Bloomberg has an interactive tool that explores the number of foreclosure filings in the United States over the past five years. 
 

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If you are in the market to buy a home, some of the properties you might be considering are foreclosures – but there are some distinctions to be aware of at different stages of the foreclosure process. It is possible to buy a home from the owner before they are foreclosed on even if they cannot pay off their mortgage – this is called a short sale.  Or, you might buy a property at the courthouse steps when it is being auctioned – this is called a trustee sale.  Finally, if a property does not sell at the auction, you can buy the property from the lender after they have taken ownership of the property – this is called a bank owned property or REO property.

SHORT SALES:  Some homeowners must sell their home, but market conditions won't allow them to sell it at a high enough price to be able to pay off their mortgage(s).  In this example, a homeowner might have a $250,000 mortgage balance but can only sell the property for $230,000.  As a prospective buyer, it is sometimes possible to purchase this type of a property through a process called a "short sale."  In such an arrangement, the homeowner petitions their lender to accept less than the full payoff of the mortgage and in return to still release the deed of trust so that ownership of the property can be transferred over to you, the new owner.  This can benefit the lender, as they skip the time delays and cost of the foreclosure process.  This can also benefit the homeowner, as a short sale will have a slightly lesser negative impact on their credit as compared to a foreclosure.  As a buyer, however, you must know that there are challenges to buying a property as a short sale.  The biggest challenges of late seem to be the uncertainty of the purchase and the time table.  Even if you and the homeowner agree to a price of $230,000, the homeowner's lender must still agree to accept that price – since it won't allow the homeowner to pay off their $250,000 mortgage balance in full.  This process of waiting to hear back from a lender, and then complying with all of their various terms can sometimes take 60 to 120 days – or longer!

Research potential short sales in Harrisonburg and Rockingham County online via www.HarrisonburgShortSales.com




TRUSTEE SALES:  If a short sale does not take place, and a homeowner is behind on their payments (or not making them at all), eventually the property will be sold by the lender on the courthouse steps.  Buying a property at a "trustee sale" can be exciting, and can be a great opportunity – but there are challenges as well.  If a property to be sold at a trustee sale is also listed for sale with a Realtor, you can usually view the property ahead of time by calling your Realtor.  Otherwise, you will likely not have the opportunity to see inside the property before the trustee sale, and thus you will not know too many details about the condition of the property. Furthermore, your purchase of the property at the trustee sale cannot be contingent upon viewing the property, or inspecting the property.  In this instance, you are purchasing the property in "as is" condition, regardless of what you then find out about the property.  It is also important to note that many times the lender will have an opening bid at the trustee sale that is close to (or sometimes higher than) the amount that they are still owed on the mortgage. Thus, in the example above, they might make an opening bid of $250,000.  As a result of this opening bid process, many (or most) properties available for purchase at a trustee sale are not great opportunities.  Occasionally, a property will be foreclosed upon that has had a mortgage in place for many years, whereby the balance of the mortgage is much lower than current market value – these are great opportunities for a buyer.

Research upcoming trustee sales in Harrisonburg and Rockingham County online via www.HarrisonburgForeclosures.com




BANK OWNED PROPERTIES:  If you don't buy the property before the auction (as a short sale), and don't buy it at the trustee sale, you'll have a third opportunity to buy it once the bank owns it.  These properties are called "bank owned properties" or REO properties ("real estate owned").  Oftentimes, the prices on these properties are quite realistic, if not under market value.  It would not be atypical for a house such as the one mentioned above to come on the market after the trustee sale at a price of $210,000.  In such an instance, you should expect to be buying the property in "as is" condition, and you will also be buying with a slightly different contract document.  Most lenders have a long standard contract or contract addendum that spell out a variety of additional contract terms designed to protect them from any future liability – and rarely will a lender agree to have these contract documents changed in any way.  As you can see above, oftentimes buying the property as an REO property is where the best opportunity lies.

