It’s all about the perception of value (or how to possibly solve the perception of devaluation)

A recent Move.com survey reported that only 5.4% of consumers surveyed indicated they intend to purchase a home in the next 12 months. Additionally, the survey suggested that not enough is being done to stabilize the real estate market (nar.realtor).

The survey underlines a key issue that has bubbled throughout the foreclosure crisis that has kept many home buyers on the sidelines- the home buyer sentiment “that home values will continue to fall as the number of distressed properties continues to increase” has diminished the value attributed to home ownership.

Fannie Mae’s new “Deed for Lease” program is a step in the right direction as a way to forestall distressed properties from entering the market (which may be one cause of lowering home values). Certainly, any further and immediate action is welcome to reduce future distressed property inventory. Maybe it’s time to re-examine the property disposition process that attempts to sell distressed properties piecemeal, only to languish on the market (sometimes for months).

Rather than attempting to sell foreclosures piecemeal through the slow and methodical process that currently exists, why not consider the bulk foreclosure sale process for quick dispositions to allow those with resources transform distressed properties into neighborhood showcases? Rhonda Rundle wrote about the pros and cons of bulk REOs in her Wall Street Journal piece “Online Marketplaces Vie to Offer Bulk Sales of Foreclosed Homes” posted November 26, 2008 (http://online.wsj.com/article/SB122765299132257847.html). Rather than being a “market of last resort,” as Ms. Rundle reported, lenders and servicers should consider the potential of bulk REOs as a primary market for rapid property disposition- and possibly assist in home value stabilization.

by Dan Krell © 2009