Are Foreclosed Homes the Best Deal?


With buyers on the lookout for that coveted ‘good deal’, I wanted to dig into the numbers in South Orange County to see what they would reveal.  Last week I wrote a post about Orange County foreclosures after watching Good Morning America tout the great savings a buyer can achieve when buying a foreclosed, or bank owned home.  I can’t speak to other parts of the country, but I can help illustrate the current realities of our market.

The Sale Price Tells a Story

I decided to pull up some individual tracts to find foreclosed homes, short sales, and traditional or equity sellers to compare the sold pricing.  In an effort to make the comparisons meaningful, all of the following examples have closed in the last 90 days and are close to, if not exact model matches.  The tracts were selected solely on my ability to pull up enough properties for a full comparison.  All provided sale data comes from Socal MLS.

*worth noting standard sale highly upgraded

 

So why aren’t the bank owned homes selling for the deep discount that some of the media describes?  With the current inventory in some of our South County cities in the range of 2.5% to 10% for that type of sale, there is hardly a ‘glut of inventory’. It’s interesting to note that two of the 4 bank owned homes in the examples sold for over asking, which may indicated multiple offer circumstances.  The number of foreclosures may increase, but throughout this housing crisis, we have yet to see a significant influx of foreclosed homes on the market in Orange County.

So should short sales be your focus for a good deal?  Possibly.  But be aware of a couple things.  There is a significantly longer process while one waits for bank approval, with no guarantees.  And very often the Homeowner’s Association dues are delinquent and in nearly all cases, it’s the buyer that satisfies those delinquencies in a short sale.

Bottom Line on Finding a Good Deal

Be clear about what you are looking for in a home.  When you find the right fit based on your criteria, try to keep from becoming too emotionally attached so that you can focus on negotiating the best price and terms possible.

 

 

 

Comments

  1. Fred Farias says:

    Ms. Linsey Planeta: Did the any of the homes sell at the trustee sales (in front of the courthouse)? Or were they sold by an RE agent out of the bank’s inventory?

  2. The inventory explored here is on the residential resale open market. Certainly the property sold at the county courthouse steps is a different animal entirely, Fred. Part of the reason I posted this particular piece had to do with a national piece I saw on the opportunities available for a buyer in a residential resale environment. It grossly overstated the potential savings of foreclosures.

    Certainly, there are great opportunities when buying at a Trustee Sale, but most buyers today aren’t willing to buy sight unseen in those sales. Not only does it take a cash purchase in Orange County, but you are competing with seasoned professionals who frequenting those sales and are very savvy about the opportunities and risks there. And certainly there can be significant risks with property condition and title.

    Have you had the opportunity to purchase at the trustee sale?

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