Research currently available bank owned properties in Harrisonburg and Rockingham County online via www.HarrisonburgREO.com




When a home goes into foreclosure it is often for very sad and unfortunate reasons – such as the loss of a job – and I do not wish such circumstances on any homeowner.  However, if you are a buyer in today's market it is important to be familiar with different methods for buying a property when it will be, is being, or has been foreclosed upon.

For information about purchasing a property as a short sale, or purchasing a bank owned property, please e-mail me at scott@HarrisonburgHousingToday.com or call me at 540-578-0102.

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Housing markets across the country have been affected by an increase in distressed sales over the past few years -- both bank owned homes (that were foreclosed on) and short sales (where the sales price didn't pay off the mortgage).  So, what was the impact in our local area?

A few observations based on the data above....

1. Distressed sales increased significantly (+ 38%) between 2010 and 2011.  Thankfully, the number of foreclosures declined (- 17%) between 2010 and 2011, so we are likely to see fewer distressed sales in 2012.
    
   
2. As could be expected, distressed sales made up a larger portion of home sales in 2011 (14%) as compared to 2010 (10%).  This marks a 35% increase in the percentage of local home sales that were distressed sales. 
     
   
3. The median price of distressed sales declined by 15% over the past year.  This may have been a combination of better deals on distressed properties and/or lower valued homes being sold as distressed sales.
    
   
4. Thanks for reading to this last point, because this is the important one!  While the overall median sales price in our local area declined 3% over the past year --- if you take out distressed sales, the median sales price only declined 1%.

Again, given the decline in foreclosures in 2011, I am hopeful that we'll see a smaller number of distressed sales in 2012, leading to greater stability in our local housing market.
   

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In very good news for the local housing market, foreclosures are declining in Harrisonburg and Rockingham County.  The graph above shows the number of Trustee Deeds recorded at the courthouse per year for 2008-2010 and the number recorded in the first ten months of 2011.

It is clear that 2011 has marked a sharp turning point in the foreclosure rate in our local area.  While we are not yet back to historically normal rates (70-100 per year), we have turned the corner from the peak of 270 in 2010.
  

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If you are looking for potential short sales in Harrisonburg and Rockingham County you can now easily find them on www.HarrisonburgShortSales.com.

Also, don't forget, if you are looking for bank owned (REO) properties in Harrisonburg and Rockingham County you can find them on www.HarrisonburgREO.com.

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If you are looking for bank owned (REO) properties in Harrisonburg and Rockingham County you can now easily find them on www.HarrisonburgREO.com.
   

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The most recent real estate news in Harrisonburg and Rockingham County isn't all good news, but there is plenty to be excited about, particularly related to foreclosures.



The numbers of foreclosures filed in Harrisonburg and Rockingham County steadily climbed between 2008 and 2010 -- but now it seems to be reversing course. 

In 2010, there were 270 foreclosure filings, and only 758 home sales.

Thus far in 2010, there have only been 160 foreclosure filings and 600 home sales. 

This is a strong indicator that we'll finish out the year with fewer properties being foreclosed on, which should slowly strengthen the market.
  

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If you hear something about the housing market on the news, it will likely mention the big (bad, scary) problem of foreclosures.

Things you may have heard could include:

• The next wave of foreclosures is going to be huge!
• There are millions of homes as a part of a "shadow inventory" -- that were foreclosed on by the bank, but that have not yet been put on the market for sale.
• Mortgage delinquencies are on the rise.
  

Here's what you really need to know:

• Foreclosures are highly concentrated in just a few states.  52% of the foreclosure inventory in the second quarter of 2011 was in only five states.
• Harrisonburg and Rockingham County (and Virginia) foreclosure rates have always been much lower than most areas of the country.
• Harrisonburg and Rockingham County foreclosures are declining.
  

So, yes, foreclosures are a problem nationwide, but significantly less so in Harrisonburg and Rockingham County.
 

