This might be especially true in the Washington area. According to a recent report by RealtyTrac, the region is one of the worst places in the nation for buyers seeking to purchase a foreclosure. The RealtyTrac report cited the relatively limited foreclosure inventory and overall home inventory in the region, the average foreclosure sale price and the average foreclosure discount percentage.
In another study, the Center for Regional Analysis at George Mason University and RBI found that, as a percentage of all sales, distressed-property sales in the Mid-Atlantic region (which includes the District, Maryland and Virginia) are falling. The number of active distressed-property listings in the region is at its lowest level since 2009, the study found.
The report said that foreclosure sales’ share of all sales fell in 44 of 45 jurisdictions in the Mid-Atlantic region last year, with short sales becoming more prevalent than foreclosures. Moreover, from January 2012 to January 2013, the number of foreclosure sales in the Washington area dropped 43.8 percent and the inventory of bank-owned homes dropped 60.5 percent.
Snags kill a deal
The deal on the house that Glen Scheirer wants was snagged by a series of legal complications, including judgments against the previous property owners for various zoning and housing code violations and botched paperwork, said Knull, his real estate agent. The problems prompted Fannie Mae to delay the sale several times and ultimately cancel the contract to sell the property.
The most recent obstacle came in November, when Scheirer was informed that the law firm that had handled the initial foreclosure of the property had gone out of business. As a result, Fannie Mae was unable to certify that the foreclosure had been done properly and in full compliance with all Virginia laws, such as the legal requirement that notice of the foreclosure sale be advertised.
Waiting to find the necessary documentation, Fannie Mae extended Scheirer’s contract to buy the house from Nov. 1 to Nov. 30. This was extended yet again, this time until Jan. 15. In the meantime, Scheirer had already begun moving his furniture and possessions and storing them in his son’s garage, across the street from his expected future home. He had also made a $10,000 down payment, which he had placed in an escrow account.
Finally, on Jan. 14, the day before the closing, Fannie Mae’s listing agent informed Scheirer that the missing documents still had not been located and that, as a result, the agency was canceling the contract. Scheirer would need to start the buying process all over, with no guarantee that his offer would be accepted.
Months of negotiations, offers, counteroffers, inspections, contracts, addenda and extensions went down the drain.
“This is a common type of mistake,” said Steven Sushner, an attorney and president of District Title, a real estate settlement and title insurance company with offices in Washington, Virginia and Maryland. He strongly cautions people who are looking to buy a foreclosure to be diligent in researching and securing marketable title to a property.
Sushner advises buyers not to rely solely on the seller’s title company. “It is a very complicated process. You should ask questions and use people who have your best interests in mind,” he said. Sushner notes that foreclosure laws vary from state to state. He recommends that buyers rely on local real estate lawyers and other experts to determine if the foreclosure and repossession process complied with state law.
In the meantime, Scheirer’s son, Glen A. Scheirer, said he still hopes his father will be able to move into the abandoned house across the street. He said he has called and e-mailed anyone who will listen at Fannie Mae. He has even contacted a congressman.
“This process is ridiculous. The federal government is broke and my father is ready to hand them $375,000 in cash to take an eyesore off their hands that we will fix up with our own sweat equity and money,” the younger Scheirer, 32, said.
The elder Scheirer is “still going to get this house,” he said. “My dad is going to live across the street from me, my wife and his grandchildren.”
Steven Harras is a freelance writer.