Top Reasons Foreclosed Homes in New Jersey Won’t Sell

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If you and your neighbors have been feeling more and more frustrated at the sight of a dilapidated home on your street, you are most assuredly not alone. Unfortunately, there are a number of reasons why some foreclosure properties sell like hotcakes and others are left to fall into disrepair.

Naturally, one of the biggest factors keeping foreclosed homes unoccupied (or occupied by renters who may not care for the property very well) was the recent mortgage crisis in this country. Caused in part by an increase in sub-prime lending practices that primarily involved adjustable rate mortgages, once the borrowers’ rates began to shift upward along with their monthly payments, the subprime borrowers defaulted on their loans, which started a nearly decade-long recession across the United States.

The number of properties being foreclosed on soared higher and higher during the years 2007-2016, after the average US house price peaked in 2006 and then began its decline. Struggling homeowners were not able to refinance the mortgages that they should never have been approved for, and because of that, mortgages everywhere were simply not being paid.

Some homeowners stayed in their homes throughout the lengthy foreclosure process, while others fled in hopes of escaping responsibility for a mortgage they simply couldn’t pay. Some homeowners moved out and downsized or rented an apartment.

Regardless of who was living in all of these foreclosed homes, nobody had the money to adequately care for the homes’ necessary upkeep, which led to a plethora of eyesores all throughout the country. Of course, the situation was ugliest in states that practice judicial foreclosures – New Jersey included. As NJ foreclosures chugged painfully slowly through the courts, abandoned or rented foreclosures homes grew unkempt, bringing nearby property values down.

Even as these homes reach the end of the foreclosure process, many of them simply aren’t bought at Sheriff’s Sale despite their low price tag. Potential buyers are being scared off and foreclosed homes are left sitting for a variety of reasons, including:

  • Stubborn tenants that are proving difficult to evict
  • Significant damage caused by squatters or vandals
  • Weather damage caused by inattention during the home’s foreclosure stint
  • Lengthy waits for inspections and appraisals can drag the process out even longer
  • Fannie Mae homes are subject to strict guidelines that require home prices to be reduced on a predetermined schedule

If you and your neighbors are frustrated by nearby New Jersey foreclosure properties bringing potential blight upon your neighborhood, it is possible for you to make a difference while you wait for the properties in question to find new owners. You and your neighbors can work together to care for the exterior of the home(s) in question. Talk to your Homeowners’ Association (HOA) if you have one, and the home’s listing realtor to get permission to be on the property and also to ask if there is anything else you can do to help keep your neighborhood looking welcoming as you wait for the NJ foreclosure logjam to loosen up.

Image credit: Don O’Brien
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