Foreclosure Crisis could mean opportunity for Private Owners/Sellers

No one knows how long the freeze on foreclosed properties will continue. But the freeze is keeping the most undesirable competitors off the market, making foreclosed properties less of a factor in pricing than they have been for the past 3 years.

Q: Shouldn’t I wait for a better time to put my home on the market?
A: When there are more foreclosed properties listed for sale, the law of supply and demand applies and suppresses prices. Foreclosed properties are active competition for private home sellers during their marketing period - often being used in negotiations to the detriment of those private sellers.

With a freeze on foreclosures (a number of active foreclosed REO properties have recently been withdrawn from the market) and the fact that pending properties that were scheduled to close have been stalled and postponed indefinitely, buyer's options are reduced and competition for private owners/sellers is eliminated.

Q: Will the freeze affect my home’s value?
A: The fact that those closings did not occur could serve to temporarily buoy the value of comparable homes within a neighborhood or market area. These depressed prices do not go on the books for appraisal purpose.
The fact that active foreclosed properties are not being negotiated on, or are even being withdrawn from the market, reduces underpriced competition for the private home owner/seller. At that point, supply and demand takes over. Fewer properties available at suppressed prices will increase demand for properly priced homes not in foreclosure.

Q: What does this mean to the average homeowner thinking of putting their home on the market?
A: Two things. First, during the freeze, fewer foreclosed homes will go on the market, reducing that inventory. Second (and most importantly), buyers will be wary of making offers on bank-owned homes. The time is right and most opportune for a private homeowner/seller to market their home at a reasonable price.

Q: Are you calling this a window of opportunity, rather than a time to sit out?
A: Yes. The law of supply and demand is still relevant and at work in our economy regardless of all the other challenges we may face. Homeowners can and should seize this opportunity to get serious about marketing their home and seize this window of opportunity that has opened while it is available!