Steamboat Springs A bank-owned home at 1600 Red Hawk Court finally went under contract this week for a price more than $200,000 less than what the original owners were asking during the height of the real estate run-up in spring 2007.
Within two blocks of Whistler Park and about a mile from the Steamboat gondola, the home provides tangible evidence that the number of foreclosures in Routt County is growing.
The number of foreclosure proceedings filed at the public trustee's office in the Routt County Courthouse is more than double the number in the system at the end of the first quarter in 2008.
The listing broker in the transaction said the Red Hawk sale represented a substantial discount from list price.
"Usually, these things start out asking the amount of the mortgage, but there's no way it's going to sell for that," said Realtor Jim Ross, of Intermountain Real Estate in Craig.
The single-family home was listed at more than $600,000 in 2007 and 2008, and it ultimately was foreclosed on. Ross put it back on the market on behalf of the mortgage holder for $499,900 on Jan. 9, and the price subsequently was lowered.
The most current price reflected on the Steamboat Springs Multiple Listing Service was $472,900. Ross, the listing broker, would not divulge the contracted price but said it was substantially lower than that.
The Red Hawk house also has the potential to set a new benchmark for family homes in Steamboat. However, appraiser Jim Hoy, of ASI Appraisal Services, said that because sales of bank-owned homes are a relative rarity in Steamboat, he doesn't expect the Red Hawk transaction to function as a comparable sale for future bank appraisals.
Public Trustee Jeanne Whiddon, who also is the Routt County treasurer, said her office is processing 32 foreclosures. That number was 13 at this time last year.
If the pace continues, Whiddon said she could anticipate 120 to 130 foreclosure proceedings in 2009 compared to 55 in 2008.
"The trend after one quarter is pretty indicative of a much higher" foreclosure rate, Whiddon said.
For the past seven years, she added, the number of foreclosure proceedings has stayed close to 50 a year. Typically, that does not mean all of those proceedings turn into bank-owned properties.
Whiddon said that of 55 Routt County foreclosures in 2008, 13 saw the deed transferred and were sold by the lending banks. A substantial number of those saw proceedings begin in 2008 and carry over into 2009. Another 20 foreclosures in 2008 were withdrawn, resulting in the owners retaining their property rights. That could mean, among other possibilities, that the owners were given the right to continue paying a reinstated mortgage, were given the ability to refinance the loan or sell the property, or even paid off the lender that initiated the foreclosure proceedings.
The number in 2007 was 47 foreclosures, with 30 withdrawn and 10 sold.
Of the 32 foreclosures in the system this year, none have gone to sale, and one was withdrawn.
Whiddon said in the current economic climate, the call centers that handle inquiries from delinquent mortgage holders on behalf of banks often are swamped. That can leave worried and frustrated property holders sometimes waiting weeks for a response.
"I'm surprised more people don't contact me right away," Whiddon said. "They can come sit with me personally. That's part of my function, to be a neutral third party."
In addition to her willingness to describe several alternative strategies for property owners, she sometimes is able to cut through the bottlenecks of the call centers.
Whiddon said she is willing to contact the local attorney who is handling the foreclosure proceedings on behalf of the lending institution and put them in touch with the buyers.
"It's rare that I can't reach someone within 24 hours," she said.
Beginning negotiations early in the process often can make a difference, Whiddon added.
"Good-faith efforts speak volumes," she said.
Ross, the listing broker for the house on Red Hawk, said he was contacted by one of several mortgage service providers he has worked with on foreclosed homes throughout the years.
"I never speak directly to the lenders," he said. "All of the big banks have pre-existing contracts with companies in cities like Plano, Texas, and Irvine, Calif., that manage the sales for their clients. They are typically referred to as mortgage service providers."
The first step he takes after being contacted, Ross said, is to work up a broker price opinion. He then evaluates the work necessary to bring the home into condition for a sale.
Ross said he knew the real estate market had gone soft in fall 2007. He faults large institutional bankers for creating the situation that led to the foreclosure sale on Red Hawk.
In addition to financing the first 80 percent of a home purchase, he said, they were willing to finance the remaining 20 percent and sometimes offered 105 percent financing.
"Then, they packaged the loans and turned around and sold them to grandmothers for their 401Ks, which then went down," Ross said.
Ross recently handled a bank-owned listing for a home on Caribou Run in Steamboat, but when he didn't sell it in 60 days, the service provider gave it to another Realtor. He recently has handled bank-owned homes in Craig and Hayden but doesn't have any others in Steamboat, he said.
The home on Red Hawk was in better condition than many foreclosed homes he gets involved with, Ross said, with the exception of one quirky issue.
"The guy took real good care of this house," Ross said. "But it had been empty so long, sunflowers had forced their way through the windows and were growing into the house. I had to go around and cut them so I could close the windows and get it ready for winter."