High-end homes aren't immune to foreclosure

Foreclosures in Greene County are up 43 percent over last year through July 31, according to the Recorder of Deeds office.

Lenders are repossessing homes in some of the area’s most prestigious subdivisions, including Rivercut, Millwood, Eaglesgate and Ravenwood South. And in the exclusive gated community of Highland Springs, a recent streak of defaults prompted lenders to foreclose on some of the market’s priciest homes, two of which sold for more than $1 million in 2005, according to Greene County property records.

The staggering number of foreclosures occurring across the country – especially out West – has been explained by a combination of factors, some of which may also figure in to the local glut of loan defaults.

“We’re in a transition market, so it’s hard to judge foreclosures,” said Scott Rose, president of the Greater Springfield Board of Realtors.

“Unfortunately, it’s kind of that subprime story.”

Rose, a Murney Associates Realtor, is referring to a lower tier of lenders sharply criticized in media reports for handing out adjustable-rate mortgages to borrowers who wouldn’t otherwise qualify for home loans.

Monthly payments on many of those loans recently jumped several hundred dollars a month when higher interest rates took effect, he said.

Rose said the rising number of foreclosures in Greene County also may be a sign that area builders riding the real estate boom had too much new housing inventory when the market began cooling last year.

Springfield Realtor Peggy Mitchell, who specializes in foreclosure properties, thinks there’s a simpler explanation. And she’s of the opinion that the much-maligned trend isn’t a negative reflection on the local housing market.

“When you’ve had a very strong economy where more people could get loans, you’re going to see more repos,” said Mitchell, with Coldwell Banker Vanguard Realtors. “It means you’ve had a great economy, and people that should have rented, bought. A certain number of people lose their homes.

“That’s just the American way.”

‘Bank-owned’ means business

Mitchell and Realtor Linda Jeffries work as a team almost exclusively with national lenders hoping to resell foreclosed properties. Both have received special training in bank-owned real estate, and it’s bringing them business.

“The banks require a lot of paperwork,” Mitchell said, noting that trained agents are sought out by lenders. “They call me. I don’t call them.”

Mitchell emphasized that foreclosures are up across the board, leading to a surge of loan defaults that includes – but doesn’t skew toward – homes valued at $300,000 and above.

Most of Mitchell’s foreclosure listings are small- to mid-size homes. Of the 30 or so bank-owned properties currently listed by Mitchell and Jeffries, only two are above $300,000.

One is a five-bedroom house with a three-car garage on South Pratt Avenue in Ravenwood South. Mitchell expects that house and her other bank-owned properties to sell at or near fair-market value.

“I work in the secondary market, and they want fair-market value. So they’re not steals,” she said, shattering a common myth about foreclosed homes. “They’re a regular purchase just like any other house.”

But Steve Trotter with Carol Jones, Realtors said circumstances surrounding newer bank-owned homes do sometimes favor prospective homebuyers looking for a deal.

“They represent a good value to the customers, because what it amounts to is that someone has taken a hit on the property and now it’s turned around, and (lenders are) ready to sell,” he said.

Trotter said he recently listed a high-end home repossessed by Wells Fargo that drew three viable offers from prospective owner-occupants in one week. The lender accepted an offer that was 92 percent of the list price, he said.

In the Springfield market, Trotter said newer, more expensive homes emerging from foreclosure don’t typically sit on the market for very long. “(Lenders want) to get them off their books and get rid of them. Typically, they’re pretty aggressive,” he said.

Going once, rarely twice

Some local real estate investors actually show up on the steps of the historic Greene County courthouse to bid on foreclosed properties when the homes are auctioned.

In most cases, though, there’s relatively little interest, and lenders usually buy back the properties for resale.

Chip Sheppard, an attorney with Carnahan, Evans, Cantwell & Brown PC, said he has tracked foreclosures in some of Springfield’s nicer subdivisions only to watch them sell for retail price or above at auction.

Sheppard said he’s been outbid on homes in Ravenwood South, Oak Knolls and Cinnamon Square that he’s tried to pick up as personal investments.

“I just walk away shaking my head, because people overpaid at the foreclosure sale,” he said, surmising that they’re mostly out-of-state investors piqued by the area’s reasonable housing market.[[In-content Ad]]