Investors Find Silver Lining in Real Estate Market
Buyers are increasingly looking at foreclosure auctions during the market slump.
Nov. 2, 2007 — -- The news about the U.S. housing market has been pretty bad -- foreclosures are up at twice last year's rate, affecting one in every 196 households.
But for an intrepid group of investors and prospective homeowners, foreclosures spell opportunity.
"When we get this wave of foreclosures due to the collapse of the subprime, more consumers start looking at foreclosed real estate auction markets as an avenue for taking advantage of the market," said Crystal Wright, a representative of Hudson & Marshall, one of the largest real estate auction firms for foreclosed properties. "It's the silver lining in a depressed real estate market for the average real estate buyer."
Home auctions, held throughout the country, resell properties that have been repossessed by banks when owners fail to make good on their mortgages. That's been happening at a record clip as homeowners with spotty credit who bought with little or no money down have had their adjustable rate mortgages increased beyond what they can afford to pay.
And because lenders want to avoid the cost associated with holding on to an empty home for months, they are more willing to lower the asking price in order to sell it quickly. In turn, buyers are finding firesale prices at foreclosure auctions.
"There is some positive in the whole doom and gloom of the housing market, in that buyers who have been shut out of the market in the last five years now have an opportunity to buy a home and realize the dream of ownership or upgrade to bigger homes," Wright told ABCNEWS.com. "And nobody likes to see a home on their block sit empty."
Business has been better than ever lately, thanks to buyers who realize this as their chance to invest, said Robert Friedman, chairman of the Real Estate Disposition Group, a firm that organizes foreclosure auctions.
"It's a rare situation where rates are low and prices are low," said Friedman. "There's just a lot of lenders out there with a lot of inventory that they'd rather sell at a low price quickly, so they're using the auction method. This is a fantastic opportunity for [buyers]."
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