Archives: January 2012

Lake of the Woods Residents: Orange County Sheriff's Scam Alert 1.28.2012

Please read this important message from Orange County Sheriff, Mike Amos:
I just spoke with a gentleman from LOW who has been contacted by a person who goes by the name of Keith Griffin or Keith Mills.  He claims that he is with Publishers’ Clearinghouse and has a check for the person that he has contacted.    He wants to set up a time to meet the individual to present him with this check.  The caller is very persistent.  The gentleman  who was contacted  has contacted Publishers’ Clearinghouse and they have informed them that this is a SCAM.
 

I'll Take Fake!

Earlier in the week, I received a call about a downed swan over by the small lake. I left my office and rushed over to find it, only to learn that it was dead. Last night, I was told there was a swan on a resident’s property on Birchside that hadn’t moved for days. Immediately I called Kaylee, the rehabilitator, putting her on notice while thinking the worst.  I rushed over there this morning at 7:30, crate in my car, blankets, towels…all ready for a rescue. What I found was…a handsome, plump, plastic swan! Oh well, better plastic than injured or ill! An interesting way to begin my day at Lake of the Woods!
Until next time…it’s another beautiful day at the lake!

Lake Of The Woods Real Estate Stats-2011 In Review

I am most pleased to report that, according to MRIS (Metropolitan Regional Information Systems, Inc), our local MLS, there are 108 active listings (as of 1/4/2012) in Lake of the Woods, and only 25.9% are distressed properties. What’s even better is the composition: 9.2% of those are foreclosures and 16.7% are short sales! In the past, Lake of the Woods had been experiencing substantially more foreclosures than short sales. This is such a win for our community!
141 homes sold in Lake of the Woods in 2011, down from 148 in 2010. The good news here is that the number of distressed property sales (short sales and foreclosures) is also down. In 2010, 42.6% of all sales were either short sales or foreclosures. In 2011, the percentage showed a small decrease to 39.0%.
We are trending well! My hope is that both trends continue in 2012: fewer foreclosures than short sales and fewer distressed properties overall!
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REAL ESTATE STATS as of 1/4/2012
Current
108 active listings (of which 10 are foreclosures and 18 are short sales) 25.9% of all listings are distressed properties (9.2% foreclosures and 16.7% short sales)
24 under contract (of which 4 are foreclosures and 10 are short sales)
11 active rentals
 
2011 in review SALES:
141 homes sold, of which 39% were distressed (30.5% foreclosures and 8.5% short sales)
Price range of sales as follows:
<=$100,000                                17
>100,000-175,000                        54
>$175,000-250,000                      39
>250,000-350,000                       14
>$350,000-500,000                       7
>$500,000                                 10
 
2011 in review RENTALS:
101 homes rented in 2011, while 105 rented in 2010

Focusing on Foreclosures

Foreclosures occur daily all across the country. In addition to hardships (loss of job or decreased income, death, divorce, etc.), another reason is an increase in monthly mortgage payments due to interest rate adjustments on adjustable rate mortgages (ARMs).This unfortunate situation has resulted in an influx of properties being sold below market value as foreclosures. Since the actual foreclosure process may vary by state, I thought it would be beneficial to review this process as it occurs in Virginia.

When a homeowner obtains a mortgage (note) in Virginia, the title to the purchased property, secured by the deed of trust, remains in trust until payment in full has been made on the loan. Usually the mortgage documents will include a power of sale clause, which allows a Trustee of the bank, usually an attorney, to foreclose on the property in case of default or non-payment. When a homeowner defaults on a mortgage loan, a non-judicial foreclosure will occur. It does not involve court action but requires notice. In order to use this foreclosure method, the power of sale language must be included in the notice and legal documents.

In a foreclosure, the following process occurs: the delinquent homeowner is notified that the foreclosure process has begun; a notice of default is delivered, which begins the pre-foreclosure period; a notice of sale is mailed, and legal notices may be published in local papers; the house is sold at public auction.

The requirements for a power of sale notice to initiate a foreclosure are as follows:

Notice of foreclosure must be advertised in a newspaper in the county in which the property is located at least once per day for three days or once per week for two weeks. If no advertisement procedure is included in the deed of trust, then the notice of foreclosure must be advertised once a week for four weeks.

