Banks still hanging tough on deals for foreclosed homes

An eye opener Tuesday at the Hillsborough County Court House at the daily auction of foreclosed homes.

Not one of the 15 homes offered up for sale attracted a bona fide bid. The 20 investors in the crowd sat on their hands.

Why the lack of activity? You'd think banks would be desperate to unload properties in a Tampa Bay area market burdened with 41,000 homes for sale and record-setting foreclosures. That's not necessarily so.

One typical no-sale from the Court House: The bank set a minimum bid of $228,000 for a Tampa house on the auction block, even though the owner owed the bank $217,000. That's not exactly dumping.

"I don't see anything to buy," one investor at the auction complained.

The pattern repeats itself: Of the dozens of homes placed for auction last week in Tampa, fewer than five sold to winning bidders.

It's quite a change from two years ago, when hordes of investors paid market price for foreclosed homes with the certainty of big mark-ups on the resale.

Comments

[Rachel Sartain]

I have looked to purchase some of these 'investment' homes. I have researched the pre-foreclosure, auction sales, and bank-owned properties. I find the best deal is found in the ban-owned properties. The home that you described in the auction scenario above is now bank-owned. After all of their legal work, the home will be listed for sale with a realtor in appx 6 months at market value. For this particular home it will probably be listed for $20,000 to $30,000 less than the original loan amount.

The hordes of investors are gone but we have to give them some credit. They significantly increased the appearance of our neighborhoods by purchasing and remodeling homes.

[Fuzzy Bear]

The banks are trying to recoup their losses. The auctions on the courthouse steps of today almost always go back to the banks because they are overvalued.

I believe based on past history that when the bank lists the house with a realtor, it will sell for much less than Rachel has mentioned. That is exactly what happened during the S&L crash in the late 80's. One house during that time was listed in Carrolwood village for $142,900 and sold for $89,000.

Based on the current market conditions, it appears to me that our current housing mess looks like it may be worse than the S&L. If you remember the late 80's early 90's, loads of forclosed homes hit the market and dragged home prices down. That is exactly is what is starting to happen right now, but more so by fall of 2008 and well into 2009.

Then again, you can listen to the NAR and they will tell you the opposite, yet they have not been correct one time since this mess started!

[Rachel Sartain]

You need to take into consideration the condition of the bank-owned homes that are being sold. They are not in 'marketable' condition a majority of the time. Investors are the ones picking these up, remodeling, and putting them back on the market at today's value. Therefore, these bank-owned properties are not 'tanking' the market but allowing an additional outlet for home investors to make more money.

[Teach]

Everyone is talking about foreclosure and how everyone is losing their homes. Is this over-hyped? In your competitor's newspaper today there was an article about foreclosures. They even have a tool that the reader can use to see how many foreclosures have happened in a certain zip code. I looked up my zip code and found the following information:
105 default notices compared to last years 45 (large increase), 12 properties auctioned off compared to last years 4 (not a large increase), 8 reposessed compared to 3 last year (again, not a large increase). I hate to see anyone lose their homes but I think this proves that most people who default don't lose their homes.

Real estate owned by banks will sell at market price like any other real estate. Banks think in "per day cost" to continue owning property. Everyday a house doesn't sell it costs the bank "x amount of dollars". There is no emotional attachment to these properties. Banks do not like owning these houses and as their files pile up they will be more and more anxious to dump these dawgs that eat up the banks' bottom lines.