AS the housing market shudders through another year of eroding prices, second-home buyers are finding a silver lining in the hundreds of thousands of foreclosures that now dot popular communities throughout the Sun Belt: bargains.
David and Susan Odell outside one of two town houses they recently bought in Park City, Utah. Both properties, which were sold by a bank, had been in foreclosure.
The sheer volume of foreclosures has pushed such sales from a somewhat arcane sideline into the real estate mainstream. And far from being rundown or neglected, many vacation homes now in foreclosure are just a few years old, with amenities like pools and high-end kitchens that appeal to second-home buyers.
Finding and buying a foreclosed property is easier, too, thanks to a wealth of online tools and a growing familiarity with the process among banks and real estate agents.
“It’s not an incidental thing anymore,” said Ruth Ahlbrand, who, with her husband, John, owns ReMax Central in Las Vegas. The agency has 200 bank-owned properties among its listings and a team of agents who deal in foreclosures and distressed property. “It’s become a business that banks and the real estate industry have invested in to make work more efficiently,” she said.
Las Vegas, which lured second-home buyers during the housing boom with a wave of high-rise condominiums and new developments outside the city, has become something of the ground zero of the phenomenon. In January, nearly 80 percent of residential sales were foreclosures, according to the Greater Las Vegas Association of Realtors. The city’s well-publicized foreclosure bus tours attract second-home buyers not only from around the United States but from Canada and Europe as well.
Susan Milliken and her husband, Bill Golberg, had been monitoring prices in the Las Vegas area from their home in Vancouver, British Columbia, and decided to take the plunge last summer, buying a 1,160-square-foot bank-owned foreclosure in the Sun City Anthem development, just outside Las Vegas, for $180,000.
The two-bedroom, two-bath home, which the couple plan to use a least six months a year when Mr. Golberg, who is 62, retires, had previously sold for $285,000. Ms. Milliken, 54, estimated that the property’s being in foreclosure probably saved them $50,000.
“The prices were just so much lower here than in Vancouver,” Ms. Milliken said.
Last year, more than 2.3 million properties in the United States received a default or auction notice, or were seized by lenders, an 81 percent increase from a year earlier, according to RealtyTrac, which collects default data. Of those properties, about 580,000, or a quarter of the total, were in Florida, Arizona and Nevada, prime second-home locations.
And while the market for foreclosed properties has traditionally attracted savvy professional investors, said Randy Paun, a real estate agent in Pensacola, Fla., buyers who plan to keep and use their properties as second homes are becoming more and more common.
“We are seeing many more family buyers going this route,” said Mr. Paun, who said his business was now almost entirely foreclosure related. “Now it’s individual buyers looking for a deal.”
Instead of poring over default notices at the local county courthouse, buyers can turn to a crop of Web sites including RealtyTrac.com, ForeclosurePoint.com, ForeclosureS.com, Zillow.com and others that provide full property details as well as maps and satellite images.
Real estate experts caution that the abundance of foreclosed properties and the ease of finding them online does not guarantee a bargain. Depending on the type of foreclosure, some deals can involve a degree of risk and frustration, especially for the second-home buyer, who may be negotiating the purchase from a different part of the country.
“Ignorance is definitely not bliss when you are buying a foreclosure” said Alexis McGee, president of ForeclosureS.com. “Above all, don’t pay market price,” she said. “There is no point in going to all this trouble if you are going to pay market price.”
The level of difficulty is often determined by the type of foreclosure. Foreclosures generally find buyers in three ways: through a preforeclosure sale; through an auction; or through real estate agents who work for banks to help sell portfoli
os of seized property.
In a preforeclosure sale, the homeowner is usually in arrears and is trying to sell the property before it is seized by the bank. A buyer who steps in at this stage can often find a bargain but may have to negotiate with an often distraught property owner. And if the price turns out to be less than the bank is owed, called a short sale, the lender must also agree to the deal, which may take 60 to 90 days.
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