Taking a house-hunting tour - of foreclosures only
A pursuit once deemed distasteful loses some of its stigma.
CHICAGO - The yellow-and-orange bus would stand out anywhere, even without the giant letters proclaiming its purpose: RepoHomeTourChicago.com. A handful of buyers have shown up to board the 12-seat shuttle, parked at a suburban shopping mall in the drizzle of a gray Saturday morning.
As they take their seats, the home shoppers are handed a slick binder listing the repossessed properties they will see in the next 21/2 hours. "Welcome to Chicagoland's Premier Foreclosure Tour," it says. "Today we visit Hoffman Estates and Schaumburg." A few minutes after 11 a.m., they're off.
Not long ago, many people viewed shopping for a foreclosed home as a distasteful act - taking advantage of someone else's misfortune and misery. As thousands of distressed properties have glutted the market nationwide, driving down home prices for the first time in quite a while, that stigma appears to have greatly lessened, or maybe disappeared.
Chicago-area real estate broker William Diehl is hoping the demand for bargain homes is as strong here as it is in places such as California and Florida, where foreclosure auctions and bus tours have drawn eager crowds.
"It's a buyer's market. They've waited a long time for it," said Diehl, who joined with fellow ReMax agent Matt McCarthy to create RepoHomeTourChicago.com.
"The reality is simple," he says. "This is going to be a great tool to get buyers back into the marketplace."
Diehl decides to address the uncomfortable issue before it even comes up. "Everybody wants to know where the people in the house went," he tells folks on the bus. "We don't know. Unfortunately, it's a national trend."
One rider, Pam Simpkins, is more than ready to move back into the market. She owned a home when she was married, but since her divorce has lived with her father in Streamwood, Ill. She is looking for a townhouse she can afford on her own.
"I'm looking to buy. I'm willing to low-ball and see what happens. You can only try," said Simpkins, who brought along a friend and coworker to help her evaluate the properties. "Absolutely, it's a huge opportunity. It's a great market for me."
Dorothy Piotrowski has a different motive. She is looking for a low-priced property, in the range of $200,000 to $250,000, that she can quickly rent out to earn income.
"I have two children that I want to put through college. I figure you can't lose with real estate," Piotrowski said. "It would be my first investment. It's a great time to buy."
First on today's tour is a two-bedroom, one-bath condo with attached garage in Schaumburg that has been foreclosed on by a bank. List price is $159,000, although no one is likely to pay that. When it comes to foreclosed real estate, buyers are comfortable offering 10 percent to 20 percent below list, offers that might offend individual homeowners.
The condo doesn't show particularly well. The doors on the kitchen cabinets are missing, and there's a cutout in the drywall of a second bedroom exposing a pipe, which suggests some kind of problem in the recent past.
Still, the consensus seems to be it's not a bad price, plus there's a walk-through from the garage to the condo and a common swimming pool.
The second stop is a single-family home in Hoffman Estates built in 1960, with three bedrooms, two baths and a price of $264,900.
This house is a short sale, in which the homeowners still own the property, although it's worth less than the mortgage debt owed. In a growing number of cases, lenders are allowing owners to sell properties for less than the outstanding mortgage because it saves the time and expense of a foreclosure.
As the bus moves from home to home, mortgage broker Richard Kimball, who made a financial contribution to the tour in hopes of lining up borrowers, offers a short course on financing a foreclosed property.
"A lot of these properties won't qualify for traditional financing. Foreclosures aren't the nicest houses," he warned. "Some things like kitchen cabinets may have grown feet and walked away. Make sure your bank can do a rehab loan. If not, you may need to switch lenders."
Kimball thumps a long flashlight into his hand - a must for shoppers of foreclosed properties, he said, because often the power has been turned off, and sometimes wildlife is in residence.
A Schaumburg three-bedroom, two-story home on the tour is listed at $310,000, down from the original asking price of $379,000. Another Schaumburg two-story sold for $440,000 in 2006. Now owned by a bank, it is listed for $320,499.
A few days later, Diehl and McCarthy said they were very satisfied with the first tour. For a second, all-condo tour in downtown Chicago, RepoHomeTourChicago.com insisted that potential riders be prequalified by a lender.
"We want to make sure the people are really serious about buying a home," Diehl said.