Real Estate Information

Luxury Real Estate Information


Rancho Palos Verdes, California Homes
Palos Verdes, California Homes
South Bay, California Homes
Luxury Mexican Beachfront Homes

Featured Properties


Oceanfront Estate Near Trump National

Related Information


Loan Information
Real Estate Information
Mortgage Refinance Information

The Value of Foreclosed Property


The discount on a foreclosed property is not as great if the state allows deficiency judgments by lenders against borrowers. In contrast, the discount is larger if the property is being sold in a state that requires foreclosures to proceed through the judicial system. Lastly, appraisals seem to be more accurate for low down payment loans, leading to smaller discounts at foreclosure.

Foreclosed properties may be vacant for a substantial period before they can be sold as the legal process of foreclosure runs its course. During this period, the lender's costs of holding onto a foreclosed property increases because a property that should have been generating mortgage revenue, generates none.

In general, foreclosed properties sell at a substantial discount and this discount is larger when foreclosure occurs early in the loan's life. The magnitude of the discount varies by the type of house, borrower and seller attributes, loan types, time and locations. Because local governments, not the federal government, define foreclosure laws, variations in how long and how costly the foreclosure process is also has a substantial impact on the size of the discount.

Any borrower who provides a small down payment can end up in a negative equity position even if prices only drop slightly thus increasing the likelihood of default and the magnitude of the losses on a default.

Since defaults and losses are sensitive to down payments, especially as they become small or even approach zero, lenders are likely to be sensitive to the accuracy of the appraisal in low down payment loans.

For example, appraisers provide a variety of different types of appraisals ranging from full appraisals, which include a detailed inspection of the property, housing stock, neighborhood, and available comparables to driveby appraisals and only electronic appraisals.

If more accurate appraisal techniques are used on low equity loans then the value of foreclosed property should be higher for loans with smaller down payments.

In addition, the behavior of the property owner prior to foreclosure (during ownership) may also have an affect on the value of the property.

Not all property owners are the same. Some will more aggressively maintain the property and others will allow it to depreciate over time through a lack of maintenance.

This will lead to different rates of house price appreciation and property value.

The requirement of a judicial foreclosure process may lower the resale price of the property because it is vacant or rented for a longer period of time, which should increase the opportunity cost of holding the property under the lender's ownership.

However, this effect is probably smaller than the effects of the right of redemption, because the new owner of the property at least has a clean title. In addition, deficiency judgment provides more power to the lender and therefore may lead to a quicker resolution of the foreclosure process, providing less time for the property to deteriorate.

Again, this effect should be much less important than the right of redemption in terms of house prices and the recovery from sale.

Previous research has focused on the relationship between how much of the outstanding balance on a loan is recovered and state foreclosure loans.

State level foreclosure laws can also have impacts on the appreciation of foreclosed property.

For instance, if a loan is foreclosed in a state that allows the borrower the right to redeem the property after paying the foreclosure expenses for up to a year after the foreclosure date the discount increases.

However, the impact of foreclosure laws is different for each type of law.

For instance, if a state requires that the foreclosure proceed through the judicial system the discount also increases, but the discount is smaller in states that allow the lender to recoup any losses from other assets beyond just housing.

In summary, many factors impact the value of foreclosed property.

The simple fact that the borrower has defaulted indicates that it generally will be sold at a substantial discount relative to similar properties.

This discount is mitigated somewhat if the state allows deficiency judgments by lenders against borrowers. In contrast, the discount is increased if the property is being sold in a state that allows statuary right of redemption.

Lastly, foreclosed properties tend to follow the movement of house prices in the area but in a muted fashion.

For instance, if house prices in general increase by 100 percent then the sale price of foreclosed property will increase by 89 percent and any other discounts discussed above.

Therefore, the discount becomes larger the more prices have increased.

John Michael is the author of "Getting Started As A Real Estate Investor" "The Art Of Foreclosure Investing" "How To Do A Title Search" "Guide to Property Inspections" "Creative Investing Using Contract For Deed's". Learn how to empower yourself as an investor with this creative investor and teacher. Visit at http://jmichaelrei.com


MORE RESOURCES:
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news


Fortune

Climate Change Is Already Depressing the Price of Flood-Prone Real Estate
Fortune
New research shows that real estate properties in areas affected by extreme weather and sea level rise are losing value relative to less exposed properties. The effects are already substantial, but they may point to a looming collapse as climate change ...



Naples Daily News

Real estate briefs - Naples Daily News
Naples Daily News
York to teach class. James D. York, a local Realtor, will instruct real estate classes in conjunction with the Collier County Public Schools and the District School Board of Collier County's Adult and Community Education Department. Real Estate Course ...

and more »


New York Times

Can I Stop My Neighbor From Running an Airbnb?
New York Times
A single-family residence has different fire safety requirements than a hotel and restrictions on which rooms can be used as bedrooms, according to Jared E. Paioff, a real estate lawyer and a partner in the New York City law firm Schwartz Sladkus Reich ...



The Denver Post

Denver's commercial real estate market heating up as big deals ...
The Denver Post
Competition for homes in the Denver metro area has been fierce for years. Early activity in 2018 demonstrates the local commercial real estate market is emerging as battleground in its own right.

and more »


Sacramento Bee

Historic Woodland mansion hits real estate market | The Sacramento ...
Sacramento Bee
The historic Gable Mansion, a sprawling Victorian home in Woodland, was the most popular real estate listing of the week on Realtor.com. Some Bay Area publications and commenters awed at the $3.85 million asking price, wondering what such a mansion ...
Woodland Mansion was most popular real estate listing in America this weekSFGate

all 3 news articles »


Milwaukee Journal Sentinel

Real estate values climb throughout city of Milwaukee
Milwaukee Journal Sentinel
In addition, every category of residential and commercial properties has increased, with apartments climbing in value by more than 10% overall. The total assessed value of property in the city is nearly $27 billion in 2018, an increase of $1.7 billion ...



Real Estate Transactions: April 21, 2018
Fairfield Daily Republic
Real Estate Transactions: April 21, 2018. By Daily Republic. BENICIA. TOTAL SALES: 11. HIGHEST AMOUNT: $925,000. LOWEST AMOUNT: $460,000. MEDIAN AMOUNT: $688,000. AVERAGE AMOUNT: $636,318. 583 Capitol Drive – $725,000, 03-22-18 [4 Bdrms – 2714 SqFt ...



Albany Times Union

Real estate news and happenings - Times Union
Albany Times Union
Ryan Clark, manager of the Berkshire Hathaway HomeServices Blake Niskayuna office, will also manage the new Schenectady office. (Photo provided). Ryan Clark, manager of the Berkshire Hathaway HomeServices Blake Niskayuna office, will also manage the ...

and more »


ON REAL ESTATE: The competitive spring market
Daily Local News
Just today, when I was sitting down to spend some time writing about the real estate market, a close friend who is working in real estate walked in to get some advice. The problem that she was facing was that she's got too much business coming in. She ...



Charleston Post Courier

Real estate advocates showcase sustainable communities, ecological ideas around Earth Day
Charleston Post Courier
Jennifer Howard was musing the other day "about how different communities embrace and promote sustainability and environmental awareness," what with Earth Day approaching on April 22. She started thinking after visiting Summers Corner, a newer ...


Google News

home | site map
© 2006 TIGER MEDIA