“Avocado green and rust orange will come back in style one day,” realtor Jason Gaia jokes as a handful of people reboard the passenger van.
They have just emerged from a foreclosed home — now being sold by a bank — with orange shag carpet and the previous owner’s dated floral curtains.
“With foreclosures, you want to look at the bones of the house,” Gaia says. “There’s always going to be something cosmetic.”
Last week, Gaia led (and played bus driver for) a tour of foreclosed properties across the Memphis area. As foreclosure rates have skyrocketed across the country, realtors and others have started doing similar tours to show potential homebuyers foreclosures.
Along for the ride were a loan officer, a contractor, and three prospective buyers. The tour was supposed to have as many as 15 buyers, but the impending inclement weather kept many people away.
“We get a lot of calls from people looking for deals,” Gaia says. “It’s the basic laws of marketing: supply and demand.”
Banks don’t publish a lot of information about foreclosures — sometimes not even a picture — so seeing the houses is a must. Of course, since most of them don’t have electricity, you need to go during the day.
Any house can become a foreclosure. Participants on Gaia’s tour saw a range of homes: a cozy High Point Terrace house built in 1948 and selling for $82,900, a three-bedroom, three-bath “Tuscan villa” in unincorporated Shelby County for $209,900, and a suburban zero-lot-line cottage with the electricity still on but the garage door missing.
“I’ll give you a tip,” Gaia says. “Wear a jacket. Vacant homes are always cold.”
Though many people assume buyers of foreclosed properties buy them as an investment, all of the potential buyers on the bus tour were looking for a home.
They were with the right tour guide. Six years ago, Gaia bought a foreclosed home with a hole in the roof to live in.
“You can get some great deals, and sometimes you get what you pay for,” Gaia says.
At one property, built in 2006, the list price is $148,000. It’s a three-bedroom, three-bathroom in a nice suburban neighborhood. When the original owners bought it, they paid $190,000. They had a second mortgage, but it’s the primary mortgage lender that foreclosed on it. Thus the bargain price.
The house had been on the market for 18 days and is a beauty. There’s no sign of anything that sometimes mars foreclosures: no pulled copper wires, no pests, and no damage.
“Foreclosures are not an overnight process,” Gaia says, allowing plenty of time for things to happen to the property. Foreclosures also mean a person or family displaced from the house.
“People get angry. They say if they can’t have this, no one can,” Gaia says. “I’ve gone into some houses and they’ve dumped a pile of dirt on the floor or they’ve taken a hammer and destroyed the cabinets.”
Sometimes the only difference between buying a house from another homeowner or from a builder is that it will often take banks longer to respond to an offer.
“It has to go before a review board with the banks,” Gaia says. “I’ve had situations where banks have responded quickly, and I have one we’ve been working on since December.”
But Gaia says that banks are also more willing in recent months to work with homebuyers. One of the houses on the tour offers to pay closing costs for the buyers.
Buying foreclosures can be a good deal for a homeowner, but it can also be good for an area as a whole.
“If we can start getting rid of some of the vacant homes in neighborhoods, it will help property values and stabilize the market,” according to Gaia.
Gaia’s next foreclosure tour will be April 4th. Though the first tour covered a wide area of Memphis, future tours will focus on a specific neighborhood.
For more information on future foreclosure bus tours, call (901) 259-7837.
