Subprime Meltdown Makes Foreclosure Websites Great Places To Shop

If you’re ready to buy a home and don’t mind a little ghoulish bargain-hunting, now is a great time to hit the various foreclosure sites online, reports Reuters. “Large real estate sites such as PropertyShark.com and RealtyTrac.com showcase a growing number of U.S. properties in pre-foreclosure and foreclosure.”

RealtyTrac says traffic to its site has tripled to about 3 million unique visitors every month from 1 million just two years ago. It estimates as many as 40 percent of visits come from first-time home buyers rather than investors or brokers.

Yahoo Real Estate saw a fivefold increase in traffic to its foreclosure listings since it expanded the site last year.

“There are a lot of people who have been priced out of the market and they’re seeing their rents go up,” said Rick Sharga, vice president of marketing at RealtyTrac. “Probably until next year, the level of foreclosure activity will remain at historically high levels.”

“Foreclosure Web sites expand audience” [Reuters]
(Photo: Getty)

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  1. laserjobs says:

    It is way too early in the game to be buying. New home builders are sitting on mass amounts of inventory and the foreclosure mess has just started with ARMs peaking out in 2009. It will take years for this to play out so go grab some popcorn and do your homework.

  2. dirtleg says:

    If I were independently wealthy, or if I had the disposable income, or if I felt secure in my employment in this crappy economy, I would definitely be looking to take advantage of some poor schmuck’s misfortune in being in way over his head. But alas, I have none of the above.

    Nuts.

  3. Kevin Cotter says:

    Those sites want you to register and give credit card info. This site:

    [www.biggerpockets.com]

    Lists all the banks that lists their foreclosed properties.

    Kevin Cotter
    [velcroman98@googlepages.com]

  4. humphrmi says:

    @laserjobs: Depends on how far out your horizon is. Home builders have lots of inventory now, but are well known for trying to screw people. I think when the demand comes back, it’ll come back to late-model-but-not-new homes first. There’s a lot of pent-up demand and rents are skyrocketing. Something’s got to give soon.

  5. Me - now with more humidity says:

    Start buying now, but ONLY if you can buy at half of market value or less. Don’t be afraid to lowball. Make lots of embarassing offers.

  6. V-effekt says:

    “Great places to shop” is misleading. Banks wont generally sell for “half of market value” on properties they own. They have a big interest (pun intended) in getting a return on their $$$. I can see it now, new info-mericals. How to make $$$$ on forclosures and the subprime meltdown. Just send $39.87 to the following address. Suckers like that at sherrif sales have been trying for years.

  7. Nighthawke says:

    Start shopping, but be wary if things bounce, those prices will double up on you, especially if the local taxing authority decides to get frisky and doubles the property assessment.

  8. brennie says:

    @humphrmi:I’m not seeing any of that in my market. I’m a long time L.A. renter. Rents are about the same for the last couple of years and it is going to be WAY cheaper to rent than own for some time to come here. Did you see the poll where over 2/3 of homeowners still think their houses are increasing in value? Builders see the reality, but individuals and banks will hold out until they are sitting on the sidewalk outside their s***box 1/1 in a lousy neighborhood bemoaning the loss of their ‘million dollar home.’

    Several years back there was definately a renters frenzy that matched the buying frenzy, but it was all emotionally driven rather than market driven and is long over.

  9. forgottenpassword says:

    Yeah, I’d be a bit worried about people who purposely trashed their house because it was going to be foreclosed & unscrupulous sellers who will not inform you of this. Hate to buy a bargain house only to find out that it is pretty on the outside, but destroyed on the inside. And yeah, yeah, yeah, buyer beware & dont buy something sight unseen blah blah blah.

  10. laserjobs says:

    @humphrmi: Rents are not going up and housing inventory will take many years to work off. Why would demand come back anytime soon especially with credit tighening? You sound like a housing shill that repeated the mantra “buy now or you will be priced out forever”. The real mantra should have been “Buy now and you will be priced IN forever”. Now go get a real job producing something of value.

  11. GhettoGodfather says:

    Two words…. due diligence. Be careful when getting involved in foreclosure properties. You don’t always know what you’re getting. Research enough and you’ll find the stories those who “got a great deal” only to find that the property had other liens on it that had to be settled. If someone couldn’t afford to pay their mortgage, perhaps some other things didn’t get paid either (think taxes, utilities, etc.).

  12. Me - now with more humidity says:

    V-EFFEKT: You’ve obviously never tried. I have purchased properties from banks at as little as 20 cents on THEIR asking dollar. I don’t get every property I go after, but I get enough. Get a clue before you post.

    FORGOTTEN: Never buy a foreclosure property without seeing it or having someone you trust see it. But if you buy low enough, it doesn’t matter if it needs work.

    GHETTOGODFATHER: If you buy without checking into those things, you deserve to get hosed.

    This thread is the perfect illustration of why smart investors are still making money even in this market, and the majority of folks — the herd — are getting smacked hard or cowering on the sidelines. Make lowball offers. The worst they can do is say “no.” Then you move on.

  13. ninjapoodles says:

    I disagree about new construction sitting around unsold for any length of time while the builders wait out the market. Builders are not building houses out of their pockets, generally speaking. They have construction loans that are short-term in nature, and profit margins are so low that the tipping point at which the interest they’re paying on the construction loan begins to eat into the profit from a sale comes sooner, rather than later.

    IOW, a builder can’t afford to sit on a spec house. Every day that a new construction sits empty, it’s costing a builder money. The closer to completion the construction is, the more it’s costing the builder in interest, since interest is charged on construction loans as the money is used. (Kind of like an equity line of credit in that regard)

  14. quail says:

    It is a little early to see big discounts from the meltdown, unless you’re buying from someone who needs to liquidate quickly.

    What I’m looking forward to is picking up stuff from high end garage sales at a steep discount. People who got 3 or 5 TVs for the house, the designer furniture and knick knacks, unopened designer sheet sets, unused mp3 players, etc. The meltdowns in ’87 and in ’91 generated some great bargains.

  15. nrwfos says:

    This may be a stupid statement – but what I want to know is what is “market value”? It’s so crazy right now and the market seems to be declining so much that I wouldn’t trust any amount mentioned as “market value”. This also applies to property taxes. Taxing authorities are presently using the high market value as a basis for their figuring. But as time goes on I doubt that they will come down. I’ve never known (but once) when taxes went down or market value officially declined for taxing purposes. This is going to hurt current property owners, and would keep me out of the market for buying foreclosure property. I think in the long run it will be a boon for those who have enough liquidity to buy…but how long will the long run be?

  16. dahlberg123 says:

    Depending on where you live there is a good chance you can pick up a newly built home on the cheap. Sure, you probably won’t get $.50 on the dollar cheap in most places but it could still turn out to be a deal. There are whole sub-divisions sitting vacant right now, houses that a year or two ago would have gone for $400k+ are now going to bidders for $300k to $340k. This is the Minneapolis area of course so your market may be different but there are quite a few newly build homes sitting around and builders going broke trying to sell them, even for a loss.

    It also seems that with the housing slowdown Canadian lumber mills are starting to shutdown so they can keep prices in check, this hasn’t happened since the early 70′s. So maybe now isn’t a great time to buy but it probably is a good time to do some remodeling if you are comfortable with where you are at. Lumber hasn’t been cheaper for the past 35 years and there are plenty of sub-contractors and craftsman sitting idle. I know around here you can get a good sub at your house that day and for rock-bottom prices.