Why can’t I find a $250,000 home for about $150,000?
I’ve had more than a few people ask me this question lately. There are still a lot of home buyers looking for great deals but the all seem surprised when they aren’t finding many foreclosures out there. Sure if you just search for any foreclosure in North Atlanta then a lot of homes will come up, but most people are looking for deals in specific communities or school districts and they are finding the choices somewhat limited.
Here’s an example looking at 3 large communities in Forsyth County:
The chart above clearly indicates that foreclosure listings are moving fairly quickly. The banks aren’t having a hard time moving these properties. As of this post there are 158 active Foreclosure / Bank Owned properties listed. There are 76 bank owned properties currently under contract or sold so far this month. That sounds like a 60 day supply of inventory.
How can this be?
I know, everyone keeps hearing on the news or reading that the foreclosure crisis is far from over. Here in Georgia we are a non-judicial foreclosure state which basically means the lender doesn’t have to sue you to take the home back. So, after being 90 days behind they can advertise your home in the paper for 4 weeks and then sell it on the courthouse steps. I’m hearing about people who are behind by 8 or 10 months, some even a year and the process hasn’t started. Before the crisis this was unheard of in Georgia.
Banks are too swamped with current inventories nationally and with people trying to get loan modifications. The foreclosures that do go on the market get priced very aggressively (generally) and often sell for over the asking price. The banks are dragging their feet on new foreclosures because having the owner in the home and taking care of it is better for them. If the bank eventually forecloses they may be able to sell it for more when the market improves.
Smart buyers make realistic decisions.
So, what does that mean for the buyer looking for a deal? It’s fine to look for a great deal but remember, you’re going to be living in the home too. Have your Realtor explain the market, this isn’t Detroit or Las Vegas. Don’t get distracted looking to pay $150,000 for a home woth $250,000 - you won’t find it. Instead, make sure your realtor looks at current comps and compares those to the market last year and gives you a realistic idea of where the market is heading now. If you can buy at 20% - 40% off recent market values you ARE getting a good deal.
