By my calculations, using data from our RMLS which is deemed reliable but not guaranteed I come up with 2223 single family homes, condos, and town homes currently on the market in St. Paul. Of the 2223, 667, or 30% of them are in some stage of foreclosure. lets just call them distressed for now. I suspect that as many as 50% of 421 multiple familiarly investment type properties are in some stage of foreclosure, maybe more. The first 150 or so that I looked at almost all were in some stage of foreclosure.
Not all properties are sold through the MLS but a very high percentage of all properties are and it is the best source of information for our local market. There is no special category for short sales or foreclosure listings in the MLS. It is my understanding that a special category may never be added, if it were it would be easy to track short sales and foreclosures and even gather information about pricing and how long they take to sell. Minnesota Governor Tim Pawlenty spoke at our Minnesota Realtors legislative impact day last week and said that the number of foreclosures in Minnesota have gone up 80% since 2006, but he did not say where he got his numbers. He is the governor so his numbers must be right.
There is no accurate way to track properties that are in various stages of foreclosure. There are web sites that specialize in listing foreclosures but they do not have accurate up-to-date data. They sell the information to consumers and people with foreclosures to sell can advertise properties through the sites. I see it as a great opportunity for someone to make money on the internet off of people who watch too many late night infomercials. If we could categorize the foreclosures on the MLS consumers could get the information for free through our web sites that have all the homes listed on the MLS in our local market.
County data is available for a price. Sheriff sales are public information but in most counties the data is not easily available and consumers have to pay for it. I have often wondered why we have to pay for information that is already paid for with our tax dollars but that is a topic for another post.
To get the data out of our MLS system I had to read both the agent comments and public comments on every single one of the 2223 listings. I may be missing distressed properties because on some of the listings the comments are vague. Agent remark comments include works phrases like "subject to bank approval", subject to third party approval", "corporate owned" or "bank owned". The comments are put in fields that except text so there is no uniformity. It takes a couple of hours to read all of the comments. If my numbers are off it is likely that I under reported because in many of the comment sections there were references to supplements that were needed to place an offer, and I did not have time to read all of the supplements.
Since I did spend some time at it I will share that I also found comments that are in violation of fair housing laws, a comment about being kind to a blind cat, and agents who do all of their comments in all capital letters. I found something funny in the remarks too. Some agents are commenting that the property is being sold for a lower price than the tax assessors value. That cracks me up because properties have never to my knowledge sold for the same amount that the tax assessor has them valued at. Home buyers should keep that in mind as they look for bargains. Other than the bit about the blind cat, most of the remarks were pretty boring to sit and read through.
I gathered other information by sorting the listings in the MLS. The average original list price for homes currently on the market that are not "distressed" is $211, 728 but the aver current list price for the same homes is $200,275. The average original asking price for bank owned properties and properties in various stages of foreclosure is $137,150, the current list price for those same homes is $115,438. On average the distressed properties are about 80 square feet smaller than the non distressed homes are, but that only makes up for a small part of price difference. The distressed properties are often in need of repairs, and are often localed in neighborhoods with a lower median home prices. They are not priced low because they are foreclosures, they are priced low because they need work and the banks need to start selling them so they can put more on the market as homeowners continue to default on their mortgages.
Banks really are dropping their prices and starting to actually sell off the properties they own. I am noticing that when my clients make offers on these properties they often end up in multiple offer situations. Some of the banks are dropping their asking price every week or two until they start getting offers. They then wait until they collect a few offers and start working with the best one, taking care that each buyers knows he or she is in a multiple offer situation and can raise their bid.