Foreclosure Trap, Don’t fall into it
One of the most popular search phrases for buyers looking for Real Estate in Southwest Florida is “Florida Foreclosure Homes for Sale”. It has been a very popular key phrase since the real Estate market crashed in 2008. Lets face it-we are all looking for a deal on homes for sale. Many buyers sat on the sidelines in 2009 waiting to see where prices were going to go. In 2010 Southwest Florida home sales began to surge. Initially in 2008 the banks were dumping home like there was no end to it. With such a large supply of available properties for sale, prices plummeted. With property values being down by more than 50% cash buyers were absorbing the properties at a very high rate. Banks started buying up other troubled banks. With the influx of government money, it was an opportune time for banks to increase their market share. Now that the banks had more money, they were not as pressed to sell the properties at a discount. So then the banks got smarter and realized real estate is driven by supply and demand that if they decreased the supply with the ever increasing demand, then prices will go up. That is exactly what they started doing. The supply of foreclosure homes for sale went from a waterfall to a trickle.
In our market area from Venice, Florida to Port Charlotte, Florida, in 2010 at any given time there were 2,000 plus foreclosures for sale. The demand was snowballing and homes were being absorbed at a very high rate. Now that the inventory is being trickled out, the number of foreclosures for sale has continued to decline. When this started happening in 2010 the inventory of available foreclosures for sale dramatically decreased, properties now were in a multiple offer situation having several offers on them as soon as hit the market. Currently in that same given area, the banks seem to be keeping the inventory of foreclosures for sale at around 200 homes. That still sounds like a lot of homes but by the time you narrow it down to the most desired criteria people want in a home that doesn’t leave many to choose from.
The selection of foreclosures is not what it was a few years ago. Many buyers are tired of the bidding wars and are now realizing that the deals on REO’s is not what it was. Truth be known, many of the best deals out there now are not foreclosures or short sales, but estate sales and traditional resales. In almost all cases these type of properties have been better maintained, cared for and are priced competitively with foreclosures. Lets face it, if a homeowner was not making their payments, do you really think they were maintaining the home? Then add a couple of years of sitting empty on top of the few years it was not maintained and you often have quite a mess. A traditional seller can tell you when the roof was replaced, about the new air conditioner, pool, ect. The only thing you are going to get from the bank are disclosures saying they do not know anything nor are they liable for anything, so buyer beware.
The nice thing about estate sales and traditional resales is that you don’t have to deal with all the red tape and bidding wars. They much easier to deal with and you don’t have the risks that you do with foreclosures. I am not saying that there are not people that I have secured great deals for within the foreclosure market, I am only saying that, in my opinion, there are many other deals out there that will be missed if you are only looking for foreclosures.