Are AndresenTysons Corner Real Estate For Sale
your sixth sense in real estate
Foreclosure deals Category
Making a quick buck flipping homes seem easy on TV - purchase a run-down home, paint and replace flooring, put in some new grass and then sell for a huge profit. In real life things get more complicated though. The Washington Post recently ran a story about a beginner investor learning the hard way that easy money is far and between.
I often get inquiries from buyers looking for a good fixer upper or an investment to flip. They’ll typically give me their info and tell me to call them when I find a “good deal.” Good deals do exist. There are people making a good/decent living in todays market flipping homes. Locating properties at a great price is hard and the price you pay for the home up-front is really where the profit is.Even if you do get a home at a significant discount, it is at a discount for a reason. That reason is the risk of unknown problems like buried storage tanks, termite damage, mold damage, collapsed sewers, outdated septic etc etc.
With the inventory of homes low in much of Northern Virginia purchasers are looking wherever they can for homes that are not listed in the Multiple Listing services (MRIS.)
The first place they look is typically for foreclosures. The “foreclosures” in the MRIS are not typically true foreclosures though – they are homes that have already been foreclosed upon and are now owned by banks. They are what should be correctly called REO or “bank owned properties.” REO properties are sold by real estate agents on behalf of the bank. These days they are often fixed up and often sell close the market price.
The market in Fairfax County (Virginia) is still holding up well in 2012. The number of transactions for 2012 seem to be on par with 2010 and 2011. The prices seems to also have held up well thanks to low interest rates and good employment opportunities.
A lot of the attention in real estate has been towards distressed sales the last few years. While foreclosures and short-sales never really ruined the market in Fairfax County as a whole, some areas did see values decimated by distressed sales after the 2005/2006 “market correction”.
Luckily, the worst seems to be behind us and in 2-3 years foreclosures and short-sales may be far between if the trend keeps. In 2009 a whole 34% of sales in Fairfax County were distressed. The percentage has decreased ever since and this year it seems that we may end up with a proportion of distressed sales at about 15%.
More normal sales would normally mean higher prices. In many communities the only thing standing in the way of some much needed price appreciation are lots of reluctant and conservative appraisers.
If you are looking to buy a foreclosure there are still plenty of great deals to be had. Please call us at 703 560-3424 anytime to talk.
While home sellers curse the occurrence of foreclosures in their neighborhoods, home buyers have taken advantage of the cheap homes on the market for years. Regular home sellers are typically limited by the equity in their homes when selling - banks are willing to accept whatever the market is willing to pay. Banks can (and will) reduce the price until the home sells. The sales price of a home in 2006 is pretty much irrelevant to the bank.
While foreclosures were a great deal back in 2008, 2009 and 2010, they are now not necessarily always the best deal. As the supply of homes in many areas are limited, the prices between a regular resale, a short sale and a foreclosure are pretty well in sync. In many areas like Arlington, Falls Church, McLean and Vienna a foreclosure will go at or near market price (minus a price adjustment for condition.)
I often get excited calls from first time homebuyers asking to see foreclosure listings they have seen listed online at amazing prices (listing will usually say the source is realtytrac.com.) Most of those foreclosures are properties being offered at the courthouse steps (basically, a true foreclosure.) The price listed is typically the outstanding loan balance of whatever bank is foreclosing. In the vast majority of cases the home will be bought back by the bank at a price higher than that and often above market – the listed price is not a price you can offer and get the home for.
Back to foreclosures… What most potential purchasers don’t realize is that a foreclosure is cheaper for a reason. They are generally As-Is with a 7 to 10 day inspection period. So, within the inspection period you can ask for repairs and the bank may agree to fix things like homeowner association violations, broken windows, major roof items, major HVAC, major electrical and major plumbing items. They will generally also treat active termite infestations. They will not replace that broken counter-top or install that missing light fixture in the bath.
You can get a great price on foreclosures that would be characterized as “dumps”. Usually in horrible conditions – often with mold and smelly wet basements, leaking roofs, bugs everywhere. To tackle those projects you need a lot of experience to accurately assess the current value, the renovation cost and the potential future sales price. There is great potential for profit – but also great potential for misery and financial ruin.