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Great news -- the local foreclosure rate is on the decline!

There were 270 recorded trustee deeds in Harrisonburg and Rockingham County during 2010.  In the first half of 2011 there were only 105 recorded trustee deeds.

Yet there are some interesting foreclosure sales currently scheduled:

• Portions of Green Springs subdivision
  
• 75 townhome lots next to Beacon Hill Townes
• 162 acres of development land on the south end of Harrisonburg

For currently advertised foreclosure sales, visit HarrisonburgForeclosures.com.

Learn more about short sales, trustee sales and bank owned properties.
 

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The median sales price in Harrisonburg and Rockingham County has declined by 11% over the past year from $180K to $160K.  That's a rather significant decline.  But looking closer, it seems that one reason why it has declined as much as it has is because there are more bank owned properties selling this year as compared to last year.



As you can see above, last year (YTD) REO sales only accounted for 8% of all home sales in Harrisonburg and Rockingham County.  This year, however, REO sales account for 14% of all home sales.

The median sales price of the non-REO properties this year is $170,056, whereas the median sales price of REO properties this year is only $129,250.

There are certainly other factors that are causing a decline in median sales price, but the proportional increase in bank owned (REO) sales is certainly contributing to the situation.
 

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Buyers can often find great opportunities in bank owned properties, but they often wonder how much they should expect to be able to negotiate off of the list price of a bank owned property.  Let's take a look....

For all residential sales in Harrisonburg and Rockingham County in the past year, we find:

• 738 sales
• Average List/Sell = 95.1%
• Median Sales Price = $176,375

When looking only at the properties above that are bank owned, we find:

• 75 sales
• Average List/Sell = 95.8%
• Median Sales Price = $130,000

Amazingly, the list-to-sell ratio is higher with bank owned properties than with the overall market (which includes these bank owned sales). 

I suppose the important thing to remember is that the list-to-sell ratio of any property is largely dependent on how realistic the asking price is.  Both a homeowner and a bank can price a home too high when putting it on the market.  Perhaps banks do that less often, and thus achieve a (slightly) higher list-to-sell ratio despite still offering great deals on properties?

Additional Relevant Information:

• Buying a Foreclosure (a refresher on the differences between short sales, trustee sales and bank owned properties)
• HarrisonburgForeclosures.com (upcoming trustee sales in Harrisonburg and Rockingham County)
  

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Inspired by a great article in yesterday's Daily News Record about foreclosure rates in the Harrisonburg and Rockingham County area, here is a comparison of foreclosure rates in Harrisonburg and Rockingham County as compared to Virginia.



A few other notable observations from the DNR article:

• "A diverse economy and relatively low unemployment rates have helped shelter Harrisonburg and Rockingham County from the national foreclosure crisis."

• "The Harrisonburg area posted the second-lowest foreclosure rates in Virginia..."

• "The number of local foreclosures based on trustee deeds filed at Rockingham County Circuit Court is trending downward this year. Through March, 52 filings were recorded, compared to 71 during the same period in 2010." 
    
  

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Over at Patchwork Nation, you can create maps to show all sorts of data, including these below that examine foreclosure rates as of January 2011....



The states that should stand out as having high foreclosure rates include California, Nevada, Arizona, Michigan and Florida.



Looking a bit closer (above) you'll see that Harrisonburg and Rockingham County are categorized as having low foreclosure rates.  This has likely led to the relative stability in our housing market, whereas many Virginia markets north of us have seen significant price adjustments largely as a result of their high foreclosure rates.

In case you're wondering, on Patchwork Nation you can also create fun maps such as the counties where Cracker Barrel restaurants exist....


 

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If the development of Preston Lake had taken place just five years earlier, it might have been a much greater, faster, happier success story. 

