M&S Realty Service - San Antonio, TX

Housing Changes for 2012

Steady stream of foreclsoures??

I was out checking on one of our listings over the weekend when I noticed a home across the street that seemed abandoned. I am familiar with the neighborhood and knew that the home was worth $350,000 to $375,000. While I was inspecting our listing, a vehicle pulled up and a a gentleman got out and started to inspect the property that looked abandoned. He then came across the street and visited with me to find otu if I knew the owners. I informed him that I did not and asked why he was looking for them.

Turns out he is with a property services company that worked with lenders when homeowners are in default or a foreclosure has occurred. He represented Wells Fargo, Bank of America and Chase. In speaking with him, he let me know his company has 2000 pending orders in parts of Bexar County to contact and evaluate properties that are already foreclosed. In some cases he had been calling on the same house 2 years after foreclosure.

I thought about that for a while and realized what may be happening. In the case of the home across the street, in a normal market, it would have a value of around $350,000. Even Bexar County Appraisal had this home appraised at $341,000. But with it in it's current condition and with few buyers, the bank may sell this home at a price of $300,000 to $280,000. A quick CMA of the neighborhood revealed that three other bank foreclosures of similar size and style had sold at this price point, well under normal market.

What it appears that many banks are doing are trying to steadily release inventory but not all at once. They realize that if they flood the market, prices could drop but also, by holding that asset on their books and not selling it, they are recognizing the asset at a value of maybe $340,000-350,000. That bolsters the banks asset balances versus selling the home at a loss.

So if you are seeing a home in your neighborhood that has been foreclosed, be patient. In most cases the banks are just trying to time the market and not take as large a loss. The San Antonio market remains strong, prices are stable and interest rates low. Even with the foreclosures, it remains a favorable time to buy.

Posted By - Wayne Marinik - 10/31/2011

View By Category
Real Estate (9)
General Public (3)

view all