With bidding wars under way and houses snapped up in days for more than the asking price, homebuyers could be forgiven for thinking the calendar has been turned back four years.
Those scenarios, however, have become more common this spring because banks are selling some foreclosed properties for a song, according to local real estate agents.
Despite the heated competition and the repairs that many such properties need, “the deals are out there,” says Re/Max real estate agent Andy Norton, who has offices in Arlington and Rockville. Although not every foreclosure is a bargain, “it would be erroneous to think that all the deals are gone just because they’re bid up on price,” he says.
The best deals are for high-end houses in upscale neighborhoods, which have fewer buyers and where some foreclosed properties are selling at half-price. A pristine bank-owned Potomac house with seven bedrooms and a backyard pool that was listed for $2.4 million in February sold in May for a little more than $1 million, according to the Multiple Listing Service database. A McLean house that was listed recently for $2 million had a comparable market value of $4 million. In the District, where fewer properties are in foreclosure compared with the Maryland and Virginia suburbs, Norton cited some Georgetown row houses as well as condos in Farragut West as good deals.
Buyers of midprice houses, though, will find fewer bargains and more modest discounts. On average, bank-owned suburban houses priced between $300,000 and $500,000 are selling at only a 10 percent discount to comparable resale homes, says Phil Chernitzer, a real estate broker and owner of REO Real Estate in Annandale, an agency that advises buyers and sellers of foreclosed properties throughout the region.
Some locations have more potential for bargain hunters than others. In Maryland, the best values may be in Silver Spring, Wheaton and Hyattsville, says Matt Beaton, a listing agent who specializes in bank-owned properties throughout the D.C. area at Prudential Carruthers Realtors in Fairfax.
In Virginia, Norton sees opportunities for buyers in Woodbridge and Springfield. Even better deals can be had in counties hit hard by the crisis.
“You can buy a house in Prince William for less than in Stafford,” says Chernitzer, who thinks Prince William County is currently undervalued. A case in point may be Dumfries Triangle, where just a few years ago four-story brick houses on acre lots sold for $1 million. Now they’re going for $400,000, Beaton says.
Because the conditions of properties can vary widely and affect the price, buyers will need to do their homework. Beaton has seen plenty of homes that have been gutted and trashed, but he adds, “We’ve also seen some immaculate houses that are delivered straight from the builder where no one has ever moved in.”
Though the steepest discounts are for houses in the worst shape, buyers shouldn’t be fooled by good looks, Norton says. “Some houses have all this sizzle and pop visually even though the previous owners had no idea how to maintain the structure.”
