Buying Foreclosed Homes--Stories from the Trenches

Posted by: Chris Palmeri on November 10, 2008

There was a great story in the Los Angeles Times yesterday about the reporter’s struggles to buy a home in foreclosure. I was particularly fascinated by what appears to be some creepy dealings by the listing agent on one of the properties who never even showed the reporter’s offer to the bank.

I’ve been poking around on my own, looking to buy bank-owned property in a Los Angeles neighborhood called Canoga Park. It’s a frustrating experience no doubt. I had a close encounter with a wild dog sleeping underneath one house I visited. Fortunately he didn’t bite. I’ve seen homes where flippers left unfinished bathrooms. I saw several houses with paint splashes on the walls, put there by owners who never even had a chance to finish painting.

Another home had perhaps fifty business cards from various real estate agents, scattered across the kitchen counter like coins in a wishing well. One Realtor told me he doesn’t even bother going to visit houses anymore. “There are 6,000 houses for sale in the San Fernando Valley,” he said. “I’d never have time to see them all.”

The last house I went to look at was listed as bank-owned in the Multiple Listing Service and had pictures attached of a nice, empty home. When I got there the home was occupied and the hastily scribbled sign outside said “for sale by owner.” A half-hour drive for nothing.

Reader Comments

Tanya Worthington

November 13, 2008 3:09 PM

Foreclosures and FSBOs are becoming a part of the big landscape. I try to show all available homes to potential buyers and I do show all offers to the bank. There are a lot of resources we real estate professionals like to use to help and one site I like that seems to be sort of "under the radar" is this site: kayyah.com. It allows FSBOs the opportunity to post their own homes and they have a great looking (professional) yard sign, and incentives that REALTORS cannot do because of federal laws like RESPA. For example, the home owner can choose to market their home with an incentive like, "Buy My House, Get a Year's Worth of FREE GAS," or "50,000 Air miles," etc. It's an amazing site and I've used it to close seven properties so far and I've also been able to drop the sales commission to 2% instead of the typical 6%.

- Tanya Worthington

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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