Trulia.com and RealtyTrac recently surveyed US adults to get some insight into what people *think* is involved with buying a foreclosure. Here are the Top 10 Myths that came up, and the facts to set the record straight:

1.  Foreclosures need a huge amount of work.  92 percent of consumers expressed that if they bought a foreclosure, they would be willing to make home improvements after they closed the deal, with 65 percent being willing to invest 20 percent or less of the purchase price.  Although stories of foreclosures missing plumbing and every electrical fixture are very memorable, many foreclosed homes need only the (relatively inexpensive) cosmetics that many new homeowners want to customize no matter what kind of home they’re buying: paint, carpet, etc.
2.  Foreclosures sell at massive discounts, compared to other homes.  Almost every member – 95 percent – of the surveyed group expected to pay less for a foreclosed home than for a similar, non-foreclosed home; 18 percent had realistic expectations of less than a 25 percent discount.  However, 36 percent expected to receive a bargain basement discount of 50 percent or more off the value of a similar non-foreclosure.  Reality check: while foreclosures might be discounted massively from what the former owner paid or owed, their discounts are much more modest when compared to their value on today’s market and the prices of similar homes.
3.  Buying a foreclosure is risky.  49% of respondents said they perceived buying a foreclosure as risky.  And yes - buying a foreclosure at the auction on the county courthouse steps can have risks, including the risk the new owner will take on the former’s owner’s liens and other loans.  But most buyers looking for foreclosures are looking at bank-owned properties, which are listed on the open market with other, ‘regular’ homes.  Buying these homes is really no more risky than buying a non-foreclosed home.
4.    You can’t get inspections on the property when you buy a foreclosed home.  County auction foreclosures don’t often offer the ability for buyers to have the homes inspected.  But virtually all bank-owned properties for sale on the open market not only allow, but encourage buyers to obtain every inspection they deem necessary. This is because almost every bank sells their foreclosed homes as-is, and they want to avoid later liability.  It’s in everyone’s best interests to make sure that the buyer has full information about the property’s condition before they close the deal.

5.  There are hidden costs to watch out for when buying a foreclosed home.  Sixty-eight percent of survey respondents who felt there is a negative stigma to buying a foreclosure expressed the concern that buying a foreclosure poses the danger of hidden costs. At some foreclosure auctions, there are buyer’s premiums and other hefty fees that can really add up and take a chunk out of the effective savings the buyer stood to realize. However, when you buy a bank-owned property that is listed for sale with a real estate agent, the closing costs are the same as they would be if you bought a non-foreclosed home. Overdue property taxes, HOA dues and other bills left behind by the defaulting homeowner are cleared by the bank that owns a foreclosed home before it is sold on the market, though these items should be watched out for if you buy a home at the county foreclosure auction.
6.    Foreclosures are more likely to lose their value than “regular” homes. Thirty-five percent of U.S. adults who believed there are downsides to buying foreclosed properties believed this myth. In fact, because foreclosures often offer a discount from the home’s current market value, they may offer some degree of insulation from further depreciation.  Whether a home loses its value or not has to do with the dynamics of the local market, including the area’s supply of homes, demand for homes, interest rates and the health of the employment market – not with whether the home was or was not a foreclosure at the time it was purchased.
7.  Most foreclosures happen when homeowners just walk away.  Out of homeowners with a mortgage, only 1 percent said walking away from their home would be their first choice if they were unable to pay their mortgage.  And a whopping 59 percent of mortgage-holders said they wouldn’t walk away from their home – no matter how upside down they were on their mortgage. Most foreclosures happen when the owners lose their jobs or their mortgage adjusts to the point where they absolutely cannot pay the mortgage, no matter how hard they try.  Voluntary ‘walk-away’s are simply not as popular as many people think.
8.  When you buy a foreclosure, you should lowball the bank – they are desperate to get these homes off their books.  Stories about in the press abound about the large numbers of foreclosed homes the banks have on their books.  We’ve all heard the adage that banks have no interest in owning these properties.  But the real deal is that they’re simply not desperate enough to give these places away.  Also, the banks mostly service the defaulted loans – they don’t own them.  Various groups of investors do, and they hold the banks accountable to selling the bank-owned property at as high a price as possible, helping them cut their losses.  Many banks won’t even consider lowball offers, and many bank-owned properties actually sell for above the asking price.  Before a bank will take a lowball offer, they will almost always reduce the list price first, and see if that attracts a higher offer than the lowball one they have in hand.
9.  You need to be able to pay in cash in order to buy a foreclosure.  Again, if you buy a foreclosed home on the county courthouse steps, you might need to bring a cashier’s check and be ready to pay for the place on the spot.  By contrast, bank-owned homes are bought through a more normal real estate transaction, which means buyers can obtain a mortgage to finance the home just like they would if the home weren’t a foreclosure. It is true, though, that in some markets, banks prefer offers from cash buyers, but this tends to be in situations where the property’s condition is pretty dire, and the bank knows this may make it hard for a buyer to obtain financing.
10.  It’s easier to buy a foreclosure with bad credit if you get a mortgage with the same bank that owns the property.  Think about it: why would the bank want to end up with the same property as a foreclosure, again? Well, that’s what would happen if they allowed buyers with low credit scores to buy their foreclosures just to earn the interest on the mortgage. In reality, many banks do offer incentives like lower fees or closing cost credits for buyers who use their bank for their mortgage. But the buyers must meet the same credit, income and other qualification standards as anyone else would to seal the deal. 

