More homeowners walking away from underwater houses

There is an interesting story on the NY Times today about homeowners walking away from houses that are increasingly under water.

"New research suggests that when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying."

"The number of Americans who owed more than their homes were worth was virtually nil when the real estate collapse began in mid-2006, but by the third quarter of 2009, an estimated 4.5 million homeowners had reached the critical threshold, with their home’s value dropping below 75 percent of the mortgage balance.

They are stretched, aggrieved and restless. With figures released last week showing that the real estate market was stalling again, their numbers are now projected to climb to a peak of 5.1 million by June — about 10 percent of all Americans with mortgages."

If more and more people walk away from their homes, don't expect prices to go up anytime soon.

Think twice before taking that sink!

A local Damascas man was arrested after stripping his house after losing it to foreclosure (Oregonian). The photo above shows what it looked like before he stripped it. See below for the after shot.

DAMASCUS -- After stripping his foreclosed home of everything from the air conditioning system to the kitchen sink, Grigoriy Bogoslavets was convicted of a crime that is often witnessed but rarely reported.

The 33-year-old electrician pleaded no contest last month to aggravated theft after stealing more than $50,000 of property attached to his former Damascus home, one of the few such cases in Oregon or across the country to result in prosecution. He will be sentenced Sept. 22.

This guy was thorough, he even took the outlets! Seriously, they cost $1.5 at home depot, I'm thinking their street value is pretty much zip. This guy was serious. Unfortunately it's likely to cost him four years in jail.

"Banks, which usually can recoup losses from insurance claims, rarely take the time and effort to report theft of home fixtures. But law enforcement officials say nearby residents, eager to preserve their own home values, are starting to turn in their former neighbors.

That's what happened in the Bogoslavets case. Neighbors tipped off police when they saw Bogoslavets return to his former home with a van after vacating the premises. Investigators discovered Bogoslavets had taken nearly everything he could remove, including the kitchen island, fireplace, bathtubs, the doorbell and electrical outlets."

The morale? If you're losing your house to foreclosure think twice about gutting it, it's just not worth it.

$50k free to buy a foreclosure?

From today's Oregonian:

"If you meet the income guidelines, the government might have a house deal for you. You may be eligible for a $50,000 interest-free loan to help move into a foreclosed home. The program, adopted by Congress last year, is aimed at preventing foreclosed houses from standing empty, bringing down neighborhood livability and property values."

I honestly don't see much downside to this program.

For the buyers you get free money, which you only have to pay back when you sell.

They are limiting it to Bank Owned properties, which limits the buyer's risk (we bought a bank owned home last year, I'll talk more about it soon) and is what I feel the best way to get a good deal on a foreclosure.

This program isn't keeping people in homes they can't afford, it's just helping keep houses from sitting vacant and gives banks an incentive to sell them at realistic prices.

Unfortunately there are only 160 bank owned houses in Multnomah county at the moment, so the pool of available properties is limited. But they are out there.

Oregon breaks top 10... for foreclosures

Oregon now has the 10th highest rate of foreclosures in the nation according to RealtyTrac and CNN, putting us in good company with other states like California, Florida and Nevada.

In July there were 1 foreclosure in Oregon for every 446 households, and a total of 3605 foreclosure events.

Hitting closer to home, one house on our block was sold at auction this past week and the flippers are hard at work fixing it up for resale.

Portland area foreclosures skyrocket in H1 2009

(I believe the second and third headers are switched on the graphic above. The second column is the % of houses in foreclosure, the third column is the rate or 1/xx houses)

In what should be no surprise to anybody here, Portland foreclosures are up 112% in H1 2009 according to the latest Realty Trac data which was released yesterday:

Portland now ranks 60th out of 203 metro areas with 1.31% or 1 out of 76 of all households in some form of foreclosure, a bit higher than the national average of 1.19%.

Las Vegas NV leads the nation with 1 out of every 13 homes in some form of foreclosure.
Seattle is faring better than Portland, ranking 76th with .94% of households in foreclosure.
Salem OR is doing slightly better than Portland, ranking 64th with 1.18% in foreclosure, while the Eugene area is doing much better with only .80% in foreclosure and a ranking of 94th.

