Market trend: Lender-owned properties

Well, it's offical. If you are a buyer looking in the under $300,000 price range and you are viewing lender-owned properties, be prepared for multiple offers.

We have been out with buyers, writing reasonable offers on lender-owned properties, and other buyers are out there doing the same thing. It's almost like a train station inside lender-owned properties; people coming and going. So this begs the question, why would there be so much competition out there?

Simple. Buyers haven't left the market, they are just being most cautious about the price-ranges of homes they are looking at. Knowing that lender-owned properties are typically priced to sell, or better yet, under-priced, buyers are flocking to these houses. Many buyers don't want to be in the same position as many property owners are in today. Quite a few buyers think that if previous buyers hadn't bought when the market was high, or bought the best house in the neighborhood, that we wouldn't be in this housing crisis. So, what we are finding is that buyers are willing to buy into the real estate market, at the VERY low-end; I.E. lender-owned properties.

Lender-owned properties can come with many surprises that a buyer may not know about, or uncover, until they have taken possession of the house. It is important to note that almost all lender-owned properties are sold "as is", without any warranties, or history, of the property's issues/conditions. Many lender-owned properties require work to make them livable or work to make them desireable. Some houses don't have functioning plumbing (copper been ripped out by vandals or previous homeowners), roof leaks, green pools, over-grown yards, trashed carpet, etc. Then there are other properties that are pristine inside and out. We're seeing saavy buyers budgeting for repairs and not relying on home equity lines to complete the repairs. The buyers are doing the right thing by considering the costs of ownership ahead of purchasing a lender-owned property, since the availability of funds to fix up a house are reserved for property owners with a substantial amount of equity already accrued in their homes.

So what does this mean to you? Well, if you are a buyer looking at lender-owned properties, be prepared to bring your highest and best offer as your first offer. You may not get a second chance to raise your price. Also, if you are a seller in a high foreclosure area, this may impact your property value right now. 44% When buyers realize they are in competition for these lender-owned homes, it almost serves to make them want them even more. We are seeing many lender-owned properties selling at, or above, list price.

A recent study from ASU (9/12/08) showed that "Of the 7,505 resale home transactions recorded in Maricopa County in August, 44 percent were bought out of foreclosures, according to the Realty Studies department at Arizona State University. That's a two percent increase from July and more than double the 20 percent of sales recorded in August 2007."