Steamboat foreclosure sales indicate differences in bank-owned properties
August 15, 2010
Steamboat Springs — Editor’s note: This story has been updated from its original version to correct that Eliese Pivarnik is with Colorado Group Realty.
Steamboat Springs Realtors increasingly are dealing with distressed properties in the recessionary market. But many say the market for bank-owned homes is more complex than typically understood.
Eliese Pivarnik, of Colorado Group Realty, said foreclosed homes aren't always the holy grail of property bargains.
"Sellers with a lot of equity in their own home are a lot more motivated than banks are," Pivarnik said. "You might find you have more flexibility working with a seller" who owns his or her home and is eager to dispose of a property so he or she can move on with his or her life.
Pivarnik said there is a misperception that banks are giving away properties; however, they want listing brokers to supply three comparable sales when possible and typically insist that offers come within 10 percent of market price based on those comparisons.
Her colleagues Darrin Fryer and Jim Walters have different stories to tell about representing bank-owned homes.
Routt County public trustee Jeanne Whiddon said this week that the pace at which foreclosure filings have grown in 2010 moderated somewhat in June and July.
"We averaged about four (filings) a week during the last two months," Whiddon said. "But just this week it increased to eight."
Whiddon said she did not regard the moderation in the pace of filings in June and July as a sign that the trend in Routt County had turned around. Nor was the uptick in the second week of August enough to signal a different trend, she said.
Whiddon confirmed Aug. 10 that the number of foreclosure filings in Routt County to date has reached 178, compared with 195 in all of 2009.
Foreclosure filings here reached 135 by June 5, causing Whiddon to say she'd be very pleased if the number didn't hit 300 by the end of the year.
She's slightly more optimistic about escaping the 300 barrier given the way foreclosure filings have tracked throughout the summer.
A relative minority of foreclosure filings here result in the property being returned to the bank.
Whiddon's database shows that of foreclosure filings that entered her office in 2009 and 2010, 42 were withdrawn. Another 28 currently are on hold. During 2009, 36 foreclosed properties were sold, potentially to a bidder at the trustee's auction, but far more often to a lending institution
that carried the note. Thus far in 2010, nine foreclosed properties have been sold.
In this case, she said, the word "sold" doesn't imply a market transaction involving a new homeowner realizing a value purchase by acquiring a bank-owned home. Instead, it means the property has been offered at auction in the Routt County courthouse and a bidder has acquired it by offering an amount that satisfies the bank or, more typically here, the property has been returned to the bank.
Prudential's Fryer said it's important to understand that not all foreclosure properties are the same. He is in negotiations on a luxury townhome he has shown 15 times in a dozen days. Perhaps it's because the asking price is $499,750 and it originally listed in the $900,000s.
The property was sold under a mortgage that was rolled into a mortgage-backed security as soon as it sold to a buyer. Now, the entity that owns it is an investor who is represented in the sale by a bank. And although the public might perceive the owners of foreclosed properties to be eager to dispose of them, these sellers are thorough and even a bit rigid in their approach.
"They have a formula that wears (prospective buyers) out," Fryer said. "Buyers make an offer and they come back at them with full price. I think we've finally reached the right price point."
Although the property is distressed, the investors are patient and are very thorough in doing their diligence. After they sign an offer sheet, they introduce an addendum to the contract that requires the buyer to demonstrate that their financing is rock solid, Fryer said.
The property Fryer represents is a five-bedroom, 4 1/2-bath townhome with granite countertops and custom cabinetry.
"It has fireplaces, an elevator and a commercial-grade kitchen," he said.
Another Prudential broker, Walters, had the distinction in late winter of selling both halves of a duplex on Alpenglow Way that garnered national media attention as the most expensive property owned at the time by the Federal Deposit Insurance Corporation.
Walters represented the buyer in the original land transaction and stayed with the property until the final sales in late March.
"The developer lost the property to New Frontier Bank, of Greeley, and then the FDIC shut down the bank," Walters said.
The duplex, which was partially completed, sold to two buyers for a combined value of about $2.2 million, Walters said.
The listing was placed on the FDIC's national registry, where it caught the attention of a reporter for The Wall Street Journal, and that coverage in turn drew multiple offers.
"We had some low-ballers because anybody and everybody can submit an offer," Walters said.
Ultimately, the duplex units sold to one Colorado buyer and another out-of-state buyer. Walters brought one of the buyers, and Laurie Dobell, of Lauren Dobell and Co., represented the other.
Now, the front duplex unit has been completed to luxury standards in a nightly rental vacation home that sleeps 16 to 18 people.
Working with a Colorado specialist of the FDIC was exceptionally smooth and business-like, Walters said.
"They get two appraisals every three or four months unless they felt the Realtor made a case" for a price adjustment, he said. "We finally got it to a price where buyers were interested."
Walters said the net result of his experience with the Alpenglo duplex is that it has turned out to be a significant asset at the base of the ski area.
"It was a shame that the developer lost it, but the FDIC used local brokers to attract the attention of good buyers, who will stay in the community," he said. "There are some buyers out there who understand our market and that we have the equivalent of oceanfront property. That's what they're looking for. They're looking at it long term."