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.

Read This Before Writing an Offer on a Bank-Owned Property

If you're considering writing an offer on a foreclosure/bank-owned property, you need to read the post entitled "20 Things You Should Know When Writing An Offer on a R.E.O. Property" over at Agent Genius. Though it's for agents, most of the items pertain to buyers.

Here's an excerpt:

#1 Verbal offers are rarely accepted, considered, or responded to.

#2. Seller is an institution or government agency and does not respond to offers on weekends or holidays. Offers presented during these times will be presented the following business day!

#3. Be aware, the possibility of multiple offers exists, all offers will be presented to seller. Please read items 4-8 carefully.

#4. Seller is looking for HIGHEST AND BEST OFFER, this means that the highest offer may not be accepted. The institution definitely weighs all of the risks associated with offers. Contingencies and sales terms are considered to determine with whom they will enter into contract.

#5. Response times of 5 to 7 business days or longer are not unusual. Your offer will sometimes require the signatures of multiple parties. Be advised that all efforts are being made to give the buyer a timely response. The listing agent has no control over this time frame! The listing agent has the same desire as you, to see a successful closing!

#6. Due to the nature of R.E.O’s, once there is an acceptance of your offer, the usual turn around time for an executed (fully signed) contract is 7 to 10 business days.

#7. Because of items 2 - 6, once an offer has been sent to the seller for FINAL (fully signed) approval, all offers after that are considered back up offers.

#8. Seller may respond with a “reject offer” with no counter.

The remaining 12 items are also important so make sure you check out the full post. If you have any questions on any of the items or need clarification, don't hesitate to contact me - danilo.bogdanovic@gmail.com or 703.582.6900.

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.