Foreclosed home could be a deal if you're willing to work
Podcast Episode
More foreclosures in Rock County means opportunity for some investors. Kyle Geissler reports. You can read more in Monday's Janesville Gazette.
New program
A state organization will announce a new program today to encourage people to buy foreclosed homes in seven counties, including Rock.
The Wisconsin Neighborhood Advantage Loan program will offer loans to buy and repair foreclosed properties, according to a news release from the Wisconsin Housing and Economic Development Authority. Loan recipients must meet income limits, occupy the home as a primary residence and complete repairs within 90 days of purchase.
The property must meet eligibility requirements, and buyers must work through a participating lender.
The organization will accept loan applications starting June 1.
For more information, call 1-800-334-6873 or visit www.wheda.com.
Foreclosure buying tips
Real estate experts offer these tips when considering buying a foreclosed home:
-- Always get a home inspection first.
"It's always good to have a home inspector because we have no idea what went on at that house," said Kris Shear, a local real estate agent who specializes in foreclosures.
-- Be patient. Foreclosure sales don't always run smoothly, Shear said. They might take longer than expected, and unexpected problems might pop up.
-- Be ready to work, or know someone who can work for you. Foreclosed homes often need a lot of repair.
-- Know what you're getting into. For home-buying resources, call Janesville Neighborhood Services at (608) 755-3065 or visit the Wisconsin Housing and Economic Development Authority Web site at www.wheda.com.
Photo
Owner Greg Spors, left, and real estate agent Chris Mayhew check out the kitchen of a Janesville home they’re selling at 532 S. Jackson St. Spors bought the property when it went into foreclosure and rehabbed the home. He’s done the same with more than two dozen properties.
JANESVILLE — They look like great deals—houses on the market for way less than typical homes, some as low as $20,000.
They're foreclosed homes that banks want to sell in a hurry.
But you know what they say...
"Sometimes, if they're too good to be true, they are," said Chris Mayhew, a Janesville real estate agent.
Local housing experts say there are great deals to be had on foreclosed properties in Rock County. But with those deals come challenges, especially when it comes to the condition of the homes.
There are plenty of foreclosures on the market. Rock County foreclosures climbed 34 percent in 2008, and the trend continues in 2009.
Usually, banks buy back the foreclosed properties at auction. Then they try to sell the homes quickly, often at bargain prices.
But the homes often need repair, ranging from minor problems such as bad carpeting to major ones such as outdated electrical systems, unsound roofs or dead furnaces.
Those problems usually fall to the buyer.
"You get what you get, and whatever's wrong with it, it's yours," said Greg Spors, an investor who buys foreclosed properties.
In fact, some foreclosed homes are in such bad shape that lenders won't finance them, real estate agents said. That's why many foreclosed homes are bought by investors with a lot of cash or high credit limits.
Spors, of Janesville, is such an investor.
He's bought about 30 foreclosed properties since 1996, he said. He fixes the homes and then sells them at a profit.
"It's common that they need, a lot of times, major repair," he said. "Furnaces, electrical work, windows, roof. Some of them need all of the above all at the same time."
Spors bought his latest property at 532 S. Jackson St., Janesville, with his parents.
The house was in good shape compared to some properties, but it still needed repainting, a new deck, trim work and plumbing repair, he said.
He now has the home on the market.
Spors has the right idea, said Kris Shear, a Janesville real estate agent who specializes in foreclosures.
"It is a great time to buy (foreclosed properties)," she said. "Investors are going to make a killing in five years when the market returns."
There are opportunities for a first-time buyer to buy a foreclosed home, too, housing experts said, especially if the home is in relatively good shape.
Loren Fellows, a mortgage officer with Evergreen State Bank, Janesville, said her bank generally is willing to finance foreclosed homes as long as they don't have structural problems.
"We don't as lenders dictate the condition the property needs to be in," she said. "Assuming it's structurally sound, we're not going to meddle."
If you do buy a foreclosed home, you might qualify for help with the repairs. The city of Janesville, Rock County, the Wisconsin Housing and Economic Development Authority and the Federal Housing Administration all offer housing-repair loans for people who meet certain income or geographical criteria.
May 13, 2009 at 5:02 p.m.
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wasnt this article in the SUNDAY paper?
the house looks good on the outside too.
GET AN INSPECTION!!!!!!!!!!!! no matter what your "guy" thinks he can find. hire a professional. if you need to know who to call just email me.
http://www.ci.janesville.wi.us/Scripts2/...
May 12, 2009 at 1:33 p.m.
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How does the real estate agent quoted in this story figure invenstors buying now are going to make a killing? I see nothing but more and more homes on the local market and a downward correction in home values with the exodus of local manufacturing jobs continuing to have an effect for years to come as unemployment and benefits run out. What is everyone's take on this? Price appreciation in the next 10-15 years just doesn't seem all that likely to me.
May 12, 2009 at 11:09 a.m.
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i had a permit and a licensed contractor and they did a horrible job ! i won in court but the house is still the way they left it until i hire someone else to fix it. contractors are mostly scum! just like most car mechanics !
May 12, 2009 at 10:51 a.m.
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janesvillian:
If they don't have permits and don't get inspections, the work on the house that was done is illegal. Doesn't matter how "nice" it looks, it is wrong. Insurance doesn't cover work without permits.
May 12, 2009 at 8:26 a.m.
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ihavealife: What website is that? Thanks!
May 12, 2009 at 4:16 a.m.
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I know I looked at a repo out on Sandhill that was about 3,700 sq feet for $90,000 it needed $28,000 work but in a normal market it was $200,000 so I'm thinking about doing it and living in it for 4 or 5 years then banking!!!!!!! I can only hope that our Presidency and Congress are not as Tax Happy as they would be now on my investment!!!!!!!!!!!!!!!!!!!!!!!!!
May 11, 2009 at 11:09 p.m.
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It is a nice. modern treatment. I'm impressed because I don't think most developers would think that a house in the Fourth Ward would sell if it got a "suburb" level redo. But if you save money on the purchase price you have more for the remodel.
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Lord knows it's what I would be doing in this economy if I had the equity to borrow against.
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richardcranium, there were a lot of inexperienced, predator property flippers during the housing bubble. (Remember all the TV seminars on how to become an instant millionaire?) I think right now you're a lot more likely to get someone who's doing it right, and there's nothing here to indicate that any corners were improperly cut. It's a LOT harder to make a lot of money in this environment, so you should be dedicated.
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The biggest problem is going to be waiting for the sale. We just don't know how long until the Janesville housing market bounces back to even where it was pre-bubble.
May 11, 2009 at 8:39 p.m.
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I don't care what anybody says, that kitchen looks absolutely beautiful!
May 11, 2009 at 7:14 p.m.
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Anyone that wants to buy a foreclosure in Rock Co. there's lots to pick from.I was on the site today....4800 plus.Sad, very sad and it's just those that are listed.Some banks don't use the site.
May 11, 2009 at 5:41 p.m.
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BUYER BEWARE OF GUYS LIKE THIS!
I called the City because I knew a new deck required a permit and of course the City has no record of a permit on that property!
Permits are public record. Don't trust the disclosure that they sign saying "no work done without permits". Call the City and check, otherwise you will be stuck if they did a crappy job and there were no inspections.
The State requires that you live in the house if you request the permit. Otherwise you need to be a licensed contractor.. so you might as well stop watching "flip this house".
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