Foreclosure signs

[Crazy Dave]

You see them all over, "Foreclosure Sale", "Distressed Sale", etc.

Is it really necessary? Are the banks just wanting to tell everyone, "Hey look! Your neighbor couldn't pay his/her bill so we kicked them out!"

What's the difference in a "Home For Sale" sign vs. a "Foreclosed" sign except that the latter just drives down the surrounding homes value and lets all the neighbors who don't know that person what happened to them.

A home for sale is only a home for sale regardless of the circumstances right?

[county worker]

1. Home values are set by sales of comparable homes.

The homes would have to be sold before they can be used as comps.

[Warpy]

2. Here they're discreet signs in the window

instead of big howling signs on front lawns.

[Crazy Dave]

5. We have three homes on our street and...

Each yard looks like a street intersection with election signs all over it. 5 - 6 signs in each yard, no kidding. I'm surprised they haven't put out balloons and pony rides yet.

[jtuck004]

3. It tells people there might be a better deal...'cause they know.

the bank might be under more pressure to sell.

Though I think a "For Sale - Price Greatly Reduced" sign might be a better strategy.

On the other hand, there are so many empty homes, and so many more to be foreclosed on, I am not sure from a pricing standpoint it makes a great deal of difference today. I suspect home prices still have some significant downside.

[tridim]

4. It tells buyers, don't buy this house because nobody knows who owns it.

It's a disgusting practice.

No offense to any realtors here, but I've found that at least half of them are as stupid as bricks. They don't have a clue about what is happening in their own market.

[OllieLotte]

6. Not sure.

Its possible that it signals that the bank owns it and it is likely in need of repair. That is what I would expect from a "distressed sale".

[DoctorK]

7. it's not anything personal

it's an attempt to attract buyers.

When people see a foreclosure or short sale sign they can expect a better deal.

I'm looking at a house now, listed as a short sale, that is ~$67/sq ft, comparable homes in the neighborhood have traded at and over $100/sq ft. over the last few months.

[pokercat999]

8. If possible you may consider renting for a couple of years

until we hit bottom. Nationally we should have at least 20% more to go on the down side, maybe more. Something else I'd be on the alert for, can you get title insurance?

But you are right about the signs, they are used to attract buyers looking for that spectacular deal. Personally I'd only buy if the house was being sold for at least 20% below todays accessed value and the neighborhood was fairly secure from decline by foreclosures on other nearby properties.

I live in central VA, between Washington DC and Richmond, VA. In 2002 I built my house and spent about $260K for land and improvements. In 2005 I had a contract for $477K with the contingency that the buyer sold one of his properties, didn't happen. Last week I had the house appraised in an attempt to refinance. It appraised for $260K, that was after I spent over $7K last spring (materials only, labor by my son and me) to finish the basement including a complete bathroom with an all tile shower.

[DoctorK]

9. I hear you

but I've actually been renting a while waiting for this post-boom period and the opportunities it would provide. I saw the boom coming years ago, and since I was planning on moving from this town back then I chose not to buy to avoid being upside down. Now I'm married and my wife and I have decided this is where we want to stay and where she has started her practice.

Comps in this neighborhood are going for $100/sq ft and above (several less than a mile away, and in the last few months). Best school districts in the county K-12, lowest crime, nice size lots (this one is an acre).

Title insurance shouldn't be too hard. This house was originally purchased by the current owners in 1985 (built in 1983). It would have been practically paid off by now, but in 2005 they took out a $214K mortgage and $53K HELOC on the property.

They put it on the market in 2009 asking $295K (~$98/sq ft). Re-listed it last March as a short sale @$195K.

The owner has divorced his wife, and this is one of their joint assets. He still owes the bank (BoA) ~$243K. I've looked through the public records (county clerk's office) and he was a major 'wheeler dealer' in properties during the boom, leveraging this house for money to make those deals. He was caught standing while the music stopped, but I don't have too much sympathy. Him and his new girlfriend have a $600K+ mortgage on his new primary residence (FL protects your primary residence from bankruptcy proceedings). The house I'm interested in is a 'strategic default'. Lis Penden was filed in June.

We'll see how inspections go, but in several trips to the property (including with my brother, a former glazier and current property manager who has also done plenty of renovations) and haven't seen any problems except that it needs a roof (original except what is over the addition).

Kitchen was remodeled, HVAC upgraded and replaced in Dec. 2008. Bathrooms need a remodel, and I think one of the reasons it hasn't sold with the comps in the neighborhood is that an addition to the master bedroom/bathroom is unfinished. The owner basically saw the market wasn't coming back soon enough to make finishing those things a worthwhile risk, so he has walked.

I know if this one doesn't work out, there will be more opportunities. 12 month supply in my city, and 60% of contracts in the last 12 months have failed to close.