Affects Of Forclosure On Value

[aprazer]

As others have said, it depends on the market. In my area, the majority sell above list price. Inventory is limited and values are still increasing. If you go to the HUD foreclosure vendor sites-you can see what they were listed for, the number of bids, the amounts and the accepted bid. Lots of useful information.

Very often the bids are unreasonably high-above what the identical house next door would sell for through a broker. I think this is mainly due to the buyers perception that any foreclosure is a "deal". It is also lots of new or first time buyers mining the foreclosure lists. They go from town to town looking at only these properties and I don't think they get a feel for what the actual market value is.

Lots of people ask me about foreclosures, and the days of a steal are over in this area. There are many companies producing lists of pre-foreclosures and foreclosures, and there are seminars on buying them. I think the people selling the lists and doing the seminars are the only ones making a killing. 10 or 15 years ago most brokers weren't that interested, but now they all are on the bid lists for HUD properties. There can be 10 or more broker bids for each home. They typically do not bid above the list price, but at it or right below.

 

[Dee Dee]

Originally posted by aprazer@Apr 14 2003, 12:57 PM
Very often the bids are unreasonably high-above what the identical house next door would sell for through a broker. I think this is mainly due to the buyers perception that any foreclosure is a "deal". It is also lots of new or first time buyers mining the foreclosure lists. They go from town to town looking at only these properties and I don't think they get a feel for what the actual market value is.

I wholeheartedly agree!

 

[Restrain]

If it's a HUD home, I find that they sell above market. The reason is that the buyer is generally a first-time buyer trying to get in on easy financing who is uninformed about the market. The fact that the same financing would get them into a home in better condition is lost on these people. As to a conventional REO, investors often buy them because the home generally needs work (carpet and paint) and the typical conventional lender will want this fixed before occupancy, but the typical buyer can't do this and buy the home as well. This reduces the market value because the buyers are limited.

Roger