Real estate foreclosure rates are accelerating to staggering numbers in many large and small marketplaces across the country. Here in Mammoth, foreclosures are moving at a different pace. Presently, there are fewer than ten lender owned properties in Mammoth. Having just completed an actual sale to a new owner and placing two other lender owned homes into escrow, I’m getting a clearer picture of how the foreclosure process is going to work––and some of it will vary lender to lender.
The Internet is playing a major role. The information is out there. And the flow of paperwork from the asset managers to the agents, and back, is all electronic. Decisions can be made quick. And the lenders and asset managers are real sellers. There’s no emotional attachment to the property, no memories, and no delusion to what the property will sell for now compared to four years ago. Each lender has a particular set guidelines and processes––and offers need to be presented in a precise format according to those guidelines. Weeding through all of this paperwork and procedure can be very time consuming. Many of the asset managers are on their own learning curve. Some are handling hundreds of files.
Each property is evaluated with a series of appraisals (by appraisers) and Broker Price Opinions (BPOs) by local real estate agents. So far the properties are being listed at attractive prices. Properties are sold “AS-IS, WHERE IS”. And the lenders don’t have the money to make significant repairs––even if the property needs it. Buyers offering 20% to 40% below the asking price (and they are) are fooling themselves. The Mammoth market isn’t there yet, and only the future will tell if it gets there. And time is of the essence––some properties are receiving immediate multiple offers. When most buyers live 300 to 400 miles away it becomes difficult to view the property. But at least the skiing is great so the trip is worth it.
As we get through more of these transactions we’ll learn more about the whole process. But how will all of this impact the larger market in Mammoth? After all, a rash of foreclosures can destroy values in a local market. My conjecture over the past couple of years has been that the number won’t be excessive. So far, that is what we’re seeing, especially in relation to other markets. Those owners that have been foreclosed on typically bought in the past three years and had multiple loans on the property. Some just gambled and lost. Because the Notice of Default-to-lender owned listing process is a 6 to 12 month process, we can see what the potential lender owned properties may be in the future. The number in the pipeline is minimal with no real growth trend noted at this time. This should be considered very positive for upholding values in the market.
What we have discovered through marketing these lender owned properties, and the balance of the market has displayed the same, is that there are plenty of buyers for and pent up demand for quality properties at a price point that lies 10% to 30% below the peak values of 2-3 years ago. That aspect of the market continues to impress me. When we received multiple offers within days on lender owned properties––that’s the proof to me. If the sellers get their prices into that buyer’s zone, then they are likely to receive offers. Other sellers are looking at this trend and are thinking they want to wait it out. The standoff continues. But will those buyers be there in the future years at these prices? We shall see. The foreclosure and lender owned properties should be a key and frontline indicator in the direction of the market. Stay tuned. I promise to keep my readers apprised of this segment of the Mammoth real estate market. Now back to all that paperwork.