Notice of foreclosure or a copy of the notice of foreclosure advertisement must be served on the defaulted borrower at least 14 days prior to the sale. It must also provide a description of the property and the time, place, and terms of the sale. The minimum length of time between the first ad and foreclosure sale is 8 days, while the maximum is 30 days after the last ad.

The property is auctioned to the highest bidder. However, what often happens is that the lender purchases the property at auction because it doesn’t sell for the desired price. The lender then lists it with a real estate professional for sale.

While it usually takes approximately 60-90 days for the foreclosure process to run its course, some delinquent homeowners are able to stay in the home for up to a year or longer. This delay is caused by the tremendous number of foreclosures in process. Although this longer timeframe is seen as a positive to the distressed homeowner, the condition of the home typically worsens, as the homeowner most often stops possessing pride in ownership or any other incentive to maintain the property. The perception of the poor condition and fact that it’s a foreclosed home reduce the value of the property. As more and more homes are sold at foreclosure prices, it begins to erode the value of traditional home values in our community.

As discussed in a previous article in this series, the credit score can be impacted more severely by a foreclosure than by a short sale. For a homeowner who faces a foreclosure, the credit score is not only affected by the foreclosure itself, but also by the late payments prior to the foreclosure. It is typical to see the homeowner paying late on other bills because of the financial crisis, and additional late payments, collections, or even judgments—all of which lower the credit score—are present. The formula for determining a credit score is complicated, so it is difficult to say with total certainly how many points a credit score would be lowered. However, the estimate of the impact on an individual’s credit report due to a foreclosure is from 125 to 150 points. Coupled with late payments on other bills, the total impact is approximately a 200-point decline, according to Bonnie Zapf, Senior Loan Officer with Virginia Heritage Bank. Additionally, Virginia is a “recourse” state, which means lenders reserve the right to attempt to collect losses from the borrower after the home has been sold as a foreclosure.

For those purchasing a foreclosure, the wait from contract ratification to closing is much shorter than for a short sale. The typical “close time” for a foreclosure is 45-60 days, while a short sale can take 6+ months. While foreclosures, like short sales, are often sold “as is,” typically the utilities have been terminated. Sometimes, in order to have a home inspection conducted, the prospective purchaser will have to pay the utility companies to restore the services for the inspection. Depending on the situation, however, sometimes the investor who foreclosed upon a property will partially renovate it prior to listing it with a Realtor for resale. This has been the case here at LOW with some foreclosures. I’ve also seen some properties that were in horrible condition purchased by an investor, completely remodeled, and then re-sold at fair market value. Can you get a great deal on a foreclosure? The answer is yes, you certainly can. But a home inspection is critical so that you know what you are getting and aren’t faced with too many costly surprises.

As of this writing (11/28/2011), there are currently 11 active and under contract foreclosure listings in Lake of the Woods (out of 150 total listings either active or under contract). How are we comparing to our neighbors? 7.3% of our active and under contract listings at Lake of the Woods are foreclosures, while 11.9% of both Spotsylvania and Culpeper Counties active and under contract listings are foreclosures.

If you have been keeping up to date with the news lately, you know that the number of foreclosures is expected to rise over at least the first quarter of 2012. According to realtytrac.com, an estimated one-million foreclosure-related notices for defaults, auctions, and home repossessions that should have been filed by lenders before year’s end will be pushed until 2012.

While we can’t affect those properties already in pre-foreclosure or foreclosure, we can have a profound impact on our Lake of the Woods community going forward. My plea, once again, is simple: if you, or those you know, are having trouble making the mortgage payment, don’t procrastinate. If the current situation will not improve immediately, ignoring it won’t make it go away. Get help now, even before you have missed a payment or made a late payment. Many local Realtors have the resources to assist a homeowner in distress and provide appropriate information regarding options. With knowledge comes power. Let’s use that power to reverse our statistics to reduce the number of foreclosures at Lake of the Woods, which most often benefits the homeowner and most certainly benefits us as a community.