Many buyers looking for foreclosure deals are finding Internet research tools misleading.
From an Inman News article posted on July 7, titled When Prices are Too Good to be True, by Matt Carter:
“A constant stream of headlines about rising foreclosures and falling home prices in many U.S. markets might lead bargain hunters to believe that there are some incredible deals to be had out there….
Is the housing downturn so bad that you can now swoop in and buy a house in Hermosa Beach, Calif., for less than $100,000? A search for foreclosure properties on Trulia — which puts the average sale price of a home in the coastal city at $1.67 million — might lead you to believe that the answer is yes.
The problem is that most, if not all, of these properties aren’t officially on the market. They are “pre-foreclosures,” meaning that their owners have defaulted on a loan, prompting a lender to begin the foreclosure process.”
“Pre–forclosure” lilstings do not only artificially inflate the numbers of available listings for a particular area…
“The reality is that the majority of homes that start the foreclosure process never complete it. The borrowers refinance, catch up on their payments, or do something else to avoid foreclosure.” – Brad Geisen, the founder and chief executive officer of Foreclosure.com
…they also grossly misrepresent the prices.
“They may represent the amount outstanding on the loan that’s in default — sometimes a relatively small second loan — or the amount that the borrower is in arrears. Real estate agents, investors and sophisticated buyers will know that it’s impossible to buy a house in Hermosa Beach for $4,712. But first-time home buyers may miss the fine print on sites like Yahoo and Trulia that explains that this is not the home’s listing price — and that the property may not even be for sale.” – Matt Carter, Inman News
“If you are looking for the best deal… contact a Realtor!”
Doug Birnbaum, a Realtor with Veranda Homes in Costa Mesa, Calif., said he recently fielded a call from a client who saw what she believed was a listing for a four-bedroom house for $100,000.
“In Costa Mesa, there’s not going to be a four-bedroom for less than $350,000,” he said. The $100,000 figure “could have been the second mortgage in default, “Birnbaum said, but “the Web site was so misleading I never actually figured out where the property was — there was no address, just an intersection.”
That experience led Birnbaum to post a warning on Trulia Voices, titled: “RealtyTrac, are the prices too good to be true?”
“It appears that ReatlyTrac is posting homes on Trulia for shockingly low prices, “Birnbaum wrote. “Now what these prices actually reflect is the dollar amount of one of the liens on the home. This in no way reflects … the true value of the home. If you are looking for the best deals in this red hot market, contact a Realtor!”