The Flood of Foreclosures
It is no secret that the number of foreclosures on homes has reached an all time high. However, why have they not reached the Multiple Listing System?
In a normal market a bank will repossess a property a usually process it through a listing agent within 30 days. Today with roughly 400-500,000 properties repossessed over the past year, they are not yet on the market.
Lenders and servicers office explanations as to why it is taking longer to process foreclosed properties that it has in the past:
- Many of the properties have title issues that need to be resolved
- Many of the properties are in states of extreme disrepair
- A number of states have strict redemption-rights periods which prevent the lender from reselling the property.
- A few states have extended the length of eviction proceedings
- The volume of REO’s (foreclosed properties going into the MLS) has slowed down the process; there will be roughly 10 times the number of REO’s this year as in the last “normal” year, 2005
There are many agents and buyers waiting for these potential “bargain” properties to come on the market. The banks often price them according to market condition but are also willing to take less than a homeowner to increase their chance of unloading the property and saving as much money as possible.