Stop Foreclosure Answer

We all have heard about how much the values of homes have dropped in most areas of the country. It seems that it is just getting worse. Every several months we hear that the values have dropped more.

Today I would like to tell you what I see as the reasons for the drop in values.

The foreclosure crisis is having two side effects.

First – foreclosed homes have to be sold. In certain areas there are more foreclosures than others. Many of these are listed for sale.

Second – many people who were thinking about buying a new home are putting that off for awhile. They have heard about the economy tanking. Friends, relatives and associates have lost their jobs and are struggling financially. They have seen and read about devastating impact foreclosure has on families. They are worried that if they buy a new home now and a financial disaster hits them, they may end up facing foreclosure. So they have decided to hold off buying a new home until the economy improves.

What impact are these two side effects having on real estate values?

The news media tells us that in the last several months home sales have increased. Unfortunately they don’t go into detail on this.

In many areas there are a lot of foreclosed homes on the market. In some areas they are the majority of the homes for sale.

If you look at actual real estate sales you will see that there are a large number of foreclosed homes being sold. In some areas this approaches 50% of the homes sold.

Every mortgage company wants a foreclosed home to sell quickly. They are not in the real estate business. Their business is lending money for mortgages. They never wanted to own the home. It is their objective to get it off their books and pay the investor off as quickly as possible. So they will have the home listed for sale at a below market price.

People looking to buy a home today are looking for a bargain. They know which homes have been foreclosed and are being sold by a mortgage company. When they see one that they like they make an offer. The offer normally is quite a bit below the current sales price of the home. The mortgage company frequently will accept that price or a price between the offer and the current sales price.

The impact this has on sales is devastating. Any homeowner who has to sell their home in this market is competing with the sales of these foreclosed homes. If their home is similar to a foreclosed home and they priced their home higher, any prospective buyer will be drawn to the foreclosed home rather than theirs. So they may have to sell their home for an amount far below what the home is actually worth.

Just imagine an area where the majority of homes for sale are foreclosures. Anyone who has to sell their home there is going to get far less for their home than they wanted.

Home values in any area of the country are determined by how much homes are currently selling for. Sales of foreclosed homes normally are pulling the values down. In those areas where the majority of sales are on foreclosed homes, the drop in values is most significant.

What can be done to stop the drop in the values of homes? From my perspective, the answer to the problem is that people facing foreclosure need to be helped to save their homes. Finally there are some good programs which focus on modifying a person’s mortgage and reducing their monthly mortgage payment to a level they can afford. This should enable them to stop the foreclosure process.

If you are facing foreclosure, don’t give up in your efforts to save your home. Don’t try to do all of the work on your own. Get a lawyer or an expert in helping people facing foreclosure to help you.

Much Success,

Mark Elkins