Given its timing, however, Preston Lake was developed and constructed at a very slow rate, which recently reached a significant milestone when Wells Fargo foreclosed on the remaining developed lots at Preston Lake.  Why did it happen?  It could have been the decline in the housing market....or the decline in the national economy....or that the developer's bank (Wachovia) went out of business....or many other reasons. 

Regardless of the cause, the development and construction of Preston Lake was much slower than anticipated, and is now in a state of limbo.  Here's a re-cap of where things are at Preston Lake, with a few bits of new information:

Homeowners Association:  The Preston Lake Homeowners Association is still controlled by the developer, which is now effectively Wells Fargo.  For now, however, the on-the-ground association management is being handled by a Harrisonburg-based association management company, and thus far it does seem as if any services to residents will be interrupted, nor will dues increase.

Ownership of the Land:  The undeveloped residential lots all transferred to Wells Fargo (or REDUS VA HOUSING, LLC as it appears at the courthouse).  Read more.

Ownership of the 4 rowhouses:  Most people attending the foreclosure auction were surprised to hear the announcement that morning that separate from the auction of all of the undeveloped lots, the bank would be auctioning off four rowhouses at various states of completion.  Since potential bidders were not prepared to consider purchasing a rowhouse, all four of these properties were bought back by Wells Fargo.  Further details follow....

• Lot 9C:  This rowhouse is completely constructed, and was actually used as a temporary residence for a couple that then later bought a rowhouse at Preston Lake.  Wells Fargo contracted (at the trustee sale) to buy this rowhouse for $270,600 and it transferred to them as of late February.  Presumably, this property will soon be listed for sale with Wells Fargo as the seller.
   
  
• Lot 10B:  This rowhouse was framed, and the exterior shell was complete, but neither the insulation nor the rough mechanicals were installed.  Wells Fargo contracted (at the trustee sale) to buy this rowhouse for $39,960, however another party (Southern Classic Inc) later contracted to buy it instead, and closed on the purchase a few weeks ago (March 4th, 2011).
   
  
• Lot 11C: This rowhouse was complete through drywall, but had a variety of trimwork, flooring, and other finishing work yet to be completed.  Wells Fargo contracted  (at the trustee sale) to buy this rowhouse for $157,760, however another party (Southern Classic Inc) later contracted to buy it instead, and closed on the purchase a few weeks ago (March 4th, 2011).
   
  
• Lot 12C:  This rowhouse was complete through drywall, and rough mechanicals, and insulation, but the entire remainder of the townhouse was yet to be constructed.  Wells Fargo contracted (at the trustee sale) to buy this rowhouse for $79,080, however another party (Southern Classic Inc) later contracted to buy it instead, and closed on the purchase a few weeks ago (March 4th, 2011).

Southern Classic, Inc:  The company that purchased the three yet-to-be-finished rowhouses seems to be a company based out of Crozet/Charlottesville.  Presumably, Southern Classic will be finishing the rowhouses and offering them for sale.  Southern Classics is an Earthcraft certified builder, and is involved in developing several smaller communities including:

• Foxchase Landing (Charlottesville)
• Fair Hill Estates (Crozet)

Current Listings:  Three re-sale properties are currently on the market.  Click here for details.
  

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An early rendering of the intended Preston Lake community center

A variety of documents were filed at the Rockingham County Circuit Court on Wednesday, February 23, 2011 finalizing the Trustee Sale of Preston Lake subdivision. 

In Summary:  A trustee sale took place on February 3, 2011 on the steps of the Rockingham County Circuit Court, whereby Wells Fargo (as the only, and thus highest, bidder) contracted to buy back Preston Lake from its developer.  Now, the deeds have been recorded transferring the bulk of the subdivision to Wells Fargo and the common areas to the Homeowners Association.

The Value of 124+ Acres:  The consideration paid by Wells Fargo for the 124+ acres was $3,500,000, but the trustee's deed also indicates that the appraised value is/was $4,530,000.  Somewhat astonishingly, the two loans (notes) that were being foreclosed on appear to have been for a sum total of $20,500,000.

