I just read an article about buying foreclosures "on the court house steps". WHOA there buddy. They are off the mark. Here is a good example of an article that has no basis in reality. When a property is sold "on the court house steps", the initial bid is the judgment amount. So if the person was upside down, under water or any of those other words bandied about, then the minimum bid will likely be more than the actual value of the home. The mortgage balance, unpaid interest assessed, and legal fees are all part of that amount.
Initial listing prices are typically near the judgment amount when the property does go onto the market. Because many of these homes have challenges, the prices fall to far below market values. Some people being removed from their homes vandalize them as they are moving out.
An analysis I did for our MLS showed that for all foreclosures sold in DABR MLS for 2008, the eventual selling price was 2/3 of the initial list price. Lest you think the Realtors(r) are setting the inflated prices to fatten their commissions, rest assured, we are not setting the prices on foreclosures.
The article does mention a couple of pitfalls you may encounter when buying on the court house steps. Properties are often kept under lock and key until the sale. You are usually buying them sight unseen. The second major draw back the article mentions is the sale price is due in a short period. In IL you must pay the total sale price within 24 hours.
WCIA news aired a good story tonight. Two interesting bits of information I was able to glean: Champaign County's average home prices are almost double those of Vermilion County. The second interesting stat: home prices in Champaign County have declined by 19% compared with last year. Contrast that to the nearly flat pricing in Vermilion County. The one thing both markets have in common is that about 23% fewer homes have sold this year.
Want to buy a new home, but don't have a decent down payment? The NAR (National Association of Realtors (r)) announced that there has been a modification to the $8,000 tax credit, for 1st time home buyers. Stay tuned for further details as they unfold. I spoke with a local mortgage broker who indicated they don't have details, yet. But, I will let you know as soon as we know how the new program will work.
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