Posted: Thu Aug 28, 2008 11:45 pm Post subject: How are DILs affecting local economy?
I have noticed a lot of DIL (Deed In Lieu) foreclosures in my area while looking for a new home. With the economy predicted to drop another 20% by next year can we expect more of these type of foreclosures? How are DILs affecting the banks? Are we to expect the same price dips with these properties even if they are trying to recoup the losses from the original loans?
I'm not an industry experts but as they say we can expect more of such foreclosures this year and the market may look better early next year. _________________ Procrastination is the enemy of your financial sucess
Posted: Fri Aug 29, 2008 5:38 am Post subject: RE: foreclosure and dil affecting markets and economy
Hi Lonelyric
Throughout the nation, home prices have been on a decline for the past 12 months. The average decline is around 10% and it is still going down. About 8 million homeowners are upside down on their homes. And the number is likely to extend to 12 million by next year. So, obviously this will force homeowners to either pay down their loans somehow or else give back their properties to the lender through deed in lieu. But as home prices are on a decline, lenders won't be able to cover the entire loss by selling off the properties.
The situation is such that on one hand, the industry and the government are trying to slow down the pace of foreclosures while on the other hand, several houses are lying empty as the prices are not worth covering the unpaid mortgage debt against those properties.
Most states are looking to buy clusters of empty foreclosed homes but they are experiencing a budget deficit. The states are trying to get funds from the Federal government such that they can buy and sell off the homes again.
Posted: Fri Aug 29, 2008 11:58 pm Post subject: DILs affecting the economy
Jessica when you say that "houses are lying empty" its because the banks feel that the properties won't sell for the list price that they would need to recover their losses, right? If that's the case, how does this affect an area when you are trying to establish comps, especially when there's more than one DIL?
It's becoming common place to find DILs and I don't know of anyone who has dealt with a bank to obtain one, if you were interested in a DIL how would you figure the asking price? My guess would be that the bank would not be as flexible as an owner in negoiations and I'm quite sure as with all foreclosures that there would be an "as is" contract included.
Posted: Sat Aug 30, 2008 3:48 am Post subject: RE: deed in lieu - property asking price
Hi alonelyric,
I think only an appraiser who deals with comparables will be able to guide you on how to figure out the asking price. You're right in saying that "houses are empty" implies that the properties won't sell for the list price that would help the lenders recover their losses.
Quote:
My guess would be that the bank would not be as flexible as an owner in negoiations
It's true that banks would not offer as much flexibility as an owner can offer. But this depends more on your situation and how much you owe.
lonelyric
