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With cloud over foreclosures, time for sellers to strike?

E-mail | Print | Comments () Posted by Scott Van Voorhis October 15, 2010 09:20 AM

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Thinking about selling your home and kicking yourself because you missed out on the fun last spring, when buyers scrambled to cash in on the home buyer tax credit?

Well thanks to some clueless big banks and their harried "robo-signers," you just may get a second chance to find a buyer.

Until the latest chapter in the never ending foreclosure crisis hit, the last helicopter leaving the embassy roof departed on midnight, April 30th - when the home buyer tax credit expired.

But suddenly,with the massive foreclosure machine poised to grind to a halt amid the fast expanding "robo-signing" scandal, home owners looking to sell, here in Greater Boston and across the country, may suddenly find an unexpected opportunity.

This fall could see a temporary drop in the number of homes for sale as banks put foreclosures on hold. And fewer homes on the market could be a boon for traditional sellers struggling to keep free of the pricing undertow generated by dirt cheap foreclosures.

Attorney generals across the country, including Martha Coakley here in the Bay State, are pushing big lenders to halt new foreclosures as they review allegations that banks seized untold numbers of homes without checking first to see if the documents were in order - or that they even had the right homeowner! (Check out this post of mine from March on banks seizing homes from owners who were current on their mortgages - or worse, didn't even have a loan with the bank.

And yes, the impact will extend right into the suburbs. While urban neighborhoods in cities ranging from Springfield to Boston have been the hardest hit, foreclosures are a fact of life now everywhere.

Moreover, the damage caused by this latest twist in the foreclosure crisis extends far beyond the specific properties banks are now forced to go back and check the records on.

This casts a cloud over the whole range of distressed properties, giving even the boldest buyers pause before putting money down on a home whose ownership and title may be unclear.

How much of a window are we talking about?

At least the few months, enough to cover the fall selling season. There are even some hasty predictions of a short-term bump up in prices as inventory drops.

By next spring, though, it could get pretty ugly again. In fact, given the record levels of bank repossessions that are now on hold, we could get a huge spike in foreclosed homes hitting the market in a few months - one that will push prices down again.

So sellers, get moving.