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August 21st, 2008 8:09 AM by David W. Welch
I have spoken this week with some of the agents I know that specialize in bank owned properties. All of them are saying the same thing, "the banks are coming around." The banks are coming around to the fact that they have to drop their prices to get these properties sold. I have heard it from the agents, and I have seen it out in the market place. One agent in my office had 40 bank owned properties go under contract last month. Another agent I know has nearly 30 bank owned properties under contract. I have been working with a couple from out of state, and we found three bank owned properties that appear to be in pretty good condtion and priced well. We will probably be writing an offer on one of them today.
This is going to have a ripple effect throughout our market place as these properties begin closing. We saw the median price last month drop to $207,500, and sales have improved so far this year. This has been partly fueled by the short sales and bank owned sales, which look to increase over the next few months. Last month short and bank owned contracts made up 40% of the total pending contracts, but only 25% of the closed sales. The short sales take longer, and are more likely to fall apart before closing. The bank owned sales are moving right along with 30 closings. These should help make the case for lower prices on the short sales, which may aid in getting some of them closed as well.
This leaves the everyday seller in the position of either reducing their price, or taking their properties off the market until we move through this stage of recovery. Yes, I said recovery. Go back and read my blogs from January. I believe we have already seen our low from a sales point of view back in January. I think we are pretty close to our low for prices now. Looking at the pending contracts outstanding, prices may go down another 5%. First time homebuyers (anyone who has not owned a home in the last 3 years) now have a 10% tax credit up to $7,500 available to them as an incentive to buy between now and next summer. First time home buyers are already the biggest segment of the market, so this should spur additional activity. The additional demand along with the declining inventory should bring prices into balance.
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