Anticipating the current real estate loan mess, I began cultivating relationships with national foreclosure managers a few years ago. It wasn’t really rocket science to see that loans made for the full amount of the purchase price (or even more), and allowing the seller to pay the buyer’s closing costs, on a SECOND home where the buyer wasn’t ever going to live here was pure real estate lending foolishness. Just in case the above criteria weren’t quite insane enough, add to all of the aforementioned characteristics that the loan(s) in question was often an adjustable rate mortgage with low borrower documentation and a very liberal appraisal value. It took very little common sense indeed to see that our Gatlinburg area real estate market was soon to be headed over the cliff to a nasty fall below. How could it play out any other way??
While the stats for July aren’t complete yet (of course) it does appear that the rally in the number of residential units sold which we saw in May likely will not be repeated. In fact, our board of realtors may even set a new multi-year low for residential units sold during July unless a LOT of closings occur during the last two days of the month.
With this backdrop in place it is now time to describe the “Strange Behavior” that caused this post’s title. My largest real estate client is one of the quasi-government national loan guarantee corporations that insures a great number of loans on residential homes and condominiums in the United States. Facing a deluge of properties that they need to market I fully believed that I would have a remarkably successful financially, if not very pleasant, 2008. There is nothing enjoyable about telling someone that they are no longer the owner of a property which used to be theirs and that the bank has ordered the locks on the home be changed.
Actually, it has been neither pleasant nor financially profitable because of the way that some of these insuring companies are operating. In the past several months I have had added to my listing inventory 19 new foreclosure properties from one vendor but have sold only 2 of them. The reason is that the seller has consistently priced the properties well above my recommended price level and above the appraisals that the seller orders to keep me honest. Failing to see the dramatic drop in our market fundamentals, this seller continues to overprice their properties and then watch them languish on the market unsold. It almost seems that they don’t want to sell these homes but would prefer to just hold them and continue to bleed as each month goes by – Strange behavior indeed!
Fortunately we have been able to sell other properties and RE/MAX All Pro, Realtors, Inc. continues to lead the entire Great Smoky Mountain Association of Realtors in total dollar volume sold year to date in 2008. For the latest firm ranking stats from our board of realtors MLS database please click here.
What does this mean for potential buyers? It means that there is a considerable glut of properties inventoried by these sellers which will eventually have to be dealt with. The only way that these foreclosure homes will sell is by significantly reducing the price. This will put more pressure on an already over-supplied real estate market causing even more bargains for savvy buyers. If you have waited patiently for your opportunity to purchase real estate here in the Smokies at below market values your turn is indeed coming. Although my vendor isn’t yet waking up others are seeing the situation for what it is and are adjusting their prices downward to move their unsold inventory.
If you are looking for professional advice in the Gatlinburg/Pigeon Forge/Sevierville/Kodak/Seymour/Cosby areas please let us know. We can provide expert assistance to help you attain your Smoky Mountain real estate dreams. Buying or selling, we will be glad to provide solid advice regarding any Smoky Mountain real estate matter.