Short sales and foreclosures have helped to drop home prices in the Tooele Valley to their lowest level in six years. That’s getting more buyers interested in the real estate market again. However, some are finding out that market and its players have changed radically following the era of subprime mortgages, bank bailouts and robo-signings.
Last week, the Transcript reported on an Erda couple who purchased a foreclosed Tooele home via an online auction house. The auction house had sold the home despite being previously supplied with a laboratory testing report indicating the presence of meth in the home. If another prospective buyer hadn’t alerted the couple to the contamination, making them rescind their offer on the home, they would have a meth house on their hands right now and be none the wiser. Instead, the bank that owns the home will now pay to have it cleansed.
The story was another example of the new complexities of the real estate market. Not long ago, before the foreclosure crisis, this home might have exchanged hands in a simple transaction between a local buyer, a local seller and a real estate agent. As was, it involved an online auction house based in Oklahoma, a banking conglomerate based in Minnesota that took federal bailout money, and a laboratory in Salt Lake City.
Navigating those waters is no easy matter.
The caveat emptor maxim has never been more apropos than in today’s real estate market. Banks want to move foreclosed properties off their books while buyers are looking for deals, anticipating a market rebound. Both sides have incentives to rush into a deal, but there are better reasons to be methodical about doing due diligence. For one, the only way the market can build momentum for a recovery is to regain the trust of ordinary buyers and sellers, many of whom have only a cursory understanding of the mechanics behind the market’s crash.
In Tooele County, few sectors are as impactful upon our overall economy as the housing market. Also, few sectors are as bright with promise, given growth projections and the relative availability of land here. To make the most of that potential, buyers need to exercise caution even as the housing industry works to regain their faith.