The New Owner of Preston Lake:  The grantee on the deed is listed as "REDUS VA HOUSING, LLC" -- an LLC registered in Deleware.  The grantee's address, however, is Wells Fargo Bank out of Jacksonville, Florida.

Value of the Common Areas:  Per the deed transferring the common areas to the Homeowners Association, the common areas have an assessed value of $323,700.



What Conveyed To The Homeowners Association:  The map above is based on an early engineering plan for Preston Lake.  I have deciphered (to the best of my ability) the deed, and recorded plats for Preston Lake to mark on the map (letters in circles) the areas that conveyed the the Homeowners Association.  Click on the map for a high resolution PDF, and scroll to the bottom of this post for the source files for the deed and plats.

Management of the Homeowners Association:  The Homeowners Association's mailing address is referenced in the deed as the same Jacksonville, Florida address for Wells Fargo.  Homeowners at Preston Lake have been informed that Wells Fargo will be hiring an association management company in the very near future to handle the business of the association. 

What's Next:  Now that the remaining land comprising Preston Lake is owned by Wells Fargo, my assumption is that:

• Wells Fargo will bring in an association management company to handle the association.
• Wells Fargo will market and attempt to sell the entire subdivision to a new developer.
• If the above is not successful, Wells Fargo may attempt to sell individual lots at Preston Lake.
  

Pertinent Documents:

• Recorded Trustee's Deed - 124+ Acres transferring to Wells Fargo
• Recorded Deed - Land transferring to Homeowners Association
• Partial Satisfaction - Liens against land transferring to HOA
  
• Amended and Restated Declaration for Preston Lake
  
• Recorded Section 1 Plat
  
• Recorded Section 2 Plat
• Recorded Section 3 Plat

Further Preston Lake reading:

• Jul 19, 2010:  Sales Updates at Preston Lake in Harrisonburg, VA
• Jan 19, 2011:  Preston Lake Headed To Foreclosure?
• Feb 3, 2011:  Preston Lake Foreclosure Auction Results In $3.5M Sale To Wells Fargo

 

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The Preston Lake Trustee Sale took place today (February 3, 2011) at noon, and drew quite a crowd of Preston Lake homeowners, developers, attorneys, Realtors, and neighboring landowners.  Here's an overview of where things stand....

Local History in the Making:  It's not necessarily the good type of history, but this was the first major subdivision --- and hopefully the last --- to be foreclosed on in the Harrisonburg area.  Many other areas across the country have seen multiple large subdivisions be foreclosed on, but until today, Harrisonburg had been unscathed.  The timing of the development of this subdivision is likely what led us to today's events, as the development began just as the housing market began to slow dramatically.

Only One Registered Bidder:  Only one individual registered as a potential bidder at the sale (by showing his deposit check to the Trustee, and providing his name), though he did bid during the auction, likely because of the opening bids from Wells Fargo.

Only One Actual Bidder:  There was only one actual bidder....Wells Fargo.

Surprise Rowhouse Auctions:  In addition to the 120+ acres of land at Preston Lake that were auctioned off today, four rowhouses were also auctioned separately.  This was not specifically advertised -- if it had been, I think we would have seen some actual bidding take place.  Each of these rowhouses are at a different stage of completion, but each at least has the shell completed.  The opening bids from Wells Fargo were as follows, and these are the prices at which they are taking back the properties:

• Lot 9C -- $270,600
• Lot 10B - $39,960
• Lot 11C - $157,760
• Lot 12C - $79,080

A Hefty Price For 120+ Acres:  It wasn't too surprising that there were not any bidders for the 120+ acres of Preston Lake, as Wells Fargo's opening bid was $3,500,000. 

The Common Areas:  The attorney representing Wells Fargo also indicated that the common areas would be deeded to the Property Owners Association.  The Association will still exist, and owners will still make payments to it to support the maintenance of the common areas and other common amenities of the neighborhood.

