all homes for sale will be bank owned properties," he said.

That could push down prices even more, perpetuating a vicious cycle, but it might also start to attract bargain hunters who may absorb some of the massive housing inventory.

Well, Loudoun County bank-owned and short-sale properties have made up one quarter to almost half of all homes for sale for almost 2 years now. And the bargain hunters and investors started coming out in packs to buy up that inventory well over a year ago and they're continuing to do so.

This just goes to show that Loudoun County and the DC metro area are ahead of the rest of the U.S. (as we usually are). Our boom market started before most of the country. The peak of our boom market (Summer of 2005) was ahead of most of the country. And the bottom of our bad market usually comes before the rest of the country's does. If they're calling for that "bad news" to happen just prior to the bottom for the U.S. housing market….well, it's already been happening here in Loudoun.

Loudoun Foreclosure Property Auctions Not a Hit With Buyers

Though Loudoun foreclosure/bank-owned properties are selling like hot cakes on the open market, foreclosure auctions are like ghost-towns. Few attend foreclosure auctions and the ones that do attend rarely make a bid.

Why? For the same reason regular properties that are up for sale just sit on the market…they're overpriced. And even if the price seems right, people are skeptical about bidding because they can't always inspect the property in person prior to bidding.

There's a great article in the Washington Business Journal that helps explain the situation in more detail. Here's an excerpt:

Many investors, who make up the bulk of active bidders at auctions, say the banks are asking too much for the homes. So far this year, 748,381 homes—or 46% of the foreclosures—have gone into the possession of the banks as real-estate owned, or REOs, because no bidders were interested in them at auction.

Individual buyers looking for deals at auctions will likely not find one, says Foreclosures.com President Alexis McGee. Making it harder for individuals: it is generally not possible to examine the properties in person before buying them and buyers must have money with them to make a down payment on the home.

Back in April, ABC7 News (WJLA) interviewed me for a story on this very subject. Funny thing is, the same is true now as it was then.

The only good thing is that banks are starting to "get it" when it comes to how they price their bank-owned properties on the open market, which is evident by the increasingly high number of bank-owned property sales in Loudoun County and the DC metro area in general.

See What Properties Are In Foreclosure For Free

If you’re curious about which properties in Loudoun County (or other parts of Northern VA) are in the foreclosure process, check out ForeclosurePoint. The site offers a database of about 1.2 million properties with foreclosure filings in 35 states including Virginia. Registered users (free) can check out street addresses and dates of foreclosure filings of properties in Loudoun County and the rest of the area as well.

If you’d like more detailed information, you can upgrade to a "Premium Membership" which runs $79.95 per month. That’s quite a chunk of change, but the upgrade provides all foreclosure details and access to their VeriTrack™ feature that monitors and updates changes to property status, auction schedules, and opening bids.

Though ForeclosurePoint offers information on properties going through the foreclosure process, it does not list properties that are now bank-owned and for sale. If you’d like to receive a list of bank-owned properties currently for sale, email or call me and I’ll get that over to you.

How To Find Out About Some Of The Best Deals In Loudoun County

Up until recently, some of the best deals in Loudoun County were being posted here on this blog. Many of you emailed or called asking for more information about the properties or to see them in person. Well, unfortunately, I can no longer continue posting those. Based on rules and regulations that govern all Realtors, posting about a property that is listed by another agent/broker is considered "advertising" and is not allowed.

But, there is a solution! You can receive my top picks of properties for sale in Loudoun County via email. If you request the information to be sent to you, then it’s no longer "advertising".

Here’s how you do it…

Insert your email address and first name into the form below and then click "Submit". A thank you page will pop-up stating that you will receive a confirmation email shortly. Just click on the link in the confirmation email and you will start receiving the best deals in Loudoun County immediately.

Please note…your email address, name or personal information will never be sold or provided to third parties. You will not receive any emails other than the best deals in Loudoun County. You will not be harrassed by sales emails or emails trying to solicit your business. It’s completely up to you if/when you wish to initiate contact with me.

Send Me The Best Deals In Loudoun County!

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Great Single Family Foreclosure/REO Deal In Broadlands!

This bank-owned single family home in Broadlands is a great deal at $693,900. It’s only 4 years old, has over 6000 finished square feet on three levels and sits on .27 acres.

It has a 3-car side-load garage, upgrades throughout and is in good condition. It’s on a cul-de-sac in the newer part of Broadlands (Broadlands South).

If you’d like more information, feel free to email or call me - 703-582-6900.

Listed by Carter Braxton Real Estate Company - 11 Loudoun St SW, Leesburg, VA 20175

-Danilo

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