December 2, 2008:
NEW YORK (CNNMoney.com) — Selling a home in this market is hard enough. Competing in a neighborhood flooded with foreclosed homes that are heavily discounted is nearly impossible.
There are nearly a million repossessed homes on the market right now. And these homes, dubbed in the industry as REO (real estate owned) properties, are being marketed by the most motivated of all sellers – that is, the lenders stuck holding the bag when homeowners default.
On average, foreclosed homes are priced almost 40% lower than normal real estate listings, according to data supplied by Trulia.com, the real estate Web site.
“Distressed sales [like foreclosures and short sales] put pressure on the whole market,” said Robert Kleinhenz, an economist with the California Association of Realtors.
The lenders selling foreclosed homes have already taken a financial bath, in missed mortgage payments and administrative costs. And every month that an REO home sits empty means another month that the lender has to pay to cover property taxes, insurance and maintenance. What’s more, as home prices continue to fall throughout the country, these homes are rapidly depreciating as they sit on the market.
With foreclosures priced so low, there is just only so much an ordinary seller can charge for a comparable house. Consider these figures: In California, the median price for an REO listing was $259,000 during the week of November 10, 23% lower than the non-REOs…
