It’s been a very long time since I’ve written about foreclosures. You’d think, after the exposure that I’ve had to them, I’d write more often about them. You’d think I’d be a bigger fan. I did, after all, represent the Clear Sky Lodge seller (Bank Of America), and the South Shore Club seller (First Midwest Bank), and the Geneva Oaks Trail seller (A New York hedge fund). This level of lakefront seller side representation is unrivaled in this market. Considering I’m not any sort of REO specialist, and considering that I’m not on any short list of bank representation, there has to be some reason for the ownership of this specific REO segment. What could it be?
Well, silly, it’s simple. It’s because the banks don’t golf with any brokers here. They don’t have lunch with friends who invite their broker friend. They don’t hang at the yacht clubs or the bars. They don’t have influences here. They just look around the market, interview the good agents and then hire the agent that seems most up to the task. I suppose I should take that as a compliment, but maybe the market should view it as more of an endorsement. Either way, the foreclosure update.
The lakefront has been quiet in terms of distressed activity. There has been a property in the Lake Geneva Highlands flirting with foreclosure, and there’s the large property on the north shore that was seized by the IRS last year, but that’s about it. The foreclosure on the lakefront in Loramoor doesn’t seem to be progressing, but I’m not privy to those details so I’m uncertain as to the current status. There’s an active Lis Pendens at the county level, but that’s about all I know.
Off the lake, foreclosures haven’t stopped, but they’ve slowed to a very intermittent drip. There is a pending issue in Knollwood, and another in Country Club Estates. There’s an REO in Cedar Point Park that has a story to tell. A few years back, a seemingly cheap REO property in Cedar Point would have been pounced on immediately by an investor or an opportunistic end user. Value or not, the distressed portion made it look like a deal, and so the market responded. Today, there’s a beat up REO in Cedar Point that’s been sitting for quite some time. In the spirit of full disclosure, I actually made a bid on it last month. I thought maybe I should rekindle my love of the challenging renovation. Then I remembered that I hate renovations and didn’t engage in a negotiation. Besides, Fannie Mae only likes to negotiate with itself, by dropping the price with programmed consistency. They do this, and then when a bid comes they don’t negotiate. It’s a strange thing, until you realize that it’s a governmental agency and awkward inefficiency is what they do best.
Geneva National has shrugged off its ongoing foreclosure issues, and looks primed to have its best year in a very long time. This is a positive, and buyers should be encouraged to buy there so long as they remember the lesson of Foxwood. The once dazzling enclave of new construction has been foreclosed on. Early buyers paid handsomely to be part of this new development within Geneva National. Then, the market dried up and the developers bailed. This is why we don’t buy in unfinished enclaves within large associations. We just don’t do it. We buy inside of existing, all-built out areas, where we know what the market looks like and we can understand our downside. I like developers, I just don’t want to tie my future valuation to their whims.