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VIDEOForeclosure Feeding Frenzy
Auctioneers, tour groups, realtors give buyers the hard sell.
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It's hard to imagine such scenes playing out several years ago, even for those who predicted a housing downturn. Foreclosure sales and tours are being held regularly around the country. This is what fills in as sport these days. Think of it as a different version of March Madness.
The auction in Manhattan presented more than 350 condos, single-family houses and duplexes in the New York metropolitan area and Pennsylvania. A company called the Real Estate Disposition Corp., or REDC, hosted the sale, only its second one in the city. REDC is doing brisk business these days: auctions are scheduled later this month in locations including Georgia, Colorado, Minnesota, Michigan and Puerto Rico.
At the auction Sunday, some homes started at $1,000. The auctioneer described some of them as fixer-uppers with problems like mold, water damage and vandalism. Many buyers paid in cash. Outside, protestors chanted, “Evictions are a crime! It could be your house next!”
I don’t think the protests hold water: These auctions are necessary to sop up the bloated housing supply in this country, which is helping to cause the crisis. Occupying an existing home is a lot more efficient than adding to that glut with a new one from Toll Brothers (TOL) or Pulte Homes (PHM).
In Las Vegas, the choice ticket is a spot on the “Vegas Foreclosure Express,” a four-hour tour of repossessed homes, like a mobile scavenger scouring the wreckage of the housing crisis. The tour was started by American Foreclosure Tours, which is owned by property firm RE/MAX. Nevada is the leading state for foreclosures – in January, 80% of home sales were foreclosed properties, according to the Greater Las Vegas Association of Realtors.
Two local real estate agents, Marshall and Barbara Zucker, observed this groundswell and spent $40,000 on a 24-seater bus to start their own foreclosure tour in Sin City.
“We’re pretty well booked solid,” Barbara Zucker told Reuters. “It’s been really phenomenal. We have people coming in from surrounding states -- Arizona, Utah, Colorado, California --just to take the tour.”
The same can be said for Detroit, a city whose obituary, sadly, seems to have already been written. It's estimated that at least 1,800 homes for under $10,000 are being offered in foreclosure. (The recent median home price in the Motor City is an astonishing $7,500.) In extreme cases, some are being put up for $1.
Local real-estate agents have confirmed that sales of foreclosed homes are booming. Buyers are arriving from out of state and as far away as the United Kingdom and Australia to get in the mix. And many people are buying in bulk, dealing with homes like they are trading cards.
“They're coming to us, saying ‘Look, I want to buy 50, 100, 1,000,’” one Detroit real-estate agent said. “They want to own every decent and cheap house they can find.”
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