I heard the rumor that Mt. Horeb has 40 homes in foreclosure. Since there are currently 140 homes for sale in the Mt. Horeb school district, I was pretty sure that wasn't accurate. The actual number of homes in true foreclosure is 7. There are about 20 that are subject to short sale or in "pre-foreclosure sale" status. I would say its fair to say that about 1/3 of those homes are spec homes that builders failed to sell.
I often have buyers who are obsessed with the foreclosure websites. I have found that often the information on those sites is either incorrect or unreliable. There are no set rules in foreclosure. Different lenders have different policies and sometimes their policies change for different homes. In my experience, there is nothing that always applies in foreclosure situations.
Buying a foreclosure isn't the easy bargain the general population thinks it is. When a property is bank-owned, it is sold "as-is" and there are a number of disclosures and legal liability waivers that buyers need to sign. The last thing a bank wants is a buyer to come back and sue them for something wrong with the house, so they make sure, with a good deal of paperwork, that this won't happen. Buyers need to remember that just because a home is sold "as-is", it is still highly recommended that there is still an inspection done so any defects are at least known prior to purchase. The bank won't fix any defects but at least you have the opportunity to walk away or take an educated risk.
Banks also take forever to approve offers. There has been an increase in foreclosures but not an increase in bank staff. You would think lenders would be excited to get an offer on a property they own, but actually the staff just see it as more work. Or it would seem by their demeanor when I've dealt with them. One staffer I recently spoke with told me her workload has increased from 20 files to 400. My guess is there hasn't been a subsequent pay raise.
Banks do not discount their price or easily accept "low-ball" offers just because they want to unload it. Usually banks still hire a Realtor to represent them and they employ the same pricing strategies that any seller would. If market information shows evidence that a home is worth $X, then a bank will likely hold as tight as they can to that price point for as long as they can. Banks are surprisingly patient: they will reject offers, they have no problem overpricing, and days on market doesn't seem to phayze them. In my experience, the only true steals in foreclosed real estate come with properties in ill repair that have been on the market for a good deal of time. In the Mt. Horeb market, very few fall into this category.
WARNING: Realtors are required to disclose when homes are "subject to lender approval", but there are no such rules governing for sale by owners. I have witnessed disasterous situations where 3 days prior to closing, unrepresented buyers find out from their unrepresented seller that they cannot actually sell the home for the agreed upon price because it doesn't cover what they owe and they cannot come up with the difference. If you are going to be homeless because you can't move into the house that can no longer be sold, you will not be a happy camper.
I will say loud and clear that nothing needs representation more than buying a foreclosed property. If you are not represented by a Realtor, you would be wise to at least hire an attorney to look over the vast contracts that come with bank owned property. I guarantee the banks have their butts covered, and so should you.
