Foreclosure mess scares off homebuyers: Campbell/Inside Mortgage Finance

The ongoing controversy surrounding foreclosures is taking its toll as homebuyers refused to look at distressed properties in October, and foreclosure sales suffered from delays, according to the latest Campbell/Inside Mortgage Finance Monthly Survey.

Both the share of home purchases involving distressed properties and average prices for foreclosed properties fell last month, the survey found.

News reports that major servicers were pulling REOs off the market, including some already under contract, spooked would-be homebuyers. The monthly survey found that 14% of owner-occupant homebuyers and 6% of investors refused to view foreclosed properties in October. Homebuyer fear was worse for short-sale properties where 30% of owner-occupant buyers, and 20% of investors refused to view these homes.

Servicing problems disrupted both short sales and REO sales. Survey results show that 24% of closings scheduled for October were delayed or canceled due to issues with short sales, while 12% were delayed or canceled due to REO title issues.

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One person looked in 90 days. My house was priced at 40% less than it value.

Nothing to see here folks, just (bank) business as usual.

The house had originally listed higher, but didn't sell, so they relisted for $5000 less. My friend offered 3.5% above the new price asked. Seller agreed. Bank hemmed and hawed for almost three months, then changed their mind and did another appraisal - bumped the price up $10,000 over the original price that hadn't even gotten a nibble.

My friend withdrew the offer.

Banks are idiotic and everyone is suffering for it. Short sales are particularly problematic; my friend's realtor warned them not to try for one (but they really liked the house).

I'm sorry you're stuck in that mess. My sympathies.

original purchase price or the current market value by a licensed appraiser?

To me it seems any house sold today would have to be priced at somewhere around 20% below it's CURRENT MARKET VALUE, because that is what it will probably be worth in 2-3 years.....if the buyer is lucky. 40% below it's current market value based on a current appraisal should represent a very good buying opportunity.

If you don't mind....where is your home located?

It was priced at 40% below what the bank claims that I owe, which is much less than market value. IMO, appraisals are a scam too.

IMO the price never mattered, the bank wouldn't have taken any offer anyway. What matters is that people aren't buying ANYTHING. My grandmother's house (paid in full) is also for sale, and is not selling at less than half of what it would have easily sold for 5 years ago.

My realtor says the market is the worst he has ever seen, and it's going to get much worse.

US Capitols. I built a house in 2002 which cost about $260K total. In 2006 I had a contract on it for $477K but it failed to close when the buyer couldn't sell his property. I've since made some improvements including finishing the basement and adding a full bath. My cost is now about $270K without including labor on a huge deck and the new basement. The latest appraisal was $260K and looking it over that seems to be a fair estimate of the current market. Today I would expect to have to settle for about $220K if I wanted to sell because the current market value is sure to go down in the next couple of years.

A note; in my area there were about 50 comparable house for sale in 2006, today over 450! The collapse in sales at the same time of massive overbuilding has led to this situation. I live on the shores of Lake Anna which has been a second home mecca for the Washington DC, upper middle class, gov't worker. Other than those recently retired residents this is one of the lower income counties in VA and certainly the lowest income county in central VA. The local residents cannot afford the majority of the houses in the lake region and many sit empty or are used only a few weekends a year. I haven't seen the owner of the house across the street (these are over one acre lots) in over 3 years. My neighbor on the East side "visits" his house about 4-5 weekends a year.

It's been a wild ride....for me at least it's only on paper so far.

Really, they're too high and employment too insecure. Yeah, the banks are still devious lying sacks of crap and that doesn't help either.

I drove from Durango up to Valparaiso Lake in Colorado to check out a rental place. On the way, my unofficial windshield survey revealed that probably 40% of the properties were for sale. Everything from mobile homes to multimillion dollar ranches. It's really incredible. I don't know where the buyers are supposed to materialize from.:shrug:

Meanwhile in the rental market, houses are being listed from $700-2000/month. I know the nice ones have four bedrooms and granite counters, but, again, who do they think is going to be able to afford them? It seems like they want the mortgage covered, plus their own rent and living expenses.

The housing market is in desperate trouble, with no relief in sight.

Precisely because of the bank fraud.

It really is hard to tell if it is the bank problem or the economy problem which is stalling sales.
I hope people are wising up to title issues, tho.

The banks are done. Stick a fork in them.