Mat-Su Foreclosures, The Good, The Bad and the Ugly, Part 2 November 4th, 2007
In part one we talked about pre-foreclosures. This is when you buy the property after it is in foreclosure but before it goes to the auction. In a pre-foreclosure you are dealing with the private owner and sometimes also with the lender, especially if you do a short sale.
In this post we will talk about actually purchasing the property at the auction. These auctions are scheduled to be held either at the Palmer Court House or the Anchorage Court House. When you read the legal notice, you will see who the contact person is and when the auction is scheduled. You will want to call the day before the auction to ensure that it will in fact be held. Often the auction is postponed or cancelled for some reason.
When you show up at the court house you will want to have proof that you can pay the price in cash. This can include a letter of credit, or a cashiers check. You will not be able to get a normal mortgage on the property because the lender will want to be paid “cash as-is”.
You will be purchasing the property “as is”. Often you will have little to no opportunity to inspect the property before you pay for it. You will have no recourse if you find problems with the property after you own it. Often these properties have significant damage. I have seen foreclosed properties with all the cabinets removed, all the light fixtures removed, the pipes frozen and broken, and a glacier flowing out the front door.
When you do purchase the property at the auction you will receive a trustees deed. This deed will wipe out any other liens against the property except a federal lien such as an IRS lien. If the IRS does come back and take the property, they will need to reimburse the purchaser of the property.
Normally only a few people show up for these auctions because they are so risky. The real savvy investors who are willing to take risks occasionally buy properties here for 50 cents on the dollar or less. But they often get stuck with major repairs as well. Most often, the lender opens the bidding with the amount owed on the property and that is the only bid. Then the property goes back to the lender who has to put it back on the market. It is now a Real Estate Owned, (REO), property.
REO properties are almost always listed with a Realtor on the MLS system. That is the subject for part 3.
Mat-Su Foreclosures, The Good, The Bad, and the Ugly November 3rd, 2007
Some areas of the country are seeing a lot of foreclosures. Generally, the places that had the fastest increase in prices are seeing the most homes go into foreclosure. Wasilla and Palmer currently have more foreclosures than we have seen in about 10 years or so, but it isn’t anything like Las Vegas, Pheonix or Southern California.
Often, people ask about buying foreclosures with the unspoken assumption that a better deal might be found there. There actually are some opportunities here for a savvy buyer, but there are also some mine fields that can blow you apart if you aren’t careful.
There are three different points where foreclosures come on the market. The pre-foreclosure, the foreclosure auction, and the bank-owned foreclosure.
This article will focus on the pre-foreclosure. I will discuss the other purchase points in future posts.
The pre-foreclosure begins when the home owner drops far enough behind in payments that the lender begins foreclosure proceedings. Often, the owner finds a way to bring the payments current so that they can forestall the foreclosure. However, if the owner cannot bring the payments current it is just a matter of time before the house will be auctioned at the court house steps. The period before that is the pre-foreclosure period.
An owner who decides to try to sell their home before the bank takes it is a very motivated seller. They know they are not only going to lose the home, they will also have very damaged credit if the lender takes it.
You can find lists of these foreclosures in local newspapers. The Alaska Journal of Commerce legal section has the most extensive list. The legal notice gives the owners name and the legal address of the property.
Usually these homes will be listed with a Realtor. The listing advertisement may or may not mention that the house is in foreclosure. The problem is that more often than not, there is more owed on the property than it is worth. That is where a short sale comes in. Sometimes the lender will accept an offer for less than the amount owed to save them the hassle of taking possession and selling it themselves.
Normally, the home will not be in very good shape, and the owner will not be able to make any repairs. If repairs must be made to bring the home up to financing condition, you may have to foot the bill yourself. Making repairs on someone elses home before you purchase it is always a risky proposition.
If you are looking fore a motivated seller, here they are. But just because the seller is motivated does not mean that you will get a great price. Negotiating with the seller is one thing, but usually the bank is involved as well. Negotiating with a bank is like boxing with Mike Tyson, they know what they are doing.
