Five years ago foreclosures were barely a blip on Realtor Cindy Carrigan’s local listings. Now they represent more than half of the 40 to 45 homes she sells each year.
And it looks like that number is getting higher. According to Carrigan, last year 12 percent of locally sold homes were foreclosures but 2011 is trending far above that at 23.5 percent so far.
To help interested buyers get a feel for the market, Carrigan and partner Doc Nicolson of Five Star Spokane group began hosting free foreclosure tours last fall. About every three weeks they pick an area of Spokane with the best deals and show between five and eight homes in a two-hour period.
“We want to educate people about what’s out there, what you can get at this price range, and what you can expect if you purchase a foreclosure. It’s an educational time more than anything,” said Carrigan, adding that they often have a lender on hand to help explain the process and banking rules.
Mark Vega went with his daughter on a foreclosure tour in central Spokane.”It was pretty cool,” he said. “My daughter was looking for a house to purchase herself, so it was killing two birds with one stone because we were looking for rentals.” He described how potential buyers met at the first home, received a packet of information and caravanned to each home.
“They kept it timely with not too much time spent in one place. But everyone got a chance to see what was on the market,” he said, noting that the quality varied considerably. “We went from a home over 100 years old and under 50K and there was one home over 300K that we chose to skip because it didn’t fit our criteria.”
Similarly, last weekend the tour started with a $75,000 Spokane Valley fixer and ended at a $1.2 million Liberty Lake showpiece so buyers could view homes at almost every price point, whether they were looking for a residence or rental property.
For Wayne Haas, who has gone on three foreclosure tours, it’s an efficient way to see what’s available. “Instead of calling a Realtor and going onesie, twosie, here is a tour where you can see them all and spend a little bit of time at each one without feeling obligated,” he said.
Of course, viewing foreclosures isn’t like seeing a string of owner-occupied homes.
“It is a little eye opening, the shape of some of these houses” said Haas, describing homes that needed new flooring, paint, fixtures or more extensive repairs. “It’s not like the owners are trying to sell the house and dress it up. People just don’t care when they’re in that position, I guess.”
Carrigan said that’s why it’s always important to get a home inspection, and she cautions buyers to do their research. “Just because it’s a foreclosure doesn’t mean it is a good deal,” she said, noting that the tour focuses on homes that are close to market value or better. “You can find a good deal with foreclosures, but you have to know what you are doing.”
Some buyers, she said, don’t understand that low-ball offers don’t fly and you still need a down payment and good credit to get a mortgage. “We are constantly educating people about that and what makes it a good deal. Just because it’s a bank foreclosure, they aren’t going to give it away. A lot are priced close to market value.”
Carrigan said most of the homes on the tour get multiple offers and sell quickly. When making offers on three different homes, for example, Haas lost each time to higher bids, even when he made a full-price offer. He speculated savvy investors were watching for price drops. “There are investors who are watching these foreclosures. They’re waiting for the right price.”
And for those homes still priced above market value, Carrigan said banks usually drop prices every three to four weeks until the home sells, which continues to negatively impact home values. “The average homeowner can’t do that,” she explained.
“There are a lot of older homes that sold for so far above real and actual value that it is going to take a lot of time to get those weeded out,” said Vega. “There’s a glut from what I’ve seen. It’s really ugly.”
Because they sell so many foreclosed properties, Carrigan said Five Star Spokane has been criticized by some. “We’ve had some negativity that we’re making money off of other people’s misfortune,” she said, adding that they see it differently. “We are trying to get these absorbed and off the market so our market can recover. The faster they get sold the better it is for everybody.”