If you are looking for a high end detached home the answer is Western Prince William County. Haymarket and Nokesville to be specific. If you are thinking of a smaller condo or townhouse then head to Eastern Prince William County in Woodbridge and Dumfries. Prince William County was one of the hardest hit areas when the Northern Virginia real estate market hit the skids in 2007. It has also seen some of the greatest price gains when the market turn around started.

Taking a look at last 3 years we can see the steady decline of REO properties in Prince William County, VA.

Currently REO properties are a small percentage of the total listings on the market in Prince William County.

At least once a week my team receives an email from someone still looking for the latest great deal on a bank owned property. Unfortunately with the low inventory of REO properties, the lenders aren’t jumping on just any offer that crosses their desk. There are some deals from individual lenders, such as Fannie Mae. The government giant is offering incentives to purchase a primary residence (up until October 2011) which includes up to 3.5% in closing cost assistance (with lender approval.)

If you want to explore the available opportunities with REO properties in Prince William County give Cindy Jones and CJ Realty Group a call at 703-346-2213. Let’s see if we can help you find a new home while the mortgage interest rates and prices are still at historic lows.

HUD is following the new Freddie and Fannie guidelines of a 15 day hold on investor bids but in some cases HUD homes in need of repairs will not qualify for conventional, VA or FHA (except 203K) financing.  Leaving them open for bids from investors.

www.hudhomestore.com

You will now need to check to see if your agent is HUD registered.  This means they need an NAID number.   I’m in the process of re-registering under the new system but have a NAID number under the brokerage so have access to assist buyers in bidding.

If you need assistance in looking at or bidding on a HUD home give me a call at 703-346-2213.  There are a number of properties available in Northern Virginia including Prince William and Fairfax Counties

Brent White a law professor at the University of Arizona has written a paper “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis ” that points out two key reasons why more American homeowners are holding on.

1) desire to avoid the shame and guilt of foreclosure;
2) exaggerated anxiety over foreclosure’s consequences

Interestingly enough as residential homeowners are caught in a debate about moral issues when it comes to walking away from their mortgage obligations, Morgan Stanley has walked away from 5 office buildings in San Francisco.  Another investment venture led by Tishman Venture Group has turned over the keys to what has been called the highest price ever paid for a single residential property in the U.S.   In both of these cases the properties are now worth about 1/2 what the investors paid for them during the boom of the market.

According to White “norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility.”  There is an obvious double standard at play when it comes to walking away.  It can’t be considered good business sense and morally wrong at the same time just because you are the little guy.

The answer to the question should you walk away is one only you can answer.  Hopefully before you do you explore all of the options that are available.  Talk to your lender, talk to an attorney, talk to a financial advisor.  Once you understand the consequences you can make the decision that makes sense for you.

Download Brent White’s Paper:  Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis

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However when my buyers and I arrived we couldn’t get to the front door.

I know it we have had an unusual amount of snow this year in Northern Virginia but buyers are still out looking for homes. In fact they are out in droves trying to find homes to put under contract before the current tax credits expire at the end of April.

You have a listing agent who you have put in charge of taking care of your listings for you. As you can see by the lack of footprints in the snow that not only are the sidewalks and driveway still covered in snow, no one has gone to check on the interior of the property.

We have had a lot of problems with leaks due to clogged gutters and if the house is winterized chances are it is freezing cold inside. Cold and wet are not a good combination as I’m sure you know. When a buyer can finally make it to the front door they may be in for an unpleasant surprise or two.

There is no doubt that you want your property to sell for top dollar and time is wasting. Would you please contact the listing agent, ask them to check on the home and hire a crew to shovel a usable path to the front door and check the interior?

My buyers are qualified and ready to go. Sorry we had to pass your home by.

Unfortunately the answer is chances are what you are seeing is not a listing at all but a notice of foreclosure scraped from one of the local papers. Foreclosure aggregators are trying to lure you in to buying a subscription to get to “real” foreclosure information.

You can check the local NOVA and DC papers such as the Washington Post, DC Examiner and Washington Times and see the same notices with the full information about the property. In Northern Virginia you will see the heading “Notice of Trustee Sale” which includes the property address, the legal description of the property and the amount owed on the loan. You will also see the date, time and location of the Trustee Sale.

Most of the time the price you see in listed in the Trustee Sale is far above what the current market value of the home might be. Occasionally you will see a home listed at below market value and those are the ones where purchasing at the courthouse steps might be an option.

At the last courthouse step auction I attended in Prince William County in December only one detached home and one townhouse had any bids and in talking to the buyers they were investors with cash looking to buy and flip.