Wasilla Real Estate News, Monday Morning Market Memo October 29th, 2007
October 22–29 Real Estate Statistics
Wasilla, Palmer, and the rest of the Mat-Su Valley
Below are the Statistics for this week. Our inventory is almost identical to last week. Pendings are down. The Average price is below $200,000.
| Average Price | DOM | ||
| New | 31 | $225,451 | |
| Total Active | 916 | ||
| Pending | 17 | $197,222 | 99 |
| Closed | 27 | $195,997 | 83 |
The accepted industry definition of a buyers market is one that has more than 6 months worth of inventory. We currently have slightly more than 8 months worth of inventory on the market. Compare that to some of the areas in the country that had the hottest markets during the last 5 years.
Las Vegas, Southern California, and Pheonix all have huge supplies of inventory. Their real estate market was booming just 2 years ago and now it is bust. Some areas of Florida have over 50 months of inventory.
We are only into the buyers market category by a couple months. That has some ramifications for buyers and sellers.
Sellers
It’s a buyers market. That means that buyers have a lot of homes to look at. If they can’t come to agreement on yours, they can try the next buyer down the street. They are shopping price. No amount of marketing, open houses, or staging will help if you aren’t price right. Get the price right and it will sell.
Buyers
It’s a buyers market…but just barely. That means that although a seller may come down to an attractive price, they aren’t going to drop by 40%. It’s a waste of your time, and everyone elses time, to make a ridiculous offer.
I do know of some great homes on the market right now. I showed a brand new 3 bed, 2 bath, 2 car garage ranch this weekend priced at less than $160,000. And I think the builder will come down from that. Give me a call, I’d love to help you get a great deal on a home. (907) 373–0999
Hatcher Pass Slide Show October 27th, 2007
Anchorage Daily New photographer Marc Lester has a fantastic slide show of Hatcher Pass on adn.com. It’s too good not to post for all my readers as well.
I wrote about Hatcher Pass last December when we watched a bunch of kids downhill skiing. There were having blast. Hatcher Pass is a special place for our family.
Hatcher Pass is one of the crown jewels of the Mat-Su Borough. It’s a fantastic get-away both summer and winter. The photo at left was from an overnight camping trip with my kids up by “Monkey Face Rock”. There is a beautiful valley beyond the rock. These photos were taken by my daughter Teressa.
Below is the valley above our camping spot. Is that pretty or what? That clear mountain stream came directly out of the rocks just to the left of the photo.
Here is just partial list of things to do in Hatcher Pass:
- Hike
- Camp
- Take Photos
- Pick Berries
- Cross Country Ski
- Down Hill Ski
- Go Sledding
- Snow Mobiling
- Hang Glide
- Explore Old Mines
- Identify Wild Flowers
- Watch Wildlife, Everything from Pikas, Ground Squirrels, Moose, Bear, Foxes, Raptors, Ptarmigan, Marmots and more.
- Hunt Moose, Bear, and Ptarmigan in season.
- Rock Climb
- Mountain Climb
- Explore WW 2 Bombers
First Right Of Refusal, It’s a BAD Idea October 27th, 2007
A Wasilla home owner recently called me with questions about a first right of refusal. It seems that his neighbor wanted to buy his property in case he should ever decide to sell. The neighbor acted like it was not a big deal. It was presented as if it were a friendly gesture between two neighbors.
A first right of refusal allows the holder of the right a chance to buy a property at the same terms another buyer has presented. The holder of the first right of refusal usually has a specified period of time to make the decision to buy or not to buy.
For a seller, that’s like entering a boxing match with handcuffs on your wrists. You have to notify buyers that if they like your property enough to write a bonifide offer with earnest money, pre-qualification letter, and everything else, you have to show their offer to someone else first. The buyer has to cool their heels while they wait to see if all their efforts are in vain. How many sane buyers are going to do this?
Don’t let anyone talk you into giving them a first right of refusal.
Marty Van Diest, Tele 907.232.7900 / marty[at]valleymarket[dot]com
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