A community’s chances of a speedy recovery from a hung-over Florida housing market not only depend on how many foreclosed homes they have in the neighborhood but even more importantly on which lenders own those properties.
Working as a short sale realtor in Orlando, I can tell you exactly what banks are the best ones for doing short sales as well as which ones make me cringe as soon as I hear their name in a conversation. Now, things tend to change a bit when are talking about bank-owned homes. This is when the lender takes a home through the foreclosure process and ultimately ends up owning the property after it goes to public auction. Once they own the property, it becomes an REO [real estate owned] which they will then list with a local realtor to try and get it sold.
You would think that lenders would try and get the property sold as soon as possible to avoid any further losses that they’ve already suffered. However, this is not always the case. Many times a bank-owned property will sit vacantly and abandoned with no sign at all of an attempt on the bank’s part to market it and get it sold.
Some realtors believe that it’s a strategy by the lenders to avoid flooding the market with properties again which would cause a dip in prices so they only release a certain amount of properties over a pre-determined amount of time. Others will tell you that it’s because the banks expect the Florida real estate market to continue improving and they want to hold out in order to try and capitalize on higher sales prices.
If that truly is the case then I believe that lenders are taking a huge risk in holding out to sell in a hotter market. For one thing, you should never ever depend on the appreciation. This is something that I learned a long time ago when I first started investing in Orlando real estate. Getting into a real estate investment for the sole purpose of expecting the market to get hot then cashing out is what got a whole lot of folks into trouble in 2007.
Not only that but houses that just sit vacant will continue to rack up homeowners association fees, property taxes, risk of vandalism, as well as code enforcement fines if the home is in some way in violation of county code enforcement or safety issues. Also, the longer a house sits unattended the deeper it will fall into disrepair.
For some reason, the smaller lending institutions appear to be a bit more nimble when they deal with foreclosures. It’s probably because they’re only dealing with a fraction of the number of properties that the big lenders are.
