I have a number of clients looking strictly at foreclosure properties for their primary home. There can be a good deal now and then, but often is the case where the home needs work/appliances/both, and the cost of getting the home up to par, when added to the cost of buying the home, would be nearly equal to the price of buying an existing non-foreclosure listing. And you save the work and headaches of upgrading the place.

As well, time and again my clients are bidding full price for a foreclosure and missing out due to the many people pursuing them. I have a buyer who has bid on 5 foreclosure properties for his primary home, and each of them have been in a "multi-offer" situation, and in each case he bid asking price or higher only to be told the bank took a competing offer... each time taking two weeks to submit the offer, get the multi-offer notice, submit a new offer and wait for the final decision. It's definitely an option for those with patience!

Nobody has brought up the distinct possibility that the loan servicers may well have bundled and sold each of these loans MORE THAN ONCE to differernt investors via the securitization process. THIS COULD BE THE REAL REASON THAT THERE IS NO DOCUMENTATION / PAPER TRAIL. The non-existent documentation and accounting is entirely consistent with this scenario. This means that the entire plan was a true Ponzi scheme in the worst sense. In other words, rather than selling the loan once to investors, as we have all naively been assuming, there is no reason to believe that they did not double-dip or quintuple-dip and sell the exact same loan to completely new buyers. THIS IS A LEVEL OF FRAUD THAT THE AMERICAN PUBLIC HAS NOT YET CONTEMPLATED.

There are no new laws that are necessary. All that is necessary is for the states to FOLLOW THE EXISITING LAWS which have been around much longer than any of us, or any of the banks themselves. These laws were devised to deal with all property frauds, including the current foreclosure frauds. No more bailouts. Let the chips fall where they may.

The Q as posed presumes that foreclosed properties don't have OTHER and perhaps even more substantial issues going on that may affect price (even with full disclosure and opportunity to inspect).

In most instances though --and this is a large part of the rationale for vest pocketing so many and creating the "shadow inventory" we hear of so much-- 1) the property will tend to be a bit beat up by use and neglected wear repairs during the "owners" occupancy ...and
2) too often these properties were rather "rough" before with only the minimum superficial and cosmetic work needed to prep them for showing; and that work even poorly done.

Long story short?
A 27% drop still sounds low. In many instances far, far too low to pique the interest of a knowledgeable buyer.

Jaime-

Can we pls oh pls oh pls start a feature called, "High Comedy Listing of the Day"?

While I do find some charm in this one, does anyone really want to spend a half a mil to live in a barn? Granted that $1500 price reduction sure has me tempted.

OOOPS forgot the link

Jaime-

Can we pls oh pls oh pls start a feature called, "High Comedy Listing of the Day"?

While I do find some charm in this one, does anyone really want to spend a half a mil to live in a barn? Granted that $1500 price reduction sure has me tempted.

http://www.trulia.com/property/photos/1059901329-2210-Furnace-Rd-Fallston-MD-21047#item-10

elweedz, I'll admit it -- I would feel bad shining a light on listings specifically to LOL them. Though I have seen it done in semi-tasteful ways -- ever checked out lovelylisting.com?

This real estate market will be properly corrected by the marketplace -- not the government. Qualified buyers can buy at a discount. Qualified owners don't have to sell or worry about the value until they do sell.

I took at quick a look at the barn-for-sale link. I think that the blue house is for sale and that all the inside shots are of the blue house (last picture). You can see the skylights of the blue house on some of the inside shots. The barn is sitting in the back yard behind the blue house. It's very unclear, however, and I think the realtor should fix the order of the pictures on Trulia.

Beth- the blue house is a refurbed barn. The other structure is just an out-building.

"I would feel bad shining a light on listings specifically to LOL them."

Jaime- you are no fun ;-).

Question- How much will your employers tolerate the negative tone this blog has taken with regard to house values considering all the advertising dollars that are paid by RE companies? By negative tone, I am referring to your posters, not you.

elweedz, Sun management has never said anything to me about the tone of the blog or its comments. Also, I've never once heard any mutterings to the effect of, "Well, we can't write that story or else our advertisers will be upset." That sort of thing would REALLY upset reporters and editors, not to mention readers, and good newspapers know better than to risk their reputation doing it.

So while I'd feel bad pointing and laughing at certain listings, it's the individual homeowners, not the real estate industry, I'm thinking about.

This case is the best argument for loan modifications. Why foreclose, and take down the neighbors, when a sustainable loan modification keeps the borrower in the home with no impact on surrounding values?

RobertJStrupp

"Why foreclose, and take down the neighbors, when a sustainable loan modification keeps the borrower in the home with no impact on surrounding values?"

Because you are artificialy propping up a market, keeping homes unaffordable. A market that no one can afford benefits no one. Besides, why should i have to pay 400K for the same house my neighbor got for 250K thru a loan-mod?