The number of new home foreclosures monthly continues to be roughly equal to the number of Sevier County residential sales each month. Many of these sales are at ridiculously low prices – Levels not seen in many years. When a client of mine who is attempting to sell his own (non-foreclosure) property asked why the banks were pricing so aggressively, I decided that the answer might be something that readers of this Gatlinburg real estate blog might also be interested in.
Basically, foreclosure units are distressed properties owned by banks that are highly motivated to sell for several reasons. As has often been said, the LAST thing the bank wishes to do is to actually end up with the house. Banks are in the business of lending, and they are restricted from doing that while they own the non-performing asset. In fact, the bank is penalized by the regulators severely until the property is liquidated. Additionally, the bank knows that an unoccupied home doesn’t fare well and that time is NOT on their side as to the condition of their asset. Next, most of these properties are no longer furnished which makes them less attractive to buyers who can find non-foreclosure properties that still are furnished and extensively decorated. Finally, foreclosure properties are sold without disclosure – What you see is what you get and the bank makes NO statements or guarantees of condition. Buyers therefore expect (and often get) excellent bargains on these foreclosed Gatlinburg area homes.
For all of these reasons, the banks price these foreclosure properties VERY aggressively. When the banks tell us that they want a price that should sell the property within 60 days (or less) this requires a very aggressive price. We sometimes get the price that we suggest but often the bank refuses to acknowledge the serious haircut that they will have to accept. When this happens the properties don’t sell until the banks grudgingly lower the price to the near giveaway levels that are required for a timely sale. Frequently, the value of these cabins and chalets is only about HALF of what they sold for at the market peak which we experienced during 2006-2007. If you are considering purchasing an investment property or a wonderful residence in our Smoky Mountains you have an unprecedented opportunity to cash in on the current situation. Please contact us if you would like to take advantage of this situation.