What Happens Next:  In theory, within 30 days, Wells Fargo will close on their purchase of the four individual rowhouses, and the 120+ acres of Preston Lake.  The attorney representing Wells Fargo commented to me afterward that he thinks there is a 90% chance that the sale will proceed to closing and that Wells Fargo will be the new owner.  After Wells Fargo owns the property, he indicated that they would sell the four rowhouses individually, and seek to sell the remaining 120+ acres to a new developer.  It is unclear what price they will ask for the remainder of the subdivision (likely lower than $3.5M), and it is unclear what price they will eventually take for the remainder of the subdivision (likely lower than $3.5M).  Wells Fargo's attorney also indicated that while they will attempt to sell the entire undeveloped section of Preston Lake as a whole to one developer, it is also possible that they would sell the property as individual lots or sections of lots.  Wells Fargo has done this with other subdivisions around the country that they have foreclosed on, though it is not their goal.

Wells Fargo is interested in money:  This should come as no surprise, but Wells Fargo's goal in being the new owner of the undeveloped areas of Preston Lake are to try to recoup as much as possible of the money that they have invested in the subdivision.  They won't, thus, try to unload the property for development into a mobile home park -- they will be marketing it and working to sell it for its highest and best use.  This does not mean that the development plan won't or can't change -- but they will be trying to recoup as much money as possible, and thus will be trying to sell it to a developer who has the a positive (and profitable) vision for it.

Those Pesky Lawsuits:  The developer of Preston Lake (Richard Hine) had filed a lawsuit against Wachovia (now Wells Fargo) --- and Wachovia had responded with a countersuit.  Per the attorney representing Wells Fargo, both of those lawsuits will go away once the sale closes, and the property is taken back by Wells Fargo.

A Community United:  If anything, the turmoil and uncertainty over the future of Preston Lake seems to have drawn its residents closer together as a community.  Most of the owners were in attendance at the sale, and then went as a group to Cally's afterward to have lunch.  There seems to be solidarity and general optimism (as much as is possible) amongst most (or all) of the owners.  They still seem to thoroughly enjoy their homes, and each other, which is a positive sign for the future of the community.

Have Questions?  If you have questions about Preston Lake or the foreclosure proceedings, I'm happy to try to answer them (540-578-0102, scott@HarrisonburgHousingToday.com), or you can contact Peter Barrett of Kutak Rock, LLP, who is the attorney representing Wells Fargo.  You can reach Mr. Barrett at 804-343-5237 or peter.barrett@kutackrock.com.

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If you are in the market to buy a home, some of the properties you might be considering are foreclosures – but there are some distinctions to be aware of at different stages of the foreclosure process.  It is possible to buy a home from the owner before they are foreclosed on even if they cannot pay off their mortgage – this is called a short sale.  Or, you might buy a property at the courthouse steps when it is being auctioned – this is called a trustee sale.  Finally, if a property does not sell at the auction, you can buy the property from the lender after they have taken ownership of the property – this is called a bank owned property or REO property.  

Short Sales:  Some homeowners must sell their home, but market conditions won't allow them to sell it at a high enough price to be able to pay off their mortgage(s).  In this example, a homeowner might have a $250,000 mortgage balance but can only sell the property for $230,000.  As a prospective buyer, it is sometimes possible to purchase this type of a property through a process called a "short sale."  In such an arrangement, the homeowner petitions their lender to accept less than the full payoff of the mortgage and in return to still release the deed of trust so that ownership of the property can be transferred over to you, the new owner.  This can benefit the lender, as they skip the time delays and cost of the foreclosure process.  This can also benefit the homeowner, as a short sale will have a slightly lesser negative impact on their credit as compared to a foreclosure.  As a buyer, however, you must know that there are challenges to buying a property as a short sale.  The biggest challenges of late seem to be the uncertainty of the purchase and the time table.  Even if you and the homeowner agree to a price of $230,000, the homeowner's lender must still agree to accept that price – since it won't allow the homeowner to pay off their $250,000 mortgage balance in full.  This process of waiting to hear back from a lender, and then complying with all of their various terms can sometimes take 60 to 120 days – or longer!

