There’s good news and bad news about foreclosures in the area.
The average price of foreclosed homes across Fairfax County is well
above the average price across Virginia and the nation—that’s the good
news.
The bad news is that there has been little improvement in the number
of foreclosures on the market in Fairfax County in the past year.
Virginia has about 15,000 homes that were bank-owned or in
foreclosure, or 1.1% of the United States’ 1.34 million
foreclosures. 16% of Virginia’s foreclosures were in Fairfax
County. According to RealtyTrac.com, there were 2,431 Fairfax County
homes in foreclosure in late March.
Patience and Pricing
The difficulties and stigma attached to buying a foreclosed property (or a negative equity "short sale" property) have been factors that have discouraged many potential and prospective home buyers (and investors) from attempting to buy a foreclosure or "short sale" property in the past. Other favorable market conditions and an overwhelming shift from a once strong Seller's market to a "target rich environment" and an extremely strong Buyer's market led many home buyers to stay clear of foreclosures and short sales. There was also an assumption that a distressed sale property was trashed and in need of a great deal of repairs or was a "Section 8" type of property.
The stigmatism attached to buying a distressed property is no longer the case. Home buyers are realizing that they can take advantage of some fantastic deals out there and get a property in move-in or "turn-key" condition. Anyone who bought property around 2004 at the height, apex or zenith of the housing market or at the top of the roller coaster quickly saw their home value drop significantly beginning in 2005 when the bubble began to burst and the sub-prime debacle began to unfold and unravel and homeowners watched as home values plummeted down towards the bottom of the roller coaster. Actually it was like a car being driven off a cliff with a brick to the accelerator pedal. If someone bought with little or no money down, they quickly found themselves without any equity in the property and upside-down on their mortgage; hence the proliferation of "short-sales". Many people realizing they had an "under-performing asset" on their hands and simply walked away and left the keys on the counter and let the property go into a "strategic foreclosure". As a result there were and still are many foreclosure properties on the market that are actually in turn-key condition.
The average price of a foreclosed home in Fairfax County in late
March was about $321,000. That’s more than both Virginia and the
nation’s average prices, which were $243,772 and $165,321 respectively. Virginia’s foreclosure situation has seen little movement
since this time in 2011, according to the Virginia Housing Development
Authority (VHDA). A problem unlikely to change significantly until
Virginia sees a drop in unemployment and household debt, and a rise in
incomes.
Virginia’s foreclosure prevention website, at www.virginiaforeclosureprevention.com,
reports that when foreclosed properties are sold, the borrowers’ loans
have been delinquent for about 117 days, or four months.
The hardest part about buying a property that has been foreclosed on
is being patient. Frequently, the bank will give a verbal
reply or acceptance to an offer, and then send the contract addendums to the buyer later. A verbal reply, however, is not legally binding as the Statute of Frauds requires contracts (or the negotiated terms and conditions and acceptance thereof) for real property to be in writing; so
in the time the buyer is waiting for the paperwork from the bank, the bank can legally
accept another offer and the prospective buyer may be missing out on other opportunities while waiting on the bank. If you're a "cut throat" investor or a "low ball" offeror with time and money to play with, that is a waiting game you can afford to play and take a chance on. If, on the other hand, you are a first time home buyer trying to capitalize on highly favorable market conditions with distress properties, you could be engaging in a wait-n-see game or chasing the curve on housing market values while you're dealing with highly problematic distress and foreclosure property contract offers that either don't go through the first time or fall apart subsequently with bank owned property, also known as "REO properties".
The foreclosed properties that have sold so far this year have been
on the market for an average of 65 days, but that number is slightly skewed. Because it takes the banks a few days to reply or finally accept an offer, they have to keep the property listed in an "active" status in the real estate MLS (Multiple Listing Service) while
they do their paperwork although basic terms and conditions have already been agreed to.
The Fairfax County government website has a variety of resources for homeowners facing difficulties paying their mortgage,
including a list of Housing and Urban Development (HUD)-approved
counseling agencies and information on foreclosure prevention.
Here are some links for Statistics on Home Sales & Market Conditions in Fairfax County and Northern Virginia:
Another good indices of either how strong or weak the housing market is known as the "Absorption Rate" - which means if no new homes came on the market how long or the rate at which it would take to sell or liquidate the current inventory of homes based on current sales statistics data and market trends.
Short Sales take a bit long to go through in my opinion. Also, dealing with the bank as a seller is a pain because they are stubborn and refuse to sell at a loss, even if its a toxic debt on their balance sheet.
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