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Closing price of foreclosures falls

Bank owned home

Bank owned home Credit: AP

The average closing price on a Long Island foreclosure was $285,051 during the third quarter of this year, down from $299,824 a year ago, said RealtyTrac, a California firm that tracks foreclosures.

Real estate agent Tom McGiveron, who specializes in selling foreclosures at Realty Connect USA in Hauppauge, said he’s not surprised at the price drop because home prices in general have fallen here.

Also, foreclosures made up 9.2 percent of all sales here from June through September, down from 10.3 a year ago, RealtyTrac.

No surprise there either, the agent said. First, many foreclosures are overpriced, he said. Second, a foreclosure that’s in good condition is rare. More common are the “duds” that sit on the market because they are not habitable and don’t qualify for regular loans.
House hunters thinking they’ll snag a bargain by buying a foreclosure are often disappointed, he said.

If the house has no electricity, no heat, a lot of mold and other major damage, practically the only financing option is a 203(k) loan from the Federal Housing Administration. They’re hard to get, require a lot of paperwork and inspection of repairs and take a long time to be approved.

All this puts off the average house hunter, who’s not an investor or experienced buyer, he said: “They lose interest because they can’t get the house,” he said.

So to get a sale, one type of buyer is best, the agent said: “We look for cash people.”

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