People who are trying to buy foreclosed properties these days are running into a situation that hasn't been seen since the peak of the housing bubble. One couple in Phoenix Arizona have been trying to buy a foreclosed home for some time now and have been out bid 15 times which is not what the couple expected to be going on these days. Their feeling is that with foreclosures dominating the market they should be able to just walk right in and buy what they want and that is just not happening. Now the couple has begun making offers on homes before they have even seen them in person.
In many areas of the country including Phoenix where there are many suburbs and other areas that are saturated with bank-owned properties, a bidding war has begun which is beginning that drive up sale prices which excite investors and frustrate first time home-buyers who, after making numerous offers on properties and are still coming up empty handed without a home.
Adding to the fire are investors who are now stocking up on homes which in turn is driving prices up and pushing traditional home-buyers to the side in some areas.
The reason for this is that investors, who often buy several houses at a time and pay cash for them, are attractive to banks because these investors are pulling many foreclosures off their books. This type of speedy transaction is putting traditional buyers at a disadvantage because when they purchase a home it takes time to handle the purchase and the paperwork needed to secure a mortgage.
Unfortunately, the market will not stabilize completely until this investor influenced change slows down to once again be a good market for traditional home-buyers to get a home in which they will reside.
The bidding war issue is mainly centered in newer communities that are more affordable for first-time home-buyers and other young families. These are the very same communities that were filled to capacity with foreclosures that were created by adjustable mortgage rates and home value declines.
This trend has been noticed by real estate agents for the past several months.
This is especially the case in many heavy foreclosure areas such as Southern California, Las Vegas and Phoenix where prices are being corrected to prices well below their peak during the boom. Furthermore, it's not uncommon for sellers these days to get many offers for their home.
Today, many people see themselves as the ideal home-buyers because they have saved their money, kept their credit in good standing with little to no debt and sadly they are seeing house after house lost because the prices are being pushed up above the initial asking price by cash investors.
As the Obama administration passed federal legislation to help people stay in their homes, the flow of foreclosures entering the market has slowed which has lowered the inventory and increased the demand for the remaining homes.
Foreclosures are down nearly 20 to 30 percent from this past January.
Many real estate agents are seeing a frenzy for homes not seen since 2004 and are selling homes over the internet.
Today, many agents are beginning to see that this bidding war is pushing prices even higher than a home's appraised value which puts traditional home-buyers at a disadvantage because those who buy strictly with cash don't need an appraisal to secure a loan.