Some believe there is a housing bubble that surrounds Northern Virginia.  Towards the end of 2005, word of it spread and the housing market has been deflating ever since.  Home sales have slowed and home values are decreasing in some areas.  Areas like Arlington have continued to hold strong, but as you move away from DC the losses contrast the gains we saw in 2003 and 2004.  It wasn't long before people started using the F word.  Foreclosures became the buzz for good reason.  As a homeowner the worst thing for home values in your neighborhood are multiple foreclosures.  One or two can be considered distress sales, which shouldn't have a direct affect on your home's value.  If foreclosures are the only thing selling in your neighborhood, they create the market.  They even start competing with each other.  I recently sold a home in Woodbridge, Virginia where we competed with seven other foreclosure listings. 

The irony is that foreclosures are what is re-igniting the housing market in Virginia.  Investors are already on to it.  The last eight foreclosure homes I listed had multiple contracts inside of a week.  It is hard to even keep up with all the phone calls.  It is not just investors anymore.  It is all of us that couldn't afford the type of home that we wanted.  If you could only afford a two-bedroom condo before, now you might be able to consider a townhouse that has been foreclosed on.  Maybe you can even afford a single family home that needs some TLC.  What is important is that people are buying again.  The momentum has to get started somehow.  I am hoping that when the foreclosures start to peter out, the appetite for real estate will remain. 

When I say foreclosure homes, what I am really talking about are REO (real estate owned) properties.  In Virginia foreclosures still go to auction on the courthouse steps.  When it doesn't sell at auction the lender buys the property back and sells it as an REO.

There are some things you should know about buying REO properties in Virginia.  They have a lot more promise of making it to settlement than a short sale, but they require more patience than a traditional home purchase.  If you are not ready for the pace you will likely lose out on the first one or two.  If you expect multiple offers, be prepared to pay at least asking price but don't be afraid to ask for closing cost concession from the "seller".  If possible, try to settle within the month you are in.  Always check with your lender before committing to a settlement date.  If possible, use a conventional loan.  FHA and as-is properties don't mix very well (I will write more about this in a future blog).  Ask for a home inspection, but remind yourself about 10 times that this is an AS-IS SALE.  You can walk away from the contract if the items found are unsatisfactory, but you should not ask for repairs.  Provide a lender letter.  Some may require it to be from the selling institution, such as Countrywide.  It's a great idea to have this letter before the property ever goes on the market, but at least make sure you or your Realtor have connections that can get you a solid letter quickly.  Get your offer in fast!  Make sure the listing agent has received it and will be submitting immediately.  Once your offer is accepted, be prepared to wait for responses and act quickly when needed.  Is it all worth it?  Usually it is.  You can get to settlement without too much turbulence and you can get a great deal on a home you wouldn't have otherwise been able to afford.  There are some gems out there!

You are welcome to use my free Foreclosure Finer if you would like to receive alerts as soon as new foreclosures come on the market in Northern Virginia.

Good luck and let me know if I can help. 

-Adam Gallegos