Alvin Fuchs was quoted in the Desert Sun last week for his comments on the topic of foreclosures and prices in Palm Springs Real estate market.
What’s it worth?
Alvin Fuchs, a Realtor with Keller Williams Realty in Rancho Mirage, said just because a property is a foreclosure doesn’t mean it’s a hot deal.
Buyers should work with Realtors to compare other homes in the area and more accurately determine the home’s value
Some banks are looking to recoup the value of a defaulted mortgage, so buyers could end up paying more than the property is worth.
That’s particularly true now that inventories of foreclosed homes — particularly those priced at less than $200,000 — have plummeted in many valley communities.
Of 3,585 homes listed last week on the Desert Area Multiple Listing Service in five cities — Indian Wells, La Quinta, Palm Desert, Palm Springs and Rancho Mirage — only 187 were low-end, bank-owned properties, Fuchs said.
In some instances, the dearth of foreclosed homes has resulted in aggressive, multiple bidding by competing buyers.
It’s critical to get a good home inspector because, in most cases, “the bank has no clue what happened to that house,” Fuchs said.
Realtors and home inspectors said one of the first steps buyers should take when assessing a distressed property is to simply trust their instincts. If a house exterior looks bad, it’s probably worse than they think.
Before making an offer, buyers should do a thorough title search to uncover past problems that could become future obstacles, Franklin said.
Buyers must determine whether the effects of a poorly maintained home has resulted in structural rather than mere cosmetic problems.
Not only should buyers ask how long a house has been empty, but how long standard repair and maintenance have been on hold, Realtors said.
Distressed properties in the desert that have stood vacant for months or years with utilities shut off can deteriorate fast in triple-digit heat, even having mold problems that warrant expensive repairs.
As many as 20-30 percent of foreclosed properties nationwide are vandalized or cannibalized by frustrated homeowners, said Bill Jacques, president-elect of the American Society of Home Inspectors.
Although many buyers pay inspectors to determine what needs to be fixed, banks are usually reluctant to pay for the repairs.
“But basically, you get a home inspection so when you take the property over you know what you’re going to have to fix.”
When buyers are seriously looking at foreclosures they should also be “open minded” to other options such as individual sellers. Many of them have dramatically reduced prices and are ready to negotiate.
Taxes and liens
A foreclosure typically wipes out the prior owner’s private debt, but there can also be public debt against a property, such as real estate tax or income tax, Franklin said.
Buyers should work with Realtors and the escrow company to research the land lease, property taxes, mechanics’ liens or lawsuits.
Although most liens are cleared at a foreclosure auction, some liens survive and carry over to new owners.
On tribal land, buyers should watch for illegal land transfers in which the landowner takes out a second mortgage and never reports it to the Bureau of Indian Affairs.
Prospective buyers should also be on the lookout for separate ownership “transfer fees” that can be as much as $4,500 in some valley country clubs.
In short sales, buyers should be sure to review the terms approved by lenders and not be afraid to say “no” later in the process.
Buyers engaged in short sales should be patient and brace themselves for what could be a long process, Fuchs said.
One of his clients spent eight months waiting for a short sale to go through, only to have the bank then foreclose on the property.
It just make sense to work closely with your Realtor who will guide you.