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Joshua's Blog

By Joshua | Other/Just Looking in Charlotte, NC

Foreclosure Homes

In January of this year my wife and I found “the house”. A foreclosed cape cod in an excellent neighborhood, with an asking price of $54,900 and tax value of $88,000. After calling the listing agent, she simply gave us the lockbox combination over the phone, so we decided to go take a look. Within about 10 feet of the house the odor of pet emanated from the closed windows and doors… with noses pinched and mouths closed we continued on. We are no strangers to rehab and renovation, but this has always been for other family members. We are looking to purchase our first house, and figured the time is right because we have saved, and waited and intend to pay cash for our home.

Looking past all the cosmetic flaws and almost no structural problems we contacted our realtor to put an offer in for $40,000. According to the listing agent, even though the house had been on the MLS for about eight weeks, she received two additional offers the very same day as ours, and suggested we up our offer because Deutsche Bank would only take one. We held steady with $40K, since the house will require almost that much in work because of the damages to the kitchen, baths, and mechanical systems.

Three weeks later our $1000 earnest money was returned and we were told the bank had sold this property and several others in the region to another bank. So, that brings us to late March. We have kept an eye on the property, waiting for the new bank to list it again. Only to find out Deutsche never sold it, but simply listed it again… now at $70,000!! I am no economist by any means, and marginally know about real estate. But, I’m fairly certain the foreclosed amount($114K) is off the bank’s books by now as a loss. To date we’ve done nothing else, just went on looking at other homes with less baggage.

The real question after all this… Is the new $70K asking price, just a way to get someone to pay closer to what the original asking price was of $55K, expecting people to put in lower offers in this market? Or something else I’m just not educated enough in this field to realize?

Comments

By Debra M. Buck,  Fri Apr 17 2009, 11:30
Hello Joshua! That is a great question and I too have had a recent similar experience where the bank could have sold at a much lower price as a short sale but chose to foreclose on the loan. The bank then listed the home at a higher price even though it was on the market for a very long time and it didn't sell at a significantly lower price. The bank I was dealing with is a much smaller bank so they probably aren't getting the Government bail out assistance the larger lenders are getting.

When I look at resales with Client's I do what is called an "archieve" search and I am able to see the information on the pricing and how long the property has truly been on the market. I am wondering if they are hoping to catch someone who doesn't know the information that you know on the property. Also, with our market picking up the Bank is probably now thinking they can get a much higher price.

I hope you are able to find something else that much less baggage!

Good luck to you!
By Sandi Farr,  Fri Apr 17 2009, 11:59
Hi Joshua,
I can certainly understand your frustration with this situation. We have a similar situation with a short sale I just listed. When we went into the listing the average sale price was $10k lower than our list price however, between the time the listing agreement was presented to the seller and we went to list the property another property in the neighborhood bridged that $10k gap, prompting my seller to up their list price a bit. So as Debra mentioned, the market could very well be steering the listing price in your case.

Hope that you find the right property soon. It's a great time to buy!

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