Foreclosures in Manatee, Sarasota more expensive as supply tightens

mjohnson@bradenton.comJanuary 23, 2014 

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Recently on the market, this 58th E. Terrace Bradenton home is typical for foreclosed properties in the current market. It is listed for $169,900, within a few thousand dollars of other homes for sale in the neighborhood. It is currently owned by the Federal National Mortgage Association.MATT M. JOHNSON/Bradenton Herald

MJOHNSON@BRADENTON.COM Buy Photo

MANATEE -- Buying a foreclosed house in Manatee and Sarasota counties is not the deal it used to be.

Six years after the start of the Great Recession and the resulting housing crisis, local real estate agents and bankers say foreclosures are almost back to historically normal levels -- down as much as 50 percent compared with 2011.

Nationally, foreclosures dropped in 2013 to the lowest levels since 2007.

While Florida remained the foreclosure capital of the nation with an average of one in every 392 homes in foreclosure in 2013, those same bankers and real estate agents say buyers aren't getting them cheaply anymore.

"They are a lot more tied to the market than what they were," said Matt Cannon, an agent with the Sarasota office of Michael Saunders & Co.

So why aren't foreclosed homes selling for tens of thousands of dollars less than the market average, as they did as recently as 2010? The banks that own the foreclosures, says Cannon, "don't want to hurt the market," so they're selling distressed homes for nearly as much as those going through conventional sales.

A 1,500-square-foot foreclosed home at 3023 58th Terrace E. in Bradenton listed for $169,900, for example, is priced similarly to others in the area. Within a few blocks, a 2,200-square-foot house is on the market for $199,900, while a 1,400-square-foot home is listed for $149,900.

As part of the pricing equation, banks now treat foreclosures as a relatively scarce commodity. About 9,600 res

idential properties in Manatee and Sarasota counties had foreclosure filings in 2013, according to RealtyTrac, an online foreclosure marketplace that publishes a monthly, nationwide foreclosure report.

Manatee County had about 6 percent more foreclosures in 2012, and 50 percent more in 2010. Sarasota foreclosures are down 17 percent since 2012.

Florida foreclosures generally fell quarter to quarter throughout 2013, according to RealtyTrac.

David McLaughlin, a loan officer with Wells Fargo in Bradenton, said his bank has the lowest number of foreclosures in its system in years, with about 2,000 in Florida as of this week. While the bank is getting higher prices on foreclosure sales and is willing to do more rehab work to put a home on the market, foreclosure sales are still an expensive option when a homeowner can no longer make mortgage payments.

Wells Fargo prefers to work with homeowners on short sales rather than gamble on selling a home. In the end, the bank usually recoups more of its expenses on a short sale because it doesn't have to do rehab work.

"Even though we can get a higher price, we would rather do a short sale," McLaughlin said. "It's best for the customer."

Florida had the nation's second-highest percentage of short sales in the nation in December with 14.4 percent of all homes selling by this method.

The shrinking foreclosure inventory hasn't made buying one less complicated. Foreclosed homes may sell either through a traditional listing or in an auction. Wells Fargo sends less than 3 percent of distressed properties in its portfolio to auction, down from 30 percent in 2009.

McLaughlin said the decrease is largely due to a lack of "scratch-and-dent" properties and low inventory, most of which were cleared from the foreclosure list over the past few years.

Both selling methods are bringing multiple offers on foreclosed properties. Cannon said it's not unusual to see seven or eight offers on a property before it closes.

Other banks use auctions more often. May Aston, a ReMax Alliance Group sales associate who specializes in Manatee County residential foreclosures, said one bank she deals with sends many of its properties to auction. But this is out of step with the times, she noted.

"They're getting less money at auction," she said.

Florida itself may be out of step. The state legal system is about a year behind the rest of the country in clearing a backlog of foreclosures, Aston said. Not that she's complaining: About 95 percent of her listings are foreclosures.

Buyers continue to line up for foreclosures. About half the buyers Aston sees are buying the properties for their own. The rest are investors.

Unlike the height of the real estate boom in 2005 and 2006, those investors generally need to hang onto foreclosure purchases longer to build up equity. The day of the house flipper is largely over, says Cannon. To make money on a foreclosed property, an investor gets the best return by hanging on to it to allow it to appreciate with the market.

Matt M. Johnson, Herald business reporter, can be contacted at 941-745-7027, or on Twitter @MattAtBradenton.com.

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