My answer usually involves the high number of listings that are on the market compared to the number of buyers that are currently 'in' the market. There simply is no balance at this time, and I really don't see balance coming back to our market anytime soon.
More and more foreclosures will be appearing on the for sale market and that is a double whammy for the market. Let me quickly explain. First it is possible that the property owner in distress tried unsuccessfully to sell their home before foreclosure. Most of the time listed at a higher price than what the market would draw buyers to. So the home basically 'sat there' for a certain period of time.
Next the home and property was foreclosed on by the bank. While there isn't any data to accurately state how long before the bank puts the home back on the market for sale, it wouldn't be a surprise that it could take a couple of months. So it is not a stretch that this property just basically 'sat there' for six months to a year. And now that it has been foreclosed on, it will likely sell for pennies on the dollar... good for the buyer, and I'm not ashamed of helping buyers get an even better price deal, but not so good for the property itself or for the neighborhood.
Again one property likely on the market a couple of times within a year's time leading to more properties listed for sale than there are likely buyers in the market. Bad for the market. Bad.
So if at all possible, the best scenario for the current market is for property owners in financial distress to stay in the home for as long as possible. One of the best ways to try to do this is to negotiate with the lender that holds the mortgage on the property in an effort to reduce the cost of ownership to a level that is affordable again for the distressed property owner. If successful, it is likely that the property won't be listed for sale (in some cases more than once). I'm talking loan modification.
Of course there are some risks with modification. Just Google loan modification fraud to see many warnings. You don't want to be in a worse situation that you might already be (if you are a property owner in financial distress).
But at the very least, a distressed property owner needs to be aware of possible solutions.
Here is a list of things to consider for distressed property owners for loan modification. Taken from this link ten steps to negotiating an affordable loan modification...
1. COME CLEAN
It can be tempting to bend the truth when you are trying to convince a lender to approve a loan modification. Only by laying all of your cards on the table and disclosing the truth can you begin to develop and implement solutions that will put you back on the path to long-term financial health.
2. UNDERSTAND YOUR LENDER’S POINT OF VIEW
As far as your lender is concerned, it all boils down to money. You are most likely to be approved if you can show modifying your loan will cost the lender less than a foreclosure.
3. KEEP A COOL HEAD
Expressing anger toward your lender puts you in an extremely disadvantageous position. For example, your lender may decide that you are unreasonable and that foreclosing would be less costly overall.
4. GIVE THEM WHAT THEY NEED
In order to expedite the situation, find out exactly which forms you need to fill out and which documents your lender needs to process your application. Make sure you provide everything to your lender or representative in the manner specified.
5. ASK FOR WHAT YOU WANT
Before meeting with your lender, make sure you spend some time figuring out what you want and need. For example, how much can you realistically afford to pay each month?
6. LET THEM DO THEIR JOB
Loan modifications typically take between 30-90 days from start to finish. During this time, avoid the temptation to micromanage the process. To alleviate unnecessary anxiety, ask your lender for an anticipated timeline.
7. GET YOUR FINANCIAL HOUSE IN ORDER
Put a tracking system in place today and start developing a budget to ensure you are not spending more money than you are earning.
8. KEEP EVERYONE POSTED OF ANY CHANGES
If anything changes related to your financial situation, be sure to keep your loan modification representative or lender in the loop.
9. MAKE SURE THE LENDER’S OFFER IS TRULY AFFORDABLE
If the loan modification is unaffordable or makes your budget so tight that you are only one car repair or medical bill away from defaulting again, head back to the negotiating table to try to work out a better deal.
10. HOLD UP YOUR END OF THE BARGAIN
The key to success is discipline and commitment. All the effort you spend setting up a plan is of no use if you don’t follow the plan you created or agreed to.
I am currently working with a professional negotiator that can be hired for services such as loan modification. If you have more questions, I'd be glad to help.
And here is a link to more information about loan modification from the site called keepmyhouse.com.
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