If you were hoping to find a good deal buying a HUD home, a bank-owned (REO) or even a Short Sale in Franklin County, you are out of luck. Distress Sales have decreased by 40.8% in the 3rd quarter of 2014, as compared to a year ago.

It appears we have finally overcome the housing bust that started in 2008. The shadow inventory has been sold to investors and equity funds, and new home construction is gaining steam.

Distress Sales Data for Q3 of 2014

The Columbus Board of Realtors compiles a quarterly report analyzing distress sales in Central Ohio. It shows the number of lender-mediated (distress) sales, foreclosure listings and the median sales price for each county, city and school district. Click here to see the full report (pdf).

Overall, the median sales price of a distressed property is $71K, while the median price of a traditional sale is $170K.

Currently, the inventory of distressed listings is less than 10% of the total inventory of homes for sale on the MLS. Compare this to a 25% “market share” four years ago.

The chart below shows the inventory of homes for sale in Columbus.

The green line shows traditional listings, which peaked in 2007, just before the market hit a wall. You can see that traditional listings are cyclical, which means more homes are available during the summer months and fewer in winter.

The gray line shows lender-mediated listings, including short sales, REOs and HUD homes. This line is not cyclical, as distress sales are independent of the season. They peaked in 2011 when they made more than 25% of all listings. Now they are down to 9.7%.

Columbus distress - foreclosure listings over 10 years

REOs and HUD Homes

Bank owned and HUD homes are listed by real estate brokers. So, you can search for them on the MLS.

Unfortunately, good deals are hard to find these days. When I was listing HUD homes in 2011 and 2012 more than 200 came on the market every week in Franklin County. Today, I could find only 37 in the HUD Home Store.

Short Sales

I negotiated approximately 150 short sales between 2003 and 2007, before the housing crisis started and it became close to impossible to work with lenders.

Some home owners are still “underwater” with their mortgages, which means they owe more than the house is worth. If they have to sell or fall behind in their payments, a short sale is an option to avoid foreclosure.

When you request a short sale, you ask lenders to take less than the full payoff of the mortgage. Lenders will only agree, if you have a legitimate hardship, like the loss of your job. You have to document your hardship and find a buyer to submit a purchase offer, before the lender will even consider your request.

Short sales may result in good deals for investors, however, they are not very desirable for home buyers who need to move at a certain time. Short sales are unpredictable. It typically takes 45 to 90 days just to get the paperwork reviewed.

If you want to make an offer on a short sale you have to be patient. The good news is that you are not bound by the purchase contract until the lender approves the payoff of the mortgage.

Sheriff’s Sales

When a lender forecloses on a home and the court grants a judgement, the house will be auctioned off to the highest bidder at a Sheriff’s Sale. 

You can find a list of homes scheduled for Sheriff’s Sale at the website of each County Sheriff. Here’s a link to the Franklin County Sheriff’s Office real estate sales page.

Sheriff Sale properties are not on the MLS, and there’s no way for you to see the inside. Which means you have to buy them “blind” (without inspection). Bidding starts at 2/3 of the appraised value, which may be too high for investors.

Many homes listed for Sheriff’s Sale are purchased by the mortgage lender itself and become REO’s.

Can You Still Find Foreclosure Deals?

Rest assured, there will always be deals available. They are just harder to find these days.

If you are interested in buying properties for rental or to rehab, please give me a call at (614) 975-9650!

I’d like to show you the opportunities available to investors in today’s market.