Seller Considerations – The Analysis of Lis Pendens

Home buyers thinking about delaying a sale may want to reconsider.  A great deal of publicity has been given to the foreclosure issue and the impact that bank owned sales have had on real estate prices. But no one seems to know for sure if the worst is behind us or whether prices could decline even further.

A good indicator of how much pain still lies ahead, if any, is Lis Penden.  Any time an action is taken that may impact a piece of property, the party taking the action will file a Lis Pendens, or a notice that an action has been taken, that could impact clear title to a property.  Once mortgage payments become too far in arrears the next step taken is to usually file a foreclosure action and a Lis Pendens.  How can Lis Penden be used to predict future pricing?  By researching the number of homes in a given area of neighborhood that have Lis Pendens filed, a home owner or agent can predict how many more bank owned properties could be added to housing inventory in the future.  If the number is significant, it’s quite possible prices will drop even further.  On the other hand, if there is very little activity, it’s more likely prices will stabilize in the future.  A seller must take this number into consideration because an abundance of Lis Penden activity could indicate that market recovery won’t occur for some time.  A majority of sellers may find this desirable to cut their losses by selling now and moving on with future real estate plans.

Lis Penden should always be reviewed as part of the sales decision process.