WRAL : People are taking bus tours of foreclosed homes.. (Raleigh: for sale, real estate market)

[weluvwakeforest]

Buyers look to foreclosed homes :: WRAL.com


People tour a foreclosed home on Feb. 21, 2009. The bus tour of foreclosed properties was created by realtor Jeanna Reeves.

I never heard of this before. Not sure what I think.

[ss20ts]

TLC/HGTV - one of them - has a reality show based on bus tours of houses on the market. It's a very odd concept to me. Who wants to view a house with a bus load of people? It can get ugly when someone wants the house and others do to. It's just strange.

[North_Raleigh_Guy]

Nothing new here. Realtors have been doing tours of homes with groups even before the housing downturn. Just look on meetup dot com. Lots of realtors do social networking with first time homebuyers new to the area where they get a group together and tour areas of the Triangle. It's just another marketing tool. The foreclosure tour is just another twist on an existing practice. Unfortunately I think some people (especially first time buyers) looking at foreclosures don't have a full grasp of the challenges that can come with trying to buy one. If you know what you are doing and have good cash reserves it may be a great option. If you don't know what you are doing it could be one of the more expensive ways to purchase a home.

FWIW, the article in the OP is pretty light on substance and the author (of the article) has a poor grasp on local real estate concepts. You can tell by how they point out the "list price vs. the tax assessed value" of a home on the tour as if that means something. It doesn't and is irrelevant as to whether the home is a “bargain” or not. If a person doesn't get that concept they probably shouldn't be looking at foreclosed homes in the first place.

[Bill Hitchcock]

Hey North Raleigh Guy-Kudos! Very wise and true words & I hope folks adhere to them.
Bill

[boocake]

Originally Posted by North_Raleigh_Guy

FWIW, the article in the OP is pretty light on substance and the author (of the article) has a poor grasp on local real estate concepts. You can tell by how they point out the "list price vs. the tax assessed value" of a home on the tour as if that means something. It doesn't and is irrelevant as to whether the home is a “bargain” or not. If a person doesn't get that concept they probably shouldn't be looking at foreclosed homes in the first place.

I'd 100% agree with that if it were not for the fact that Wake County was very recently reassessed. Now, I know that even so, the tax value is still not exactly what you should expect to pay for a property and is not the same thing as an appraisal, but I've been doing a lot of looking at the Wake County real estate tax website and have noticed that the values right now are pretty darn close. If anything I'd say they tend to be a bit HIGHER than what the sellers are asking. So, if a home is assessed at 400-something and has an asking price of 200-something, I'd say, while not a guarantee, that has the potential to be a good deal unless it's a brand new home or something out of the ordinary that would cause the assessed value to be way off. Even in that case, though, the tax value is usually just based off the lot itself so the value is much lower than it should be. So, those numbers would definitely pique my interest if I was looking in that area.

The tour though, I agree is just a gimmick to draw in clients based on what people are seeing on the news and HGTV or whatever. I know these things are very popular in places like Florida. I don't think the foreclosure market locally is anywhere near bad enough to really support something like that. 57 people went to see 5 homes?

[weluvwakeforest]

According to wake.gov, one of the featured f/c property in Crenshaw Hall recently sold for $384,500 and is now being listed for $280,000? The home has 3600 square feet. The tax value is $418,000.

I haven't had a chance to verify the information for the featured home in Heritage but I plan to F/U later today. I do know there are a lot of homes for sale in Heritage, but then again it is a huge neighborhood.

Once these homes sell, won't the low selling prices hurt resales in the neighorhoods? Or are home prices falling so quickly it doesn't matter?

Depressing.

[GucciLittlePiggie]

i wish this was happening 5 years from now so i could buy a bargain house. i'm sure that's selfish, but right now i am not in the position to be purchasing a home, but it seems like a heck of a time to be a buyer...

[Charlton Dude]

Originally Posted by weluvwakeforest

Once these homes sell, won't the low selling prices hurt resales in the neighorhoods?

I may be wrong on this, which would be a first, but I think foreclosures are not counted the same way or at all into the appraised values of homes. However, that may be a onesie twosie thing and if the majority are foreclosed, that may be a different story.

[anothertntony]

Originally Posted by GucciLittlePiggie

i wish this was happening 5 years from now so i could buy a bargain house.

It is entirely possible that the housing market will not have recovered its previous highs five years from now. Bubbles tend not to be surpassed for decades. The NASDAQ is sitting at about 1440 after hitting 5000 in early 2000. The NIKKEI 225 (Japanese stock market index) is even worse: it is near 7500 after hitting almost 39000 in late 1989. That is an 80+% decline after two decades in one of the worlds strongest economies. Their real estate market followed suit: there was a brief price increase in 2007, but otherwise their real estate has gone downhill since 1990. Do you remember when people were afraid that Japan was going to buy up all of the commercial real estate in the US?

There seems to be a widespread belief that the real estate market will start to recover this year. That is certainly possible, but nobody really knows. It is also possible that real estate will decline or stay flat for decades. Look up the phrase "zombie companies". Japan created them in the early 90s because it feared letting large banks and companies fail; we are creating them now.

For example, see:

Japan's zombie economy - not buying but browsing | Business | The Guardian

This paragraph is especially relevant:

"But traditional Keynesian remedies do not work in Japan either - the substantial public spending packages rolled out by Tokyo throughout the 1990s have left the country saddled with the highest debts of any major economy. Worried that the government will not be able to afford to pay for their future pensions, Japan's ageing population prefers to save rather than spend."

[wheelsup]

Also something to consider, I looked at a few foreclosures and they were trashed inside. Needed around $30k in work themselves and that was on a $150k house.

Homes that were bought for $250k+ were outside what the average population in and around the Triangle could afford. You'll continue to see price declines on those homes IMO. Homes in my neighborhood were selling for $200k at the peak and have declined around $20k-$30k since then but the value has been steady over the past 6 months or so.