Concerning a prelisting appraisal…

This interesting article was published in a recent real estate magazine by Paul Pastore.
Published on Friday, July 24, 2009,

One of the benefits of obtaining a prelisting appraisal is to verify the square footage and avoid embarrassing and costly mistakes that cause deals to vanish and attorney’s to appear out of thin air.
For decades, I have asked sellers to obtain an independent appraisal at their expense as part of the listing due diligence. It is also a litmus test to see if the seller is ‘serious about selling’ and willing to invest some funds, and divest some ego from the pricing process.
Recently, I listed a two story basement home that the owner said was 5800 sq ft. The tax assessor confirmed this figure, and it was listed on a prior MLS plano. The seller was reluctant (too cheap & smug) to obtain an appraisal. The property eventually sold and appraised about 100k below the list price and 75k below the contract price.
The seller was certain his prized possession would appraise for “At least 500k”. He told the buyer and both agents that he felt the property was “Lucky”. This is one of the reasons Feng Shui drives me crazy. Lucky is a great name for a dog or a cigarette, but not a property.
The appraiser said this ‘lucky’ property had 4976 sq ft not the 5800 the seller claimed. Once again, real estate confronts reality. The buyer did not want to pay above appraisal and went looking for another home. The seller is considering an independent appraisal in hopes of justifying his elevated expectations.
Years ago I read about a lawsuit where the buyer successfully sued the seller because the house he purchased had more square feet than was stated. Most buyers would be elated to get more for their money; but, not this buyer. His attorney alleged the buyer would have more taxes to pay, higher utility bills, and higher insurance premiums. The judge agreed with the plaintiff.
There are dozens of great reasons to obtain prelisting appraisals. Avoiding the ‘shrinking house syndrome’ is one of them. Staying away from litigious buyers is another.

A blog posting by Heather Hopkins, analyst for Hitwise, a company that measures Web traffic, showed that Google was not among the top 10 real estate Web sites in the week ending July 4. Realtor.com, the National Association of Realtors’ site, had the biggest number of visits by far, with 7.6 percent of all real estate site visits. Zillow came in second, with 3.7 percent. Then came Yahoo real estate and Zip Realty, each with about 2.9 percent, and Trulia and Rent.com, each with 2 percent. Rounding out the top 10 were RE/MAX Real Estate, Homegain, the U.S. Department of Housing and Urban Development and Homes.com, each with less than 2 percent of all visits to real estate sites.

