More novices find their way to foreclosure auctions
March 20th, 2009 in Blogs
Richard Defendorf, contributor
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Used to be auctions of distressed or foreclosed properties were attended overwhelmingly by real estate investment specialists and contractors savvy to the research, bidding, management, and/or renovation skills needed to make such purchases worthwhile. It was a small group of people.
But not anymore.
With the near-ubiquity of foreclosures and pre-foreclosures, more and more of the prospective bidders are people looking to buy a house as a primary or secondary residence rather than as a speculative investment or rental property.
“We’ve seen a sea change over the last three years,” Rick Sharga, senior vice president of marketing for Internet-based foreclosure specialist RealtyTrac, recently told Senior News Editor Mike Stuckey for a story published this week on msnbc.com.
The story underscores the obvious potential benefit – landing a property at 70% to 80% of its current value – but also the potential drawbacks. Buyers typically have to come up with full payment quickly, for example. They also have no legal recourse if they fail to do adequate research and end up with a lemon or a property with outstanding liens or other debts. They also might have to force a family from their home.
And yet the regular folks are showing up to bid. Properties in foreclosure have become so numerous that “now, conservatively, at least 50% to 60% of people who are in the market to buy a house are at least considering a foreclosure purchase,” Sharga told msnbc.com. “Historically, that simply hasn’t been the case.”
And for many contractors with the inclination, capital, and patience, the foreclosure auction has become a regular stop.
“I personally like massively trashed places,” Rock Harrison, a contractor based in Washington state’s King County, told the news service. “They really scare people. They look horrible, but I’m going to strip all that out anyway. A vacant house that has little fix-up goes for a premium.”
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