Condo Foreclosure
May 4, 2010 5:59 PM Subscribe
My wife and I own one unit in a large condominium complex. Four of the units were owned by a man who died earlier this year. Now his units are in foreclosure. How will this affect our property values?
The owner was not married and his father has been managing his estate. The loans were through a private party, not a bank. At the most recent HOA meeting, his father revealed the lender had started foreclosure proceedings. A few days ago I saw a notice posted to the door that per California foreclosure laws, one of the units will be sold at auction later this year.
How will this affect our property values?
The owner was not married and his father has been managing his estate. The loans were through a private party, not a bank. At the most recent HOA meeting, his father revealed the lender had started foreclosure proceedings. A few days ago I saw a notice posted to the door that per California foreclosure laws, one of the units will be sold at auction later this year.
How will this affect our property values?
Are you planning on selling any time soon? If not, probably won't affect it at all.
posted by gjc at 6:23 PM on May 4, 2010
posted by gjc at 6:23 PM on May 4, 2010
How will this affect our property values?
Prices are not static over time and do not always reflect fair value. If you're trying to sell your condo right now, of course it will receive a lower price because a potential buyer is likely to get a better deal for a similar unit from the motivated seller.
But assuming that the other units sell and there's no long-term damage due to neglect, why should another person's financial situation impact the value of your property? Even if the foreclosed units sell at a bargain price and turn up as comps down the road, other condo sales in your area will have occurred under more normal circumstances and those will be better comps.
The more complicated situation would be if you're re-financing. A bank will probably want to lend against the value of your condo as measured right now. If the bank succeeds in negotiating this, the bankers will be thrilled because they know once the foreclosed units clear the market your unit will revert back to something closer to fair value (i.e., what other units are selling for at that time under normal circumstances, not firesale auctions). You may have to wait for the bank to budge.
posted by mullacc at 6:30 PM on May 4, 2010
Prices are not static over time and do not always reflect fair value. If you're trying to sell your condo right now, of course it will receive a lower price because a potential buyer is likely to get a better deal for a similar unit from the motivated seller.
But assuming that the other units sell and there's no long-term damage due to neglect, why should another person's financial situation impact the value of your property? Even if the foreclosed units sell at a bargain price and turn up as comps down the road, other condo sales in your area will have occurred under more normal circumstances and those will be better comps.
The more complicated situation would be if you're re-financing. A bank will probably want to lend against the value of your condo as measured right now. If the bank succeeds in negotiating this, the bankers will be thrilled because they know once the foreclosed units clear the market your unit will revert back to something closer to fair value (i.e., what other units are selling for at that time under normal circumstances, not firesale auctions). You may have to wait for the bank to budge.
posted by mullacc at 6:30 PM on May 4, 2010
There is a good chance that auction sales will lower your condo's value, so you might want to look into having your homeowner's taxes reduced. After the sale, you might even be able to get a lawyer together with the new owners to lower the tax assessment of all the condos together.
posted by halogen at 6:33 PM on May 4, 2010
posted by halogen at 6:33 PM on May 4, 2010
Impossible to say, but in the long run, probably very little. If you were trying to sell right now, yeah, that could be a problem, as you'd be competing with four distressed units in the same complex. But in the long run, whether or not a property has been foreclosed upon in the past doesn't seem to have any permanent effect upon its value.
I'm really unconvinced that this could lead to a reduction in your property tax assessment. I wouldn't waste the money on a lawyer.
posted by valkyryn at 6:47 PM on May 4, 2010
I'm really unconvinced that this could lead to a reduction in your property tax assessment. I wouldn't waste the money on a lawyer.
posted by valkyryn at 6:47 PM on May 4, 2010
valkyryn, I only mention it because my parents were able to get a significant reduction in taxes that way.
posted by halogen at 6:54 PM on May 4, 2010
posted by halogen at 6:54 PM on May 4, 2010
Ditto gjc. One local neighborhood had a couple of foreclosed houses in it when another guy wanted to sell his house. He listed it at market value but of course it didn't sell because the two repos were listed for sale at about $40k less. So he had the choice of dropping the price to be more competitive, keeping the listing price and probably not getting any buyers, or waiting to sell until the repos were gone and the prices got back up to "normal". He still owns the house.
posted by MsKim at 8:41 PM on May 4, 2010
posted by MsKim at 8:41 PM on May 4, 2010
You almost certainly will be subject to special assessments on your HOA fees until those units have new owners.
posted by eas98 at 6:58 AM on May 5, 2010
posted by eas98 at 6:58 AM on May 5, 2010
This thread is closed to new comments.
You need to provide more information for a better assessment. Where in CA? How is your neighborhood? What price range are the units in now? Have prices fallen already? How many units in your building? And so on.
posted by Dee Xtrovert at 6:05 PM on May 4, 2010