Foreclosures are like old relatives that live far away. Not the sort that you get birthday cards from, nor the sort that you talk to on the phone every now and again. Rather, the sort that send you a Christmas letter, because that’s the one time during the year that society has deemed a self aggrandizing, photo packed, self indulgent, macro-status update to be passable. I write such updates three times a week, but still. This is the card you get that has a name on the outside that you recognize, but you can’t remember from where, exactly. You open the card, which is really a letter, printed from their home computer and copied at their local Staples, or whatever copy center is popular in whatever town they live in. You look at the card, the photo, skim the commentary. Lisa got an A in Study Hall. Timmy went to summer camp for a couple days. You scan the faces in the photos. And then, sometime after placing the card/letter in a stack of similar braggadocios greetings, you remember- that’s cousin Carol!
These foreclosures are out of sight, and they are out of mind. We have no time for them anymore, because we’ve moved past them. Most of us have, anyway. If you’re struggling with a foreclosure right now, I’m sorry. It’s a bad time, I’m sure of it. But, for the broad market we live in, foreclosures are no longer headline grabbers. Sure, once in a while some large entity or person goes belly up, and we make a spectacle of the failure, but that’s the case at all times. The culture of foreclosure, of short sale, of all things distressed, has passed. We have returned to happier times, when foreclosures happened to someone else, never to us. Things are, according to the news cycle, better. No, they are the best!
Realtors have moved past these dirty properties, too. The new mantra is hot, hot, hot! Check a Twitter feed of your favorite Realtor, whether in Lake Geneva or Fort Meyers. I scanned a Twitter feed of a Realtor the other day, and according to his hourly updates, I believe he’s on track to sell approximately 700 homes this year with total sales volume exceeding ONE billion dollars. That, or he’ll do around seven million, but it’s hard to tell. The market is hot, brokers are sweaty, and foreclosures- what are those?
And so it goes, the attention span of the real estate world, fixated on one thing or another, but rarely more than one at a time. Foreclosures were foreclosures, and booms are booms, and this is a straight boom. Except that it isn’t, necessarily. Foreclosures still exist. They have not all been swept away, hidden as a past mistake that too many committed. Foreclosures, they are still lurking in surprising numbers. I don’t like to do this, but I must quote myself, again. I only do this because I must, because an agent of your choosing shouldn’t be the person you know because you recognize their name from ads, the agent you choose should be the one that can see changes coming in the market before everyone else. Or, they should be the person that your mom knows from the place she gets her hair done, either way.
I see a likely foreclosure brewing in the South Shore Club. How can I predict something that I have no control over? Well, if a note is high, and the property is valued far below the note, and the owner has some demonstrable distress (lis pendens filing), then it’s pretty obvious that barring an outlier of a buyer who does something ridiculous, there is a foreclosure in the offing.
I wrote that 90 days ago, and I mentioned this property a few times last year as well. There is indeed a scheduled sheriff’s sale in the South Shore Club, and I don’t want everyone to get too excited. The note is likely high, the opening bid at the sale will likely be set similarly high, and there is no value near those numbers. The value will be found only once the property is returned to market as REO, assuming the bank pays close attention to the market and prices accordingly. Let’s watch this one together, and let’s learn a valuable lesson about foreclosures in 2014: A foreclosure now doesn’t suggest an eminent downward pricing trend, as the same foreclosure in 2010 would have done, instead it brings volume to the market, and possible value to a buyer.
I may use that quote in another post in a few months, so be on the look out. Anyway, there are still foreclosures in the Lake Geneva market. There is one in Abbey Springs, one in Cedar Point Park, and a few scattered here and there in Geneva National. There are still isolated bits of trouble, and buyers should do well to be aware of them, and take a close look at the specific property to see if it represents value, or not. A month ago I had a buyer contact me telling me he was expressly looking for foreclosure opportunities. I told him that foreclosure opportunities are no more exciting or tangible than traditional market opportunities, and he seemed to disagree. The concept of any and all foreclosures representing value is antiquated and no longer applies. If you want value, hunt value, and if it happens to present in the form of a foreclosure, then swell, but don’t allow a foreclosure fixation to redevelop.