League City Foreclosure Update

We still have a record number of foreclosures and a record number of sales. Aggressive tactics by mortgage brokers and lenders have lead to our record breaking foreclosure rate. Many people who purchased a house 10 years ago are shocked to hear that anyone with decent credit can purchase a home with Zero down and not have to pay any closing cost. Daily we are seeing buyers close on a house only spending money on inspections and a appraisal. Many times those expenses are actually refunded to them at closing. There are many renters that have more invested in a rent house then some new homeowners.

Many people feel that this is an indication of a bad market. Traditionally that has been the case but in today’s market we are seeing a different cycle. Typically once a foreclosure is taken by the bank and put on the market it is purchased within the first 30 days of being on the market by investors or first time home buyers. It is an odd cycle but luckily it is not affecting the home market significantly. I hear many people say “don’t foreclosures hurt my home value?” and they answer is no. Even with the high number of foreclosures many subdivisions rarely have more than one foreclosure home on the market at anytime. Appraisers and Real Estate Professional know that those lower sales price are not an indication of the market but rather an indication of the condition of that property. Foreclosures are typically not used when completing marketing analysis or appraisals.

Foreclosures present a great opportunity for investors that are seasoned and have cash available to act quickly. Foreclosures that are discounted sell within days and many time over list price. Mortgage companies are moving to tighten up requirements to cut the number of foreclosures and to try to stop mortgage fraud.