Archive for the 'Foreclosed Homes' Category

Foreclosed houses caused huge losses in the home building industry across the country, but ironically in Lee County, Florida, these same houses have been helping home builders survive the downturn.

In Lehigh Acres, where foreclosures pulled down the median home sales price to only $55,500 in 2009 from the $237,965 median peak in 2006, home builders have been fixing foreclosures and reselling them to continue giving work to their employees while waiting for the time when they can build new homes again.

Advantage Builders and American Dream Builders have been fixing foreclosure properties for owners or have been selling bargain properties in the area. Once in a while, they get calls for the new homes they constructed before the housing meltdown. They have not been staffing their model homes because fulltime work for selling the new homes has been a losing proposition.

Executives from ten firms which have built houses in Lehigh Acres hope that in the next few years, the number of foreclosure properties drop and resale home prices increase so that they can begin building again.

Fort Myers builder Ray Scalero said that his firm was selling about 40 new houses per year in Lehigh from 2004 to 2006. Now, all home builders in the area cannot compete with bargain-priced foreclosed houses. He said that the cost of permit fees, impact fees and builder insurance already equal about 25 percent of the price of a pre-owned house, excluding the cost of the land and construction.

According to real estate executive Bob Oxnard, of the more than 4,600 single-family houses sold in 2009 in Lehigh Acres, almost 76 percent were foreclosures, the price median of which was $54,000.

During the boom in 2006, the median price for single-family houses in Lehigh was $237,965. It dropped in 2007 to $200,000 and plunged steeply in 2008 to $94,000. Last year, the median was only $55,500, just $1,500 above the foreclosure median sales price.

KenMark Construction, meanwhile, has been doing remodeling, extensions and steel buildings while waiting for better times. Cypress Homes, which sold about 75 new houses in 2006, has accepted nonresidential projects such as constructing the $7.5-million church building of the New Life Assembly of God over 15 months.

According to Jim Boggs, owner of Cypress Homes, it is not practical to build homes at a cost of about $130,000 per unit when existing homes and foreclosed houses can be purchased at half the price.

A foreclosure home for sale has been a means of recovery from financial difficulty for Bay Area real estate flippers Michael LaOrange and Steven Burris and broker Christopher Stafford.

According to San Francisco-based LaOrange, he has purchased and resold two distressed homes last year, after he decided to take advantage of the foreclosure market when he could not get work in the accounting world.

His partner, Burris, also turned into real estate when he lost his job in 2008. LaOrange added that he and Burris are not the same as other flippers who quickly buy bargain-priced foreclosures and just as quickly sell them at a profit. A big part of their success is their willingness to fix and renovate properties before selling them.

LaOrange is fortunate because he is able to borrow money from his mother when he and his partner need to buy in cash. He and Burris made around $25,000 on the first house they bought and resold. The second house they bought made them more money – around $40,000. They bought a foreclosure home for sale in a good neighborhood in Santa Rosa for $239,000, renovated it and then sold it in five days for $275,000.

The partners lower their investment risk by buying mostly from banks, which give them the opportunity to inspect first the properties before finally signing the purchase contract.

For prospective investors thinking of buying at foreclosure auctions without first inspecting the properties, auctions are being held by courts and trustees in the Bay Area. But according to LaOrange and Burris, they need to do their homework before plunging into the foreclosure buying and selling business.

San Francisco-based broker Stafford is another real estate professional making money from foreclosures. He said that 2009 was his best year, posting his highest sales number in his 17 years in the real estate sector.

Stafford has sold bank repossessed houses in San Francisco and in East Bay, including one bank owned Danville home that was considered wrecked, but was fixed and resold for $1 million.

According to Stafford, LaOrange and other investors, there are still a lot of foreclosure homes and distressed homes in the portfolios of banks, which are waiting for the right time to release them. So anyone who is able to duplicate what LaOrange and other flippers are doing can earn money from a foreclosure home for sale.

The continued rise in foreclosure properties has been hurting condo associations throughout Florida, according to Fort Lauderdale-based Becker and Poliakoff, a law firm helping homeowner associations.

Condo complexes are now being forced to cut amenities and to impose higher fees on condo owners as the rising number of foreclosed condo units has been creating severe deficits for condo associations. Banks and mortgage firms are also contributing to the problem as they delay final foreclosure procedures to avoid paying condo association dues.

Banks have also been tightening their lending policies on condo purchases. They now refuse to lend when over 50 percent of units in a condo complex are being rented, when condo owners do not have adequate reserve funds, when many condo owners are delinquent on their association dues or loans and when many units are owned by a few investors.

Real estate brokers specializing in condo units complain that banks are worsening the foreclosure situation involving condos. But Anthony DeMarco, government relations vice president for the Florida Bankers Association, explained that banks have been losing money too and that banking regulators have required them to be strict in their lending activities. Additionally, bankers said that the foreclosure process in the courts takes too long they cannot legally take back their foreclosure properties at the expected time frame.

According to Rich DiBello, rental manager for Villagio Condominiums, banks have been using all strategies to avoid assuming their responsibilities as owners of foreclosed units.

Most of the condo complexes currently suffering from foreclosures are those that were built or converted into condos from 2004 through 2007. These complexes were products of heavy speculative buying, according to analysts.

At the 42-unit Waterside Condominiums in Charlotte County, 74 percent of buyers abandoned their units, leaving only 6 owners to pay monthly expenses totaling $8,000 and a yearly insurance bill of $16,000. The six owners had to increase their monthly fees to $500 each and to pay an assessment of $1,800 each.

At the 320-unit Villagio condo complex in Sarasota, over 40 buyers abandoned their loans and their units when the housing market plunged. These buyers were able to purchase units as lender Countrywide Mortgage allowed them to buy with zero or minimal down payments.

Among Florida condos suffering from foreclosure properties are the Las Palmas in Sarasota with 105 foreclosures, the Town Park Village at Lakewood Ranch with 143 foreclosures and the Cortez Palms at Bradenton with 97 foreclosures.

Orlando foreclosed properties and other foreclosures in Florida account for 29 percent of the $3.2 billion bad loans and assets of Ohio-based Fifth Third Bank as of September 30 despite the fact that total loans provided by Fifth Bank in Florida account for only 10 percent of the bank’s loan portfolio.

Los Angeles foreclosed properties contributed to the $60.8 billion in home values lost by property owners in the metro area during the 11-month period ended November this year, according to a real estate company.
The property loss in Los Angeles was higher than losses in any other metro area in the country during the period, [...]

Foreclosure houses on sale and distressed properties for sale currently account for more than 50 percent of all residential units for sale in the Alabama Gulf Coast counties of Baldwin and Mobile, according to members of the Baldwin County Association of Realtors.

Negotiating foreclosed property sales in the Treasure Coast has been a mixture of exhilaration and discouragement for buyers and real estate agents over the past months as various factors come into play in the Treasure Coast housing market.

A foreclosed property for sale in Sarasota can be turned by a buyer into a vacation home as the city of Sarasota is a favorite destination for families and individuals looking for sparkling beaches, clean air, beautiful weather and other tourist spots.

Charlotte foreclosed properties dropped in number in September, but may rise again if unemployment in the area situation does not significantly improve, based on data from the realtor association of Port Charlotte, Punta Gorda and North Port.

A portion of the Woodstock Station housing development project in Illinois is facing public foreclosure home auctions. The undeveloped portion of the project has been foreclosed by the Barrington Bank.