Real Estate in Northeast Florida and Around the World

I read in today's newspaper that foreclosure filings in the Jacksonville Metropolitan area increased by 36 percent from the month before, from 2,670 in May to 3,640 in June.  This is also a 97% increase from June 2008, a year earlier.  Wow, that is a huge number.  And think of the number of people out of their home.

At the risk of sounding harsh, I want to bring this back into perspective.  As I view the inventory in our area of houses that are on the market, many of these homes were not occupied.  Many of these homes were purchased by investors who got caught up in the flipping frenzy.  Granted - there are families out there who for what ever reason, saw their hopes and dreams of homeownership dashed, and this is very sad.  My heart really breaks when I see a family impacted by foreclosure.

Many of these foreclosures have been listed as a short sale, or a transaction where the owner owes more on the mortgage than can be recouped from a sale, and for whatever reason, must be sold.  The loan may or may not be delinquent in a short sale.  In a short sale transaction, the process can be long, tedious and seemingly unfair, and many people just do not want to get involved with this type of transaction.  Why?  Generally, it takes weeks if not months once an offer has been submitted, to get a response from the servicing agent of the loan whether the offer was accepted. Secondly, the price listed may or may not be the price that the lender will accept.  Note the caviat in the comments where the lender must approve all terms - this includes the price.   In addition, the lender can require that the home continue to be marketed and accept additional offers.  For a buyer needing to find a home, who is keeping an eye on a specific interest rate range or loan preapproval with an expiration date, they do not want to be playing a waiting game for weeks or months.  When they find a house to call theirs and make their home, they want to buy it.  They want a time frame.  This is an emotional time.  In addition, to take advantage of the $8,000 federal tax credit for first time home buyers, the transaction must close before December 1, 2009. Time is running out.

For the investor looking for real estate, then perhaps the short sale is a way to go.  But I find most investors that come to me just wanting to bypass that step and look only at foreclosures.  Same reason.  The uncertainty, the time spent waiting is just not productive.  They would rather wait until foreclosure.  Once a house has gone through the foreclosure process, the lender owns the house, sets a price and typically you know what you are getting.  Can you offer less?  This is a free market society and the answer is yes.  Will they accept the lower offer?  The only thing you know for sure is that if the offer is made at the asking price, the offer has a good chance of being accepted.  But the lender may still keep the house on the market, and may set other requirements for acceptance.  The rules are less ambiguous with a foreclosure, depending on the lender, but still can differ than a non-duress sale.

So - foreclosure notices on the rise may be a good thing, because it is a sign that something is happening.  Once the foreclosure process is completed, more people are seriously attracted, because the process is not as drawn out typically, and they don't get stuck in the land of uncertainty.  In addition, it clears more "short sale" transactions from the books - and this market cannot heal until the ambiguity begins to clear.  So foreclosures on the rise, while it is not a pretty or optimistic outcome for many people and their neighbors, is a sign of a process coming to an end, and only then can the healing in our neighborhoods begin. 

See you around the neighborhood.....