While California still holds a number of top spots in the rankings, the rate of foreclosure has declined in most areas. I predict that Portland will climb in the rankings before we fall since we're late to this party and facing higher unemployment than most areas.

Freddie Mac - Youtube sensation?

This headline caught my eye as it appealed to both the marketer in me and my interest in real estate:

"Freddie Mac turns to YouTube to help troubled homeowners"

Mortgage giant Freddie Mac is using YouTube.com to educate homeowners at risk of foreclosure on how they can help reduce the stress and time it takes to get a mortgage modification under President Obama's Making Home Affordable program or Freddie Mac's other workout programs.

Freddie Mac posted a new video on the site that tells borrowers what financial documents they need to have available before calling a mortgage servicer. The documents will enable the mortgage servicer to determine the homeowners' eligibility for a workout and process the application, Freddie Mac representatives note.

The two-minute video, available in English and Spanish, can be seen at www.youtube.com/FreddieMacWeb.

Huh, maybe they've hired some new talent.

1 out of 5 Portland homes for sale is a foreclosure

I caught this article by Ryan Frank when I was catching up on his blog recently:

"1. 18% of PDX listings foreclosure, short sale: I had someone run the numbers yesterday and they're not pretty. The Portland region in RMLS has 14,328 active listings. Of those, 641 are forecloses that have been taken back by the bank. Another 2,297 are listed as requiring a third party approval. Most of those are short sales. But being conservative, say 2,000 of those are short sales. That leaves 2,641 foreclosures or short sales on the market, or nearly one of every five listings"

I'd love to track this statistic as I belive it's a real window into the health of our market. I know California is in worse shape, but I'd like to know if we're seeing more or fewer foreclosures and short sales these days.

Any disgruntled real estate agents want to share their RMLS data for a little fun with numbers? I don't expect to see this from the RMLS anytime soon.

EDIT - I didn't need to get the raw data, Ron Ares ran the same basic report I was thinking of. You can find it on his site here.

Making Money in any Market

Sent in by a reader:

"Heh, here's a good one. I went and looked at this place - huge foursquare type, not terrible neighborhood, too bad it's a 100% total ruin (foundation half gone, porch sinking off the front of the house, broken windows, eaves totally shot etc etc). Great big house asking 116K - the punchline is from PortlandMaps, somebody named "Fast Cash House Buyer LLC" bought it in December 08 for 106k. Don't click the link too hard or the place will collapse!"

These guys are proving there's an angle in any market. It looks like they bought the house at a foreclosure auction and are turning around and putting it on the market with no work. No so much as a flip as a wholesaler.

It looks like a great house with lots of original "charm" intact, and a little lot of charm that has been "added" over the years.

Proving once again that he who has cash in a crisis is king. Course you gotta sell it first.

The Next Wave is About to Crash

60 Minutes recently ran a piece about the next wave of loans that will soon go bad. The orange peak to the left above above are the subprime mortages that have reset recently and forced many into bankruptcy.

The greenish peak to the right are the Alt-A and Option loans that are starting to reset.

Portland has a number of these loans, which were used to buy all sorts of property, including high end property. These aren't buyer's with bad credit, but rather buyer's who bought more house that they could afford assuming they could refinance into 30 year fixed loans once their home value appreciated another 20% in a year.

Some of these loans had options that didn't pay off any of the principle, these are now starting to reset as they typically contain a clause (that most didn't read) that says that the principle must be paid down when it reached 110% of the original amount.

Other loans had low teaser rates (as low as 3% for some) that are now resetting to 6% or higher, doubling the payment.

I remember a Portland couple was featured in Money magazine last year. They had just bought a 700k house, on about $100k income, using one of these loans. (If they had used a conventional 30 year fixed at 6% their PITI would be about $3700 a month, or 44% of monthly income for someone earning $100k a year. So no they really can't afford this house