These days “foreclosure” has moved beyond a buzz word and become a household term you might use at dinner, casual talk around the water cooler and of course when talking to a real estate professional. I personally get asked if I’ve got any “hot” foreclosure deals, or know of any coming up at least daily. Most don’t realize that it’s a loaded question- or at least in this market. It used to be there might be a bank owned or “foreclosure” property listed and sold every once in a while in Astoria, Warrenton and even Seaside- but almost never did one come up in Gearhart or Cannon Beach. Usually these properties were towards the low end of the market, required tons of work and were only purchased by investors or contractors.
Today things are a little different, we’re seeing more and more foreclosures here each week. And we’re seeing them everywhere including ocean front properties in Seaside and year or two year old homes in new subdivisions. Some of them are good deals, but many are not. Why? Contrary to what you might see on TV not every foreclosure or REO (Real Estate Owned by a bank)is a great deal. There’s many factors that come into play, and generally in a small market like ours where there might only be a dozen REO properties on the market at a given time each situation is truly unique. Some of these properties were foreclosed because they had serious defects and the owner could not afford to fix it or chose not to. When buying a bank owned property, the lender has no first hand knowledge of the home’s history and thus is except from filling out the Seller’s Property Disclosure. In theory that disclosure when filled out honestly by the Seller would contain information relating to any defects in the property that a prospective Buyer should know about prior to purchase.
Another factor has to do with the location or development. This normally applies more to newer homes built or purchased at the peak of the market when developers were scrambling to finish subdivisions and get buildable inventory on the market for sale- and often for a quick and very profitable sale. Some of these developments on the North Coast came on-line right at the peak of the market selling a few lots or new spec homes right away at premium pricing, then the sales slowed or dried up completely leaving a half built out development that’s not particularly attractive to Buyers. If the developer was becoming cash strapped, maintenance of the development might has become lax and contributed further to the lack of demand and lack of Buyers- And making a even more undesirable neighborhood in the process. Where am I going with all this? Some might argue buying a home in an area of declining interest might not be a great move in this market, let alone paying market value for a REO property with an unknown history.
“Huh? I’m not paying market value, I’m getting a smokin’ deal cuz it’s a foreclosure!”
Maybe, maybe not.