Over the past four months, Jesse and Nanette Horn have been trying to buy their first home.
They’ve made offers on five houses — some in foreclosure — but they’re still looking.
“We can’t even get bids put on them before they’re gone,” Jesse Horn said. “Anything that’s priced $100,000 or less is going within a week.”
The couple started out looking in Lakewood, Arvada and Wheat Ridge, but found those homes to be out of their price range — and selling just as fast as those that were less expensive.
They broadened their circle to include Aurora, Commerce City and Montbello.
“We were going to put a bid in for $106,000 for a house that was listed at $99,000, but it already had a contract,” said Jesse Horn, a supervisor in the Stapleton Home Depot’s garden department. “We found one in Aurora that was priced at $69,000, but the Realtor told us we would have to go way above asking price to get our bid selected.”
The foreclosure market may be equally frustrating for investors.
Jan Pollard and his family set a goal to buy 10 houses out of foreclosure by the end of 2008. At the time, that was the most Fannie Mae would allow one entity to have a mortgage on.
“Our plan was to buy distressed properties, rehab them for rent and then refinance them,” Pollard said. “That would give us enough money to go buy the next house.”
But Pollard was only able to buy four houses this year, with the last deal closing in July. He was getting outbid on nearly every home he tried for.
“One house had been on the market for over six months and didn’t have any bids on it,” he said. “We put a bid in on it and all of a sudden it’s got six bids on the same day. I’m thinking that’s not possible.”
In another instance, Pollard’s investment group bid $60,000 for a property, but another buyer bid $60,050.
“This happened not once, but I would say 10 times,” Pollard said. “I know that these Realtors were sitting back waiting for someone to put in a legitimate bid then tell one of their buddies or investors or mother they had a legitimate bid.”
Then, in August, Fannie Mae implemented new rules reducing the number of mortgages one person can have to four, including a personal mortgage.
“We were dead in the water after that,” Pollard said.
Part of the issue for both short sales and foreclosures is that lenders are overwhelmed by thousands of offers every day, said Mike Welk, a Your Castle broker who works with distressed properties. Many potential buyers think they can pay 50 cents on the dollar.
“They’re getting ridiculous offers, but they still have to process them,” he said. “In that sense, I can understand why the process takes so long, but lenders should be hiring more people to cover that workload.”