An interesting article by Jeff Yeager I found in the EcoBroker newsletter this week:

The recession may have a silver lining in the form of better quality of life. Learn how to save money and live well.

My father-in-law had a saying: “If you don’t have a good time, you usually learn a good lesson.” I’m reminded of that a lot these days during the current economic recession.

I’m not saying that the economic downturn is a good thing, particularly for people who have lost jobs or their homes. But fortunately that’s not most Americans. For the rest of us, some involuntary belt tightening might have some silver linings. In other words, I think the current market corrections we’re going through might just trigger some long overdue — and ultimately very positive — lifestyle corrections for many Americans.

Consider:

* We’re borrowing less and putting more into savings. We’ve truly learned a lesson — albeit the hard way — about living beyond our means. In 2008, savings rates rose to 1.7%, coming off the lowest savings rates since the Great Depression. And figures recently released for April 2009 are even more impressive, showing the personal savings rate for the month at a 14-year-high of 5.7%.

* We’re wasting less. AKA Using it up, making it last, doing without. This is clear from the increase in thrift store and re-sale store sales. Goodwill Store revenues in February were up 7.2% over last year, and for the first time in generations, many thrift stores are selling their wares faster than additional merchandise is being donated.

* We’re building smaller homes. It’s bad for your bank account and bad for the environment to construct, heat, cool, electrify, decorate, maintain and pay taxes and insurance on unnecessary square footage. For the first time in more than 10 years, the average size of new homes being built dropped by nearly 300 square feet, or 11%. Studies show that we, as humans, are inherently uncomfortable living in too large of spaces, and the recent economy has shown that we’re definitely uncomfortable trying to pay for them. In with “Not So Big” and “Little Boxes”!

* We’re driving less and staying around home more. When gas was at $4 a gallon, two-thirds of Americans said they changed their habits and drove less…and nothing awful happened because of it. It save resources, generates less pollution, and, because we’re spending more time closer to home, it stands to bring our families and communities closer together. That’s why I still continue to pay $4 a gallon at the pump, or, rather, pay myself the difference in my “$4 a Gallon Savings Club.”

* We’re eating lower on the food chain, which is usually healthier. Sales of poultry are up, red meat are down. We’re buying more staples, and fewer processed foods. We’re eating more fruits and vegetables, and raising a lot more of those ourselves: Home vegetable gardens are projected to be up 40% this year compared to 2007. If these trends continue, the next dire headline out of the recession might just be “American Obesity Epidemic Declines!”

* Hard times might help to revitalize local businesses/economies. In the long run, it stands to reason that the current recession might actually help to revitalize long struggling local businesses and economies. Consider these factors: * Transporting products from far away becomes less cost effective, making the produce at local farmers’ markets, for example, more cost competitive. * Big national chains are going under in record numbers, opening the door to local/independent businesses. * Local businesses are more responsive to changing demands and have fewer, if any, demands by shareholders for higher returns on investment. * And many local communities, like those in the Berkshire region of Massachusetts, are taking matters into their own hands and finding creative ways to help local business not just survive, but thrive.

Check out Jeff Yeager talking about saving money on ABC News Now
Jeff Yeager is the author of the book The Ultimate Cheapskate’s Road Map to True Riches. His Website is http://www.UltimateCheapskate.com.

Read more: http://www.thedailygreen.com/living-green/blogs/save-money/how-to-save-money-recession-460609?src=nl&mag=tdg&list=dgr#ixzz0K2PUZqPu&C

According to the latest Zillow Real Estate Market Reports, home values in Portland decreased -6.39% in the third quarter of 2008, compared to the third quarter of 2007. Nationally, home values decreased -9.7% during this same period.

Zestimates and Zillow Home Value Indices are published multiple times per week on Zillow.com, and quarterly Zillow Real Estate Market Reports are released every three months. You can find the latest Market Reports in the Zillow Media Room, or you can check out the Zillow Home Value Index for your ZIP code, neighborhood, city, state or US by clicking on the “Zestimate and Charts” link on any home details