RealtyTrac lists foreclosures by zip code, and thinking that there couldn’t possibly be any in my neighborhood, I checked it out anyway. Wow! Several people I know are actually in pre-foreclosure.
I first assumed the pre-foreclosures would be folks who took out the exotic mortgage, and couldn’t handle the ARMs resetting. These are the people we’ve been talking about, the ones who will have to fold, thus dragging down the home prices.
Only one of the 4 properties that I delved into, fit this criteria. The sellers reduced their price twice since first listing about one month ago, and their current list price is $3K less than their purchase price about 2 years ago.
The other three I found are for folks who were refinance junkies. They bought their homes in 1992, 1993, and 1988. They have multiple loans and HELOCs recorded. And although they are in pre-foreclosure, none of these 3 homes is listed for sale! Not in the MLS. I drive by these homes regularly, and there is not a for-sale sign.
Of course, these stories don’t give enough data to make a conclusion, but I will do it anyway.
Homeowners are emotionally attached to their homes. They will not part with it, even if they are in pre foreclosure, hoping and trying to get another loan, to find a way to hold on. This human emotion runs strong, and defies logic. It does appear that at least certain folks are not going to sell when they see financial trouble, but will hold on until the bitter end.
I will keep my eye on these properties, to see how this plays out.
Perhaps we have had foreclosures for a long time, and this is not a new trend.
I had assumed folks would sell their homes once they fell behind on their payments. Not always.
I found another preforeclosure. This is a friend’s neighbor (divorce), and we had been discussing how long this house has been on the market. They listed it at $775K last fall, and dropped the price in January to $750K. But in October they were served with pre-foreclosure! I would have expected a bigger reduction.
Does anyone know how to make sense of the RealtyTrac lien info? Do they list only current mortgages, or do the old ones stay on the record, even if they are paid off as part of a refinance?
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