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Distressed Properties and What They Mean to You
Since affordable pricing tops the list of motivation and criteria for buying, it is no surprise
that many first-time home buyers purchase distressed properties, which can be up to
30% below market value. Cost-conscious buyers are the most interested in distressed
properties, but it is important for them to take into consideration the additional costs and
expenses related to damage or neglect that occurred during the foreclosure process. On
average, distressed property prices for first-time home buyers are $185,971 with a
median of $153,000.
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Another consideration for buyers is the transaction time. Short sales and foreclosures
typically take considerably longer to close because buyers deal with institutions rather
than individual sellers. Yet buyers who are patient can benefit by paying less
As a seller, it is important to understand the current real estate market, and a real estate
agent is there to guide sellers every step of the way. Agents can help sellers understand
what the level of distressed sales and competition look like in their area. This way, they
will be able to price their home right and will more than likely be able to attract attention
from potential home buyers.
Home Sales
August home sales were up 18.6% year-to-year, posting a 7.7% increase in sales activity over
July despite Hurricane Irene, which struck the Eastern seaboard and New England regions at
the end of the month. As a result of the hurricane, the Northeast experienced the smallest
increase in sales. At the same time, persisting restrictions among banks affecting home lending
are having the greatest constraint on sales levels. NAR Chief Economist Lawrence Yun stated,
“The market can easily move into a healthy expansion if mortgage underwriting standards
return to normalcy.”
Congressional Loan Limit Guarantees Set to Fall
On October 1 the loan amounts that can be guaranteed by the agencies Freddie Mac, Fannie Mae,and the Federal Housing Administration dropped in higher-priced markets from $729,750 to $625,000,
or a -14.35% reduction. While $625,000 is far above the national median price of $168,300, affecting
only 1.3% of loans, this reduction can have an impact on the overall prices of homes by creating even
tighter mortgage lending standards and cause some sellers to reduce their asking prices.
Source: The Wall Street Journal
Senate Subcommittee Brainstorms Foreclosure Solutions
On Tuesday, September 20, a Senate subcommittee met to discuss the foreclosures that still plague
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the balance sheets of banks, the federal government and other agencies. Of the total 54.9 million
residential real estate loans that exist, 4.5 million are non-performing, with another 10.4 million
borrowers who are likely to default. The subcommittee listened to the opinions of many industry
experts, who urged the policymakers to be conscious of these borrowers and to find ways to increase
available funds to potential buyers and investors who could absorb some of these properties.
This meeting comes on the heels of several attempts to stem the tide of foreclosures which includes
the Homeowner Affordability and Stability Plan enacted in 2009, a $79 billion effort to help 7–9 million
families avoid foreclosure by refinancing or restructuring their loans. Source: The Wall Street Journal
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TheRealEstateLadyofKY.com
Marcia Whigham Duncan
The Real Estate Lady of Kentucky
"The Realtor for You. The Difference Is Dedication"
502-321-4978
