REPORTED FROM HIS HOUSE — I did not set out to buy a foreclosed house.
Earlier this year, I wrote about selling my condominium unit in 2005 to rent, rejecting the hyped promise of an always-rising real estate market. Now I've purchased a foreclosed home -- but that doesn't mean I've bought into the new wave of hype in real estate, the idea that cheap, repossessed houses are a sure bet.
There's usually good reason many foreclosed houses languish with no buyers. They may be badly damaged or situated in places that seemed attractive only in the frenzy of a real estate bubble.
The foreclosure inventory is loaded with properties far from job centers, stripped or even vandalized by previous owners or in abandoned developments with no parks, schools or even neighbors nearby.
As a result, finding a decent house amid the wreckage of the real estate crash can be a long, tedious process. Then, actually buying one can also be tricky. When a foreclosed house in good shape and in a desirable location gets to market, it often attracts multiple offers, even in this struggling real estate market.
But a foreclosed house might still be an easier way to get what you want than trying to get stubborn individual sellers to lower their list prices. In both my day job covering the housing market and my own search for a house, I've seen what has worked for many buyers of foreclosed homes.
This is what worked for me.
Why a foreclosure?
Some purchasers think foreclosed houses and condominiums are so cheap that they can make money flipping them -- just like in the old days of the housing bubble.
But the reality is that people who buy now are still taking a big risk. The median home sale price in Southern California has fallen close to 40% from its peak, and chances are good, to say the least, that it will keep declining.
That was OK with me, though. I was not counting on price appreciation. After three years in our rented house, my family basically wanted to get a place we could decorate as we pleased, and one with at least some of the features we had been living without -- a two-car garage, air conditioning, a kitchen sink with a garbage disposal, maybe even a dishwasher.
When we began looking for a place early this year, though, the prices set by individuals on their homes seemed ridiculous in light of the market crash. And sellers wouldn't budge, even when they got no offers.
