Bank sales bring out bargain hunters
A real estate for-sale sign offers a reduced price in Ramona, Calif.
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Kai Ryssdal: They probably missed the irony entirely, but the International Monetary Fund released its Global Financial Stability Report today. Among other things, the report says the bottom of the housing market is nowhere in sight, but that kind of depends on where you look, because one of every 171 houses in this country is in some stage of foreclosure.
Banks don't want to own them, they want to get rid of them, so they're unloading them cheap and driving down prices. In some areas, that's brought back bargain-hunters and memories of the housing market before the bust.
From Miami, Marketplace's Dan Grech.
Dan Grech: It was yet another abandoned house in the working class neighborhood of Little Havana: A big patio, a shed out back, and a colony of bees in the rafters. When realtor Chris Vane first visited, the grass was three-feet high.
Chris Vane: These bushes here in front, you couldn't even see inside the house. This tree did not have a single leaf on it. It was dead.
The bank wanted to unload the three-bedroom house in 30 days. It was appraised at $350,000. The bank's asking price: $190,000.
Realtor Christina Lopez works with Vane.
Christina Lopez: I was getting 10 to 15 calls a day from realtors as well as just people looking and passing by in their cars, just even walking in the neighborhood.
One of those calls came from 22-year-old Sonia Aguilar. She and six family members were squeezed into two one-bedroom apartments. For months, she had been eyeing that house. She had financing in place. She was just waiting for the price to drop.
Sonia Aguilar: You know when you look at something and you're like, "I want it?" You want it.
Sonia put in an offer. So did six others, including a woman Sonia met at an open house.
Aguilar: I'm like "Oh God, I hope they don't have more money than me."
Grech: Did you look her up and down?
Aguilar: No. Well, yeah. Yeah, yeah, I had to. I was trying to see what kind of people they were.
In markets around the country, prices are plummeting. Buyers are beginning to worry that if they wait too long, they could miss the best deals.
Realtor Lisa Thomson specializes in foreclosed properties for Coldwell Banker in Pinecrest, a tony suburb of Miami. She says if the price is right, a home can sell within hours.
Lisa Thomson: The other day we had a foreclosure property that we had on the market that was about 40 percent under appraised value. And it was on the market for one day, and we had eight contracts come in on the property. And it sold $35,000 over asking price.
Multiple offers and bidding wars remain the exception, but the deadlock between buyers and sellers has been broken by banks. Foreclosure sales often reset home values in an entire neighborhood. Thomson says that forces stubborn sellers to be realistic.
Thomson: What we do is we kind of flashcard them. We say, "Look, at the price that you want, this is what you could get. Would you buy your house or would you buy this house with marble floors, has an additional 1,000 square feet and it has a pool?" That makes them realize actually what their house is worth.
Sellers will be looking at a lot more flashcards. Experts predict a million new foreclosures in 2008. That could produce more small buying frenzies as bargain hunters move in.
Thomson: I was just speaking with an investor out of California yesterday and he said that banks are just dumping properties. It's literally all over the country.
That doesn't mean banks are giving houses away, and tight credit will keep many buyers on the sidelines.
In South Florida, 33,000 homes were up for sale in May. Fewer than 900 changed hands. One that did sell was the house in Little Havana. Realtor Christina Lopez says the winning bid was the asking price.
Lopez: I called her and I said, "Sonia, are you sitting down?" and she said, "Yes." I said, "Guess what? Your offer was accepted." She screamed. She goes, "My prayers have been answered!"
The Aguilar family is fixing up their new home. Sonia's husband is refinishing the walls. Outside, her father is trimming the bushes with a machete, as is the custom in his native Honduras.
This abandoned house is coming back to life. Even that dying Royal Poinciana out front is in bloom.
In Miami, I'm Dan Grech for Marketplace.