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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Waiting for the day.... Posted by Ward-CA- on December 04, 2003 at 6:58 AM In Reply to: What happens to foreclosure market if values drop posted by Jason on December 03, 2003 at 11:45 PM : Ward, : What happens to the foreclosure market when home prices go down? For example, a home currently worth $500k with $450k balance, and the price of the home goes down to $400k. : What happens to these at the public auctions as well as if it goes back to the lender as an REO? : Also, in your experience, does the competition for preforeclosures at that point get really stiff because there are less home with a lot of equity. : thanks =================== Jason, When prices of homes drop to less than their encumbrances the short sale market starts to boom. If the opening bid at the foreclosure sale is equal to or larger than the retail value of the property there's going to be just one bid for the property...the opening bid of the lender. Absent any competition from outside bidders the lender's bid will prevail and the lender will get the title to the property as an REO (real estate owned). When the lenders perceive that they are going to get large numbers of new REO's in their inventory they will become much more willing to do a short sale before the foreclosure auction. And they will drop their opening bid at the foreclosure sale to less than what they are owed, hoping to stimulate outsiders to bid at the sale. The equity buyout market will blossom since the pall of a buyer's market will penetrate to all aspects of the foreclosure market and defaulting home owners will know they don't have a chance of waiting to get a better price. So they will be quite willing to sell a lot sooner for a lot less than they do presently. In a buyer's market most of your competition will head for the mattresses for the duration. You will have your pick of any foreclosure you want to buy....be it before the sale, at the sale or after the sale. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : Ward, : : What happens to the foreclosure market when home prices go down? For example, a home currently worth $500k with $450k balance, and the price of the home goes down to $400k. : : What happens to these at the public auctions as well as if it goes back to the lender as an REO? : : Also, in your experience, does the competition for preforeclosures at that point get really stiff because there are less home with a lot of equity. : : thanks : =================== : Jason, : When prices of homes drop to less than their encumbrances the short sale market starts to boom. : If the opening bid at the foreclosure sale is equal to or larger than the retail value of the property there's going to be just one bid for the property...the opening bid of the lender. Absent any competition from outside bidders the lender's bid will prevail and the lender will get the title to the property as an REO (real estate owned). : When the lenders perceive that they are going to get large numbers of new REO's in their inventory they will become much more willing to do a short sale before the foreclosure auction. And they will drop their opening bid at the foreclosure sale to less than what they are owed, hoping to stimulate outsiders to bid at the sale. : The equity buyout market will blossom since the pall of a buyer's market will penetrate to all aspects of the foreclosure market and defaulting home owners will know they don't have a chance of waiting to get a better price. So they will be quite willing to sell a lot sooner for a lot less than they do presently. : In a buyer's market most of your competition will head for the mattresses for the duration. You will have your pick of any foreclosure you want to buy....be it before the sale, at the sale or after the sale. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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