If you are looking to purchase a foreclosure in Northern Virginia I’d recommend that you find an agent ( yes call me) who will help you locate a “real “listing in the MLS. An agent will take the time to walk you through the pros and cons of buying a foreclosure, talk about loan options and find properties that are for sale not scraped from a local newspaper by someone who wants you to pay to find out more.

In July I wrote a post “Strategic Foreclosures are Lenders Listing” which indicated from Wall Street Journal research that that once the value of a home fell by more than 15% the number of homeowners would simply “walk away” increased.

Now a new report produced by Experian and Oliver Wyman adds to that study with their own research about who it is that will make the decision to walk-away.

“New research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50 percent more likely to “strategically default” — abruptly and intentionally pull the plug and abandon the mortgage — compared with lower-scoring mortgage borrowers.”

 There is some very interesting data to support the thought that strategic foreclosures are not something to scoff about.

The number of strategic defaults is far beyond most industry estimates — 588,000 nationwide during 2008, more than double the total in 2007. They represented 18 percent of all serious delinquencies that extended for more than 60 days during the fourth quarter of last year.With more Alt-A loans ready to reset in 2010 and the value of homes in Prince William County as much as 50% lower than 2005 this new research might be an indication of more trouble to come for the area.  

Read the full article by Kenneth Harney as published in the St. Petersburg Times

The report indicates that the temporary suspension of foreclosures and work towards to completing more loan modifications have decreased the number of properties that both Government Sponsored Enterprises (GSE) own.  Though the Midwest is the only region that has seen an actual decline in REO properties this year the other areas are holding steady.  As expected Alt-A loans were the biggest pool of foreclosures that both companies currently own.

Hopefully as the government pushes for more loan modifications the inventory of GSE’s will continue to decline across the country.

Part of the reason behind the proposal is the number of vacant homes sitting empty in neighborhoods across the country is rising. The vacant properties are becoming run down, lowering property values in entire neighborhoods. But is allowing the owner who couldn’t pay their loan the right way to solve the problem?

When we look around and see teachers, police officers, fire fighters and other deserving public employees who are still priced out of some markets I wonder why wouldn’t we offer them a chance at the property first? A lease to own program that gives them credit for their years of service and a reasonable market rent with a percentage going towards their down payment. There are some programs in place offering assistance to our public employees but certainly there are more who deserve the opportunity to become homeowners. Why not more government programs to support putting them in one of these foreclosed properties?

Perhaps I’m missing something in this new proposal that answers the question as to why a foreclosed homeowner will get a chance to stay in a home that has cost their lender thousands in missed payments and their neighbors even more in lost property value.

What is the rest of the story here?

Recently my buyers have encountered two properties in Woodbridge that were pristine and within their price range.  They were excited and ready to write an offer.  However both properties were flips and didn’t qualify for FHA financing.

Since a large percentage of buyers in our area, especially at the lower price points are using FHA loans those newly purchased and renovated properties are not available for them to buy.  When you look back at the month of March of the 750 properties sold in Prince William County 257 of them were purchased with FHA loans.  So close to 1/3 of the potential buyer pool in the county can not purchase a flip.

Even though the FHA changed the rules last fall to provide relief for lenders handling foreclosures it does not cover individual “flippers” who purchase properties to rehab.  In an area such as Woodbridge this can be a surprise to both the investors, listing agents and prospective buyers.

As an investor it is something that you need to consider before you decide that it will be easy to make a quick buck on a flip.   Your pool of prospective buyers may be a bit smaller than you thought.

My first post pondered why the Prince William County housing inventory numbers reported in the MLS and by others was significantly lower than the previous quarter.  The second showed some of the issues buyers were facing with the low inventory.  Bidding wars in Prince William County started again resembling the hot market in 2002-2004.

Now Housing Wire has reported a number of critical numbers.  Per Housing Wire the foreclosures decreased 77% in December and 79% in January from the previous quarter.  During the same time period the number of loans that reported as 60 or 90 days delinquent increased 47%.  Now these numbers are nation wide and don’t reflect only local numbers.  However the Washington Post this week had 14 pages of Trustee Sales that have to end up somewhere and that somewhere is usually the MLS.

Even without a crystal ball it would seem that unless a significant portion of the delinquent loans are modified that there will be more foreclosures coming on the market in the next quarter.  So the question becomes for those of us working with buyers at the lower end of the current Prince William County market should we advise them to wait and not get involved in the bidding process or move ahead and deal with the stress the current market has created?

March inventory numbers in Prince William County

March Prince William County Inventory Numbers