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Foreclosures on Maui
According to Zillow Research, the average discount nationally on sales of foreclosed properties is 7.7%. On Maui, there have been 445 REO properties sold in the last year at an average price of $353,597. Given the average list price was $380,710, this represents an average discount of 7.1%, so we are pretty much in line with the rest of the country.
At the present time, there are only 32 Active and 37 Pending REO Listings on Maui. Where have all the foreclosures gone?
Well, we can’t speak for the rest of the country, but last year, the Legislature passed Act 48 which put a moratorium on non-judicial foreclosures until July 1st of this year when Act 182 replaced it. If they wanted to foreclose, they had to go the judicial route which can take any where’s from 9 months to 2 years and at a much greater cost.
But wait….if the banks can now do non-judicial foreclosures which are much quicker and for less money, why hasn’t there been a slew of non-judicial foreclosures hitting the market? By some accounts, there are more than 1300 properties on Maui that are in pre-foreclosure. The main reason, in our opinion, is that Act 182 struck down Part 1 non-judicial foreclosures and now the only recourse is Part 2 non-judicial foreclosures which are much more complex and with far greater liability to the lenders.
In any event, we believe this will sort itself out, and you will see a steady uptick in the number of REO properties hitting the market over the next 6 months. Given the low inventory, we suspect these properties will be easily absorbed by the market without any negative consequences.