More foreclosures are on the horizon just about everywhere in these United States. Retirement havens Sequim and Port Angeles are no exception, although we certainly have a much smaller foreclosure market than most. Our own foreclosure market is a function of the mortgage debacle and the recession. Owners who find they owe more than the house is worth are making hard decisions about whether to continue to make the mortgage payments or just walk away. But there’s another reason we will see more foreclosures. This national recession is taking a tremendous toll on family finances. Many are unemployed. The self-employed entrepreneurs, who are the backbone of this great nation, are getting hit hard, and this will mean more foreclosures. To make matters worse, national banks with mortgage loans on the Olympic Peninsula are quite uncooperative and generally unwilling to work with distressed homeowners when it comes to what are text book cases for loan modifications and short sales.
So we certainly will see more foreclosures in 2010. How will this effect the real estate market for buyers and sellers? Will this present grand opportunities for buyers? If you are a buyer, should you be scouring the market for that diamond in the rough, aka that foreclosure bargain?
Not all foreclosures are disasters like the one in this photo, but many foreclosures are in such disrepair, or have been damaged intentionally by the previous owners so much that they simply do not appeal to 98% of all buyers. Several of our local foreclosures have had fixtures torn out, sinks ripped out, kitchen islands taken, hot tub parts removed, and yards left looking like a natural disaster occurred.
Buyers tell me the first priority is location. What good is a great house if it is in a horrible location? With that in mind, foreclosures do not lend themselves to the first priority. A foreclosure cares not where it is located, what the neighborhood looks like, whether there is a mountain view, a water view, or no view at all. A foreclosure does not care if it is next to a junk yard or 200 feet from a major highway. You don’t get to pick the location of a foreclosure.
Foreclosures on the Olympic Peninsula are not like foreclosures in markets like Las Vegas or Phoenix, where there are so many that they have had to develop systems to organize how the banks will work with the REOs, the appraisers, new lenders, and the listing Realtors. By comparison, the foreclosure market here is in chaos, not order.
When foreclosures are listed in Las Vegas, they are listed at sellable prices, not excessively high listing prices. But this is not necessarily true in Sequim and Port Angeles. Many foreclosures here are listed at prices so high, you can find much better deals in the MLS that are not foreclosures or distress sales.
Of the very few needles in the foreclosure haystack that we do get, you can bet that the property either will not make it to the Trustee’s Sale before a full time investor has already purchased it, or it will be sold within two hours of listing. It is almost impossible to compete on that level. First, you can’t compete in the first instance, and in the second, there’s no way to know when a foreclosure will find its way back into the MLS. But there are some who are either on the inside (don’t get me started on that issue, because I do not have the evidence to reveal some of what I suspect may be going on in the foreclosure market behind the scenes), or they are just involved in a series of coincidences. As a buyer, you can’t count on being lucky with a foreclosure.
Conclusion. An increase in foreclosures in the Sequim and Port Angeles areas will not help buyers as most of them hope or think it could. The vast majority of buyers (98%) have no interest in the foreclosures that come across their radar. Of the few who are interested in pursuing the idea of buying a foreclosure, most of them will give up after great frustration and months of searching. For homeowners who have their homes listed for sale in the MLS with a Realtor at a reasonable price, the homes in foreclosure are not really competition. Those who would buy a foreclosure are almost never those who would buy a nice three bedroom, two bath home in a nice area here. Or perhaps that should be said the other way around. Those who are in the bell curve of buyers who want a nice three bedroom, two bath home with an attached garage in a nice area are not likely to find those parameters in a foreclosure. And those buyers who retire here and are serious about finding their prefect retirement home often cannot find it in the regular MLS listings. These buyers will purchase a lot in the perfect location with a mountain view or water view, and hire a custom home builder so they can live the rest of their days in a castle of their own design. (See Sequim Custom Home Builder)
Recommendation. I would urge you to narrow down precisely what it is you want and can afford, as well as your timeline. Then scour the market with your Realtor’s help and find the best home for you. Whether that is a FSBO, a regular MLS listing, a foreclosure listing, or building your own retirement home doesn’t matter. What matters is that you live in your dream home for the rest of your days in peace. In other words, don’t focus all your energy on finding a foreclosure. That can turn out to be a very frustrating failure. Instead, focus all your energy on finding that ideal home in the ideal location. That may or may not be a foreclosure, but with this strategy your probability of success just went up dramatically.
A great tool online for finding a home or land in the MLS, whether it is a foreclosure or not, is this online MLS search: Search the Sequim and Port Angeles Homes and Land Listings.
Possibly Related Posts:
- Buying a Foreclosure and How Banks Kill Deals
- Foreclosure Ripoffs
- HUD Closing Requirements
- Lawsuits Against Auction.com
- Dangers of Buying a Fannie Mae Foreclosure Through Homepath
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In response to the above article, in the paragraph Conclusion:The last sentence refers perfectly to us!We found the perfect waterfront lot, hired an architect, and it went downhill from there once the bids came in! As you say, the area of the country evidently governs price. We hoped for, as you referred to, “live the rest of their days in a castle of their own design,” The plans are for a 1900 sq ft, one story with attached garage. Lot is west side of PA, waterfront. In our opinion it is not a “high end” design. But when the bids come in, we could not afford to move forward. We were shell shocked! Everyone knows it would just grow from there. The contractors prices were about 200 a sq ft, which surprised us. We do not have vaulted ceilings or special design. Most of the back facing the water is all windows. We could not understand how they came up with these prices. We just can’t afford to go this route . We had a figure in our minds and it was way over that. Of course we were told to reduce and replace, but that changed the whole idea of our design. It seemed to us, these contractors really were really not interested in such a small structure so maybe they bid high because there was not enough money to be made. We still do not understand the great differences in bids between the four contractors, which leads us to wonder. We felt we were being gouged, so chose to sign any contracts. We know our financial limits, but some of these builders just don’t get it. The biggest surprise was the tax we would have had to pay to
the state of Washington ! No one told us that before, which we felt the architect should have disclosed this to us in the beginning . It is an ongoing learning experience. You mentioned in one article, that a custom home does not have to be an expensive home and that was our goal, and somewhere along the way, the architect did not keep that in his mind. His words of “that won’t be that much more” and our conception were two different price ranges altogether. We felt that with the building of new homes at a standstill, the contractors would do just about anything to get our contract. No way, they submit their prices , and you take it or leave it. We just don’t understand it. PA is facing a $1.2 million deficit, and you would think they would do anything to get newcomers into the area! The City Manager of PA queried newcomers and this article in the July 12th issue stated persons come for the natural beauty. Well, that may be one reason, but the survey was trying to go beyond that. Yet, not much is being planned with the results for that survey. Does City Council discuss how many people have been turned away from building here? Wonder how many building permits are pulled or minds changed due to so many concerns. Natural Beauty cannot fix realistic problems. Port Townsend is closing a real estate office due to no buyers and this is probably just the beginning. Building permits in Sequim have risen sharply, and just how many persons can afford the increases? There are very few permits being issued in both PA and Sequim. They are going to go up, and also with the new electrical code, it will add more costs to building. Reality sets in pretty fast once you come off your dream cloud !