Unfortunately the California foreclosures are still on the rise and home prices are getting lower, slowly but surely. Short sales are popping up all over California with their list prices dropping lower and lower to generate an offer so the bank will communicate with them.
Allot of people keep asking me about the California foreclosure homes. How can I get a foreclosure home for cheap? Aren't all the foreclosures being bought up by the investors?
How do I find foreclosure homes for sale? etc. etc.
There's something that these people don't know about the foreclosures going on in the California real estate market today. Yes you can get a foreclosure home for cheap but these are very rare. The circumstances that would allow for a foreclosure home to be sold cheap are just not likely to occur.
These California foreclosures are allot of the time new homes or homes that have been refinanced in the last couple years. So therefore, the amount of money owed to the foreclosing bank is in most cases substantially more than what the home is worth now. So the foreclosing bank wants to sell the house for what they are owed.
Small story short the foreclosing banks will not likely get what they are owed or anywhere near it for that matter. They will foreclose on the homes ,try to sell them at a foreclosure auction, list them fore sale with an agent without any repairs for the price owed plus the foreclosure process fees. Than, they will probably do some repairs and slowly drop the price in small increments until someone finally buys it. But this price won't a cheap price. it will sell for close to the current market value of the house which will most likely be less by the time the foreclosing bank pulls their head out of the sand and prices it correctly.
Why do the foreclosing banks price their foreclosed homes so high for so long that they end up losing more money than they would have by pricing it correctly to begin with?
Well for short the foreclosing banks don't know what the heck they are doing. They hire some agent out of area real estate appraiser who knows nothing about the market conditions of the town they are appraising in. They pay him/her a discounted price because they are going to give him/her more business with all their foreclosures. And, they get a discount job done. The appraiser goes in and checks the place and than goes to get comps similar the foreclosed home near the foreclosed home. often times their are no similar comps that have sold recently so the appraisers looks for older comps that sold back when the market was good.
Long story short- the appraisal comes in high(really high sometimes) and the foreclosing bank says OK. It is right we hired a professional appraiser who works in a city 200 miles away and he says so.
Even if the appraisal came back close to the real market value the bank still starts off at the price they are owed plus the foreclosure process expenses.
the foreclosure homes that sell cheap are the ones where the mortgage is alot lower then the current market value of the home. And in this case most of the time the owner will sell the home themselves for a little under market value if need be.