Many homebuyers use FHA loans these days and you can purchase foreclosed properties with an FHA loan. You are typically restricted to the properties that are in the better condition as the FHA appraisers(so does non-FHA appraisers) have specific guidelines to follow in regards to the condition. Foreclosures in a good condition that allows for FHA and conventional financing sell close to the market value.
If you are looking to buy a foreclosure for investment or as a home, please give us a call at 703 560-3424. We help buyers get great deals on foreclosures all the time.
One reason for the large number of foreclosures and short sales the last few years is the inability of homeowners that owe more on a home than it is worth to refinance.
Many that purchased their homes during the hot market in ’05/’06 the 2004-2007 time-frame purchased with adjustable mortgages – some of them with very unfavorable rates after the first few years. The “plan” at the time was that you would buy as much house as yo could afford based on the initial lower ARM payment – and simply refinance when the rates went up. However, when prices started falling and credit became scarce people ended up with homes they could not afford and could not refinance or sell.
Many people wonder how the market is. Well, in the Washington DC and Northern Virginia area it can sometimes be really hot! While I have had 4-5 offers and escalation clauses on listings of my own, nothing comes close to the answer I got from an agent when inquiring on the status of a foreclosure in Herndon.
A repeat investor client of mine showed interest in a town home in Herndon. It is a 4 bedroom/3.5 bath foreclosure at Dunbarton Square listed at $164,500. It has been listed for 7 days and said that offers would be submitted in another weeks time (lenders sometimes collect offers for a week or two and then review.)
With fears of a double-dip in the housing and stock market (and pretty much an end to civilization as we know it), I get a lot of questions about the number of distressed sales.
While I don’t have any inside knowledge about shadow inventories, I do know that we now have had several years of sales with foreclosures and short sales. While distressed sales keep driving down prices in some areas and neighborhoods, prices have stabilized and even climbed a bit in others.
To make sure I wasn’t totally out of touch with things, I compiled the statistics in the above graph from MRIS.
As can be seen, since 2009 the number of distressed sales (foreclosures & short sales) have been pretty consistent and were 29% in 2009, 23% in 2010 and 26% in 2011(YTD) of the total number of sales. So, the trend seems to be less distressed sales, not more.
So, what happens with prices? I don’t know – my best guess would be more of the same.
You would think you could make an offer on any property you choose. However, that is not necessarily the case if you are an investor and looking to purchase a foreclosure. In many cases the lender has qualifications that has to be met, and on Fannie Mae properties there is often a 15 day “First Look” where only owner occupants and non-profits may make an offer (investor offers are NOT considered.)
One of the reasons for this is that banks, already under regulatory pressures after the sub-prime crisis, are looking to keep regulators off their backs. A way to do that is to make sure that not only “rich investors” benefit from the foreclosure crisis but also the average Joe looking for a new home. Without the protection period it would be hard for a regular home buyer to compete for the properties - all-cash offers are very attractive to the bank holding the foreclosed property.
So, if you are an investor and want a property…Sorry, you may not be able to get the one you want. Good news is – there are plenty of other properties available!
Update: The Washington Post had an article on this topic http://www.washingtonpost.com/realestate/foreclosures-for-sale-all-homes-sold-as-is/2011/06/20/AG3k05iH_story.html
The Washington D.C. metro area has done extremely well compared to the rest of the country. Still, foreclosures and short sales have had a dramatic effect on the real estate values also here. The effect is often hyper-local with the number of foreclosures varying greatly from one county, city and community to another.
In Tysons Corner the effect has not been as dramatic as in for example Herndon, Chantilly or Manassas. To give you a general idea of the foreclosure activity in the Tysons Corner area I put together a quick comparison of the number of distressed sales in 5 communities.
Built in the 1950’s, the 1,500+ single family homes typically have a quarter acre lot. The community is located off Rt 7 in Falls Church close to Tysons Corner. Home prices range from the low $300’s for a rambler with 3 bedrooms and 1 bathroom and upwards to $1M homes.
The number of distressed sales seem to have peaked in 2009. Very few shortsales – still some foreclosures.