More foreclosures for sale

Those numbers don't even take into account the number of short sales on the market. In some areas, short sales appear to out number bank-owned properties for sale.

The problem with short sales, from a buyer's perspective, is that lenders are taking anywhere from a few days to a few months to decide whether or not to approve the sales price agreed to by the parties.

The recent week of blog posts on the Boston.com real estate site have been fantastic.

I hope you keep posting entries like these. Not only do they provide much needed information, they seem to be getting people involved. Thanks for that.

Of course, some of the comments leave a lot to be desired, but, what can you expect?

I agree with John K that this week's blog posts have been great. Good job Binyamin, in particular.

Rich, I have to agree with the comment on decision times for shortsales.
I just purchased a short sale, my initial offer letter was November 2nd, and I just closed Feb 15th. roughly about twice as long as a normal sale would have required.

Rich,

I'm advised that the totals in the post include short sales. Apologies for the error. I'm adjusting the post accordingly.

Hi,
You keep writing:

As I've noted in other posts, foreclosed homes generally are sold at a discount, which tends to force other sellers to cut their prices, too. The same is true of short sales, to a lesser extent.

This is a very simplistic statement to describe what's going on.

I have been going into a lot of bank owned properties of late and when you say discount I feel you are implying that these properties are in the same condition as a home where the owners are still living in them and the bank is letting them go cheaper to move them.

Many of these properties are in such bad shape that you need to factor in the cost of repairs into what you would pay for the property compared to a property in move in condition. The pool of buyers who have the skill, money, and desire to fix them up is small. Add in some of the lenders who want to move these properties quickly and you get a price that appears to the outsider as a discount which really is a true reflection of the cost to buy and fix up the property compared to a property already in good condition.

I feel it's more like buying a car from the junkyard and restoring it instead of buying one in good condition from the dealer. Would you say the junkyard car was discounted from the newer car off the dealers lot?

Paul,

I appreciate the comments, and I think you make a very good point -- foreclosed properties are often in bad shape.

It is also the case, however, that mortgage companies are unusually motivated sellers. Unlike normal sellers, who book a profit or loss at the time of sale, the companies have already lost money on the foreclosure. Every penny they realize through the sale is a recovery, and they're often eager to recover something as soon as possible.

For this reason, many REO properties sell at significant discounts to market value -- not the value of a comparable home in good condition, but the value of that home in its actual condition.

Each REO sale takes a buyer out of the pool, decreasing demand. So it makes no sense to claim they do not affect prices.

Nor are they all in terrible shape.

In any case, it's very interesting to visit foreclosure web sites that offer a map view of distressed properties. Looking at preforeclosures as well as REOs, you can see that the contagion is spreading, even in towns and neighborhoods that fancied themselves immune.

It does help to have had a bank approved offer on a deal that fell through. The wait is much shorter.
I have a great property for sale as a short sale. Newly renovated and move-in condition. Has a former bank approved offer. Address: 104-106 Woodstock Street, Somerville (Teele Square), 15 min. from Davis sq.

Does anyone have opinions about buying foreclosures or short sales in Haverhill? There is an incredible amount of inventory and many of the houses make great investments based on the income potentials. My only concern is since there is so much inventory that is not turning over there is no way the housing market is going to appreciate within the next 10 years.