Trustee Sales:  If a short sale does not take place, and a homeowner is behind on their payments (or not making them at all), eventually the property will be sold by the lender on the courthouse steps.  Buying a property at a "trustee sale" can be exciting, and can be a great opportunity – but there are challenges as well.  If a property to be sold at a trustee sale is also listed for sale with a Realtor, you can usually view the property ahead of time by calling your Realtor.  Otherwise, you will likely not have the opportunity to see inside the property before the trustee sale, and thus you will not know too many details about the condition of the property. Furthermore, your purchase of the property at the trustee sale cannot be contingent upon viewing the property, or inspecting the property.  In this instance, you are purchasing the property in "as is" condition, regardless of what you then find out about the property.  It is also important to note that many times the lender will have an opening bid at the trustee sale that is close to (or sometimes higher than) the amount that they are still owed on the mortgage. Thus, in the example above, they might make an opening bid of $250,000.  As a result of this opening bid process, many (or most) properties available for purchase at a trustee sale are not great opportunities.  Occasionally, a property will be foreclosed upon that has had a mortgage in place for many years, whereby the balance of the mortgage is much lower than current market value – these are great opportunities for a buyer.

Bank Owned Properties:  If you don't buy the property before the auction (as a short sale), and don't buy it at the trustee sale, you'll have a third opportunity to buy it once the bank owns it.  These properties are called "bank owned properties" or REO properties ("real estate owned").  Oftentimes, the prices on these properties are quite realistic, if not under market value.  It would not be atypical for a house such as the one mentioned above to come on the market after the trustee sale at a price of $210,000.  In such an instance, you should expect to be buying the property in "as is" condition, and you will also be buying with a slightly different contract document.  Most lenders have a long standard contract or contract addendum that spell out a variety of additional contract terms designed to protect them from any future liability – and rarely will a lender agree to have these contract documents changed in any way.  As you can see above, oftentimes buying the property as an REO property is where the best opportunity lies.

When a home goes into foreclosure it is often for very sad and unfortunate reasons – such as the loss of a job – and I do not wish such circumstances on any homeowner.  However, if you are a buyer in today's market it is important to be familiar with different methods for buying a property when it will be, is being, or has been foreclosed upon. 

For information about upcoming trustee sales, please refer to HarrisonburgForeclosures.com. 

For information about purchasing a property as a short sale, or purchasing a bank owned property, please e-mail me at scott@HarrisonburgHousingToday.com or call me at 540-578-0102.
 

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The Associate Press (AP) story below ran a few weeks ago in the Daily News Record.  AP stories often don't reflect market realities here in Harrisonburg and Rockingham County, so I must admit I didn't really believe it to be true in our local area.



This headline came to mind again, however, when I was analyzing the 47 properties to go under contract in Harrisonburg and Rockingham County thus far in 2011.  Each statistic below speaks to the types of properties that are actually selling these days, and the types of buyers that are actually buying.

Of the 47 properties that have gone under contract thus far in 2011....






 

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Per a Trustee Sale advertised in today's Daily News Record (view ad), the bulk of the Preston Lake subdivision may be headed to foreclosure.  This doesn't necessarily mean that the foreclosure sale will take place, but this is a significant step in that direction.

Preston Lake is Harrisonburg and Rockingham County's first master planned community, intended to include nearly 500 townhomes and single family homes, a large section of retail stores with a main street appearance, and many amenities such as a community center, soccer fields, swimming pool, and more.


  The vision....


 Main Street renderings


 Amenities at Preston Lake

Now, however, all of those plans may be coming to an end, at least for now.  On February 3rd at 12:00 p.m., 124.693 acres of Preston Lake is scheduled to be auctioned at the Rockingham County Circuit Court.  Please note that an advertised trustee sale (all that has happened thus far) does not necessarily mean that the foreclosure process will take place. 

This wasn't the first sign of trouble for Preston Lake, as the developer of Preston Lake and its lender (Wachovia) have been in the midst of legal proceedings for almost a year now, as described in the Mar 2, 2010 article from the Daily News Record:


While it was happening quite slowly, residential construction at Preston Lake had been continuing even over the past year.  Since the first closing in 2008, there have been 37 sales at Preston Lake recorded in the HRAR MLS, ranging from $318k to $883k, with a median price of $421k.  Three of these sales took place as recently as the fourth quarter of 2010.

Today, only four properties are being marketed for sale at Preston Lake per the HRAR MLS -- three are resale properties, and one is being sold by the developer.  (view active listings at Preston Lake)

A few notes about the foreclosure sale:

• It appears that most (or all?) of the common areas (such as the Village Green) will not be sold at the foreclosure sale.
• It appears that the property being conveyed will still be bound by the covenants and restrictions already in place.  (view the HOA disclosure package as of October 2008)

What could happen from here?  These are my best guesses:

1. The foreclosure sale will not take place, construction and sales will continue, quite slowly.
2. The foreclosure sale will take place and the subdivision will be purchased by a new developer who will continue with the current vision, or adjust it and move forward with development, construction and sales.
3. The foreclosure sale will take place, but nobody will buy the subdivision, and thus the bank will become the owner.  They will then work to sell Preston Lake to a new developer through more traditional sales and marketing means.
4. Same as #3, but the bank will then try to sell the lots individually, instead of as an entire subdivision.

If you have questions about Preston Lake, feel free to call me at 540-578-0102 or e-mail me at scott@HarrisonburgHousingToday.com.

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Harrisonburg and Rockingham County have seen an increasing number of trustee sales (foreclosures) over the past few years....


click the image above for a larger version of the graph

The yellow bars above show the increasing number of trustee sales over the past decade, as compared to the number of sales recorded in the HRAR MLS (blue bars).  I am quite thankful that we have not seen as much of a surge of foreclosures as many other areas in Virginia and across the country, but the presence of these foreclosure and then bank owned properties has had a very real impact on homeowners trying to sell in the same neighborhoods as some of these foreclosed properties.

Let's take a look at an example to see the impact....

Stone Spring Village is a wonderful neighborhood of single family homes near the intersection of Port Republic Road and Peach Grove Road close to an elementary school, close to the new hospital, and close to JMU.  Most homes in the neighborhood are 3 to 4 bedroom homes, most are 1,500 to 2,500 square feet, and many have basements.  Until recently, home values in Stone Spring Village have been relatively stable.  But three foreclosures in the past year have made the Stone Spring Village market a bit more turbulent....

• Three homes sold in Stone Spring Village in 2008/2009 at an average of $134 per square foot.
• In 2010, however, the three bank owned (foreclosed) properties sold at an average of $113 per square foot. 
• One currently listed bank-owned property that is now under contract in Stone Spring Village is listed at only $89 per square foot!

Thankfully, there have been quite a few (five) traditional sales in 2010 that have sold at more typical prices, bringing the overall average in 2010 up to $131 per square foot.  The challenge, however, is having any chance at all of selling your house when you're competing with a nearby bank owned property. 

Which house would you choose if the following were available?

• a 2,000 SF home with 4 bedrooms and 2.5 bathrooms for $299,000
• a 2,000 SF home with 4 bedrooms and 2.5 bathrooms for $230,000 (bank owned)

Bottom line -- if you're living in a neighborhood where there have been several foreclosures in the past year (or so) it may be difficult to sell your home for much more than those bank owned properties....especially if there are currently available bank owned properties....and especially until there have been traditional sales to replace the bank owned comparable sales.

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