What impact are foreclosures having on real estate on the West Bank of New Orleans?
Traditionally, Louisiana has been one of the states with the lowest foreclosures rates. While the rest of the country has been battling wave after wave of short sales and bank owned properties, we’ve managed to hold our own. After Hurricane Katrina, most mortgage holders allowed an extended grace period to home owners who were in a bind financially and faced with repairs to their homes. Payments were deferred, collection efforts were put off and foreclosures were put on the back burner. As time has passed and foreclosures have resumed, we are beginning to see the impact of bank owned properties on the West Bank.
How Many Foreclosures are Being Sold on the West Bank?
Foreclosures have been making up an increasingly large percentage of single family home sales on the West Bank, jumping from single to double digits in a fairly short time frame.
What is the Impact of Foreclosures on West Bank sales prices?
Big banks, while not looking to take a huge loss, have the ability to price their properties much more aggressively than many home owners, so the continued increase in the number of foreclosures being sold on the West Bank is having an impact on sale prices and putting pressure on the average home owner in some cases.
It doesn’t take a math major to figure out that bargain hunters are going to be more attracted to these foreclosures….at least at first.
A look at the gap between the sold prices of bank owned homes and those that were not bank owned shows that, on average, a buyer can purchase a foreclosure for about 52% of the price of a non-foreclosure. Sounds like a great deal, right? Not always.
What Home Buyers Need to Know About Foreclosures
While a foreclosure may present the opportunity to get into the neighborhood of your choice at a discount, it’s important to remember a few of the challenges you may face.
Foreclosures in good condition are often priced below market value and generate multiple offers, driving up the price along the way. If you are faced with this scenario, the advice and experience of your buyer agent can be invaluable in determining the right offer. We have seen several buyers assume that all banks are willing to accept pennies on the dollar and end up disappointed when they are outbid.
The flip side is foreclosed homes that have been neglected by owners that could not afford to make their mortgage payments and continue to maintain the house properly. Some properties were trashed as the previous owner took out their frustration on the house before being forced to leave. The banks sell these homes AS IS with no repairs being made, no utilities being provided for inspections (although you can turn them on at your own expense) and often no written acceptance of your offer until right before the closing.
You may get a “great deal”, but that deal can come with out of pocket costs associated with repairs and renovations that, in the end, exceed what buying a non-foreclosure in the same community would have cost to start with.
What Home Sellers Need to Know About Foreclosures
If you are considering selling your home, it’s important to have enough details about sales in your neighborhood to make an informed decision on pricing.
One of those details is whether or not a comparable home sale was bank owned, since in most cases those sales will skew average sale prices downward. If you are in a neighborhood where all of the recent sales are of foreclosures, there is no way around the fact that it is going to have a negative impact on the value of your home and the price that you will be able to sell it for.
For more information about home buying or selling on the West Bank of New Orleans, or relocating to or from NAS JRB New Orleans, please contact the West Bank Living Team. It would be our pleasure to have the opportunity to assist you with any of your real estate needs and have a little fun while doing it!
Originally published at West Bank Living