Posted: Sunday, May 1, 2011
By MICHAEL MILLER Staff Writer Press of Atlantic City
A Cape May County Sheriff’s auction is scheduled Wednesday for a six-bedroom, four-bath bayfront home in Avalon.
But you won’t find any foreclosure or auction signs posted on this bank-owned property, with its estimated value of $1.3 million.
Even in the Darwinian world of real estate, there are limits to what is considered socially acceptable, agents said. While neon-red placards declaring “Bank Owned!” might be a way to entice a bargain-hunter on the mainland, such fire-sale tactics are frowned upon in southern New Jersey’s wealthiest enclaves.
“I’ve never seen a foreclosure sign in Cape May,” said Dagmer Chew, the broker and owner at Homestead Real Estate in Cape May. “I’ve never used a foreclosure sign. I think it would not be a nice thing to do if it was in someone’s neighborhood.”
Chew said Cape May, a national historic landmark, has seen its share of bank foreclosures. But agents are sensitive to the stigma that this carries.
Chew recalls a recent sale of a distressed property for $600,000 in a neighborhood surrounded by nearly identical homes that sold for $1 million. The bargain-basement price did not sit well with neighbors who are trying to hold onto their neighborhood’s value, Chew said.
“Everyone in the neighborhood lost $400,000 in comps,” she said, referring to the comparable sales that sellers use to justify their asking prices. “It’s not fair to them.” Foreclosure signs are a common enough sight in southern New Jersey, which was not spared by the recession or the mortgage-loan crisis that rocked the nation’s real-estate market in 2008.
In places such as Ocean City and Stone Harbor, Cape May County, and Barnegat Light, in Ocean County, real-estate firms are legally obligated to disclose to prospective buyers that a home is in foreclosure, but they do not have to trumpet it from the rooftops.
“You’d get some upset neighbors,” said Nicholas Marotta, president of the Ocean City Board of Realtors.
Marotta said real-estate agencies would face a backlash of resentment from neighbors if they started posting foreclosure notices on their signs.
“Especially in multi-million-dollar areas like the Riviera, where you have a lot of year-round residents,” he said. “Do you think they would like to see a sign on their neighbor’s property saying ‘bank owned?’ I wouldn’t do it.”
Ocean City has a strict sign ordinance limiting the size and number of real-estate signs on the island for aesthetic purposes. In some south-end neighborhoods, the thousands of rental and sales signs made the island look like a giant gift shop for three-bedroom condos.
Adding a second sign would break the city’s rules. But Marotta said he thinks the signs are inconsiderate to the plight of the property owner.
“It puts the person’s personal business out there that they lost the house to the bank,” he said. “And it’s a respect factor for the rest of the neighbors. I don’t want them thinking, ‘What’s going on with my neighborhood?’”
Some real estate agents see too much usefulness in advertising that properties are foreclosed to hide the information.
Broker Jean Ball of Re/Max, of Northfield, in mainland Atlantic County, advertises bank ownership on her properties, regardless of the zip code. Posting a notice of foreclosure entices first-time homebuyers who might be priced out of these neighborhoods without benefit of an auction price, she said.
“The banks are trying to appeal to first-time homebuyers,” Ball said. “We’re just trying to open up the properties to all kinds of buyers. I think it does attract more business.”
Ball said banks would never tell a Realtor to take down a foreclosure sign.
But buyers might consider a foreclosure sign a red flag, said broker Lisa Henson of Island Realty in Surf City and the Loveladies section of Long Beach Township, both on Long Beach Island in Ocean County.
“The bank laws are completely nebulous,” she said. “A couple times we brought offers on properties that were bank-owned, and you can’t even get a response.”
Henson said these listings — called short sales — can be a headache for buyers.
“Communication with banks can be ridiculous. They will give you an 800 number in California,” she said. “Once, we had a house that everyone knew was in foreclosure. We brought them a great offer, and they wouldn’t return our call.”
Surf City broker Ray Procaccini of Oceanside Realty said he has seen plenty of bank-owned properties advertised on the island.
“I don’t see agents hiding that it’s a short sale,” he said. “It’s usually a better price, so it’s a win-win. These companies are trying to make it easier to get from offer to acceptance to closing table. If it works out, you can get a property for a competitive price.”