Real-estate broker Sarah Hays’ phone started ringing off the hook when the for-sale sign went up in front of a foreclosed home she represents in old Lafayette.
“The property was one of the worst I have ever seen. I thought this was something that was going to be very difficult to sell,” she said.
What Hays, who works for Metro Brokers Colorado Investors Real Estate Services in Denver, didn’t appreciate was the appeal that a 100-year-old home in Boulder County has for renovators.
Hays has another problem: Freddie Mac, which controls the home, hasn’t provided her with a listing agreement or a price.
She keeps adding eager bidders to a list about 10 names long as she waits.
Coloradans handed over more than 25,000 homes to lenders last year after failing to make their mortgage payments. Several thousand more sold their homes for less than what was owed on them in “short sales.”
Despite the glut of distressed homes on the market, real-estate experts contend that buying a bank-owned home is not as easy as it should be.
Bob Costello, managing broker with Foreclosure Brokers in Littleton, placed a full- price bid of $67,000 on a foreclosed home in the Fitzsimons neighborhood for a client.
And then there was nothing. For three months. Despite numerous calls pleading for a response. The bank eventually accepted the offer, after the frustrated buyer had moved on. The home is now back on the market for $57,000, Costello said.
Brokers who list homes on behalf of lenders said that turnaround times of three to five days are more the norm.
“Most lenders are really pretty good about getting an answer within three business days. It behooves them to sell these assets,” said Matthew Revitte, who sold more than 300 bank-owned homes last year with Pro Realty in Greeley.
Lenders are so overwhelmed that purchases might not be completed on a schedule that buyers are accustomed to. But they are going through.
Tips for buyers
Real-estate experts give some basic advice to buyers interested in foreclosures: Expect the home to be in worse shape than you imagined, have your financing in order ahead of time, and be prepared to both wait and act quickly.
Buyers should also work with a real-estate professional who understands foreclosures and the neighborhoods they are in.
Although bank-owned homes are discounted, it is usually for a reason. Banks typically try to get three expert opinions on what a home might sell for.
“Banks are not in business to give away properties and go broke,” said Greg Radziewicz with Radz Real Estate LLC in Thornton.
Buyers who don’t appreciate that will make serious financial mistakes, he said.
A homeowner who didn’t make the mortgage likely didn’t have money to spend on repairs and maintenance.
Some are so upset about being forced out they sell off appliances and vandalize the property.
“You are going to get a house that hasn’t been cared for,” said Phyllis Perkins, a broker-owner with Metro Brokers Perkins Real Estate in Fort Collins.
Don’t expect the bank selling the property to engage in the normal niceties of a seller — like replacing the garbage disposal or water heater.
Other hurdles
There are other hurdles buyers can expect. Some banks that own the properties require buyers to prequalify with them, even if their own bank has agreed to fund the purchase.
The lenders are hoping to get the loan, but they also want to make sure buyers are creditworthy in an environment where qualifying for a mortgage gets tougher with each passing month.
Depending on the home in question and how well the bank has priced it, buyers can expect either a lot of competition or none.
Geography matters too. Trying to land a bank-owned home in Highlands Ranch is a different exercise than getting one in Aurora, where foreclosures are numerous. In a high-demand area such as Highlands Ranch, foreclosures are rare and likely to be snapped up quickly when they do appear.
Costello said as a rule of thumb, lenders want full-price offers the first month a home is on the market.
After 30 days, they will consider a 5 percent discount, and after 60 days they get anxious.
Buyers who don’t place a lot of contingencies on a purchase, such as selling an existing home, are at an advantage, said Duane Duffy, a broker with Duffy & Associates LLC in Littleton.
When it comes to buying foreclosures, especially government-owned homes sold in online auctions, be careful of other bidders who have no clue what they are doing, Costello cautioned.
Many HUD homes are being bid up way beyond list price and what they can sell for once repairs are taken into account — a good deal for taxpayers but not for buyers.
“Take the emotions out. Go in and make a reasonable offer,” Costello said. And realize there will be plenty of other homes if your offer is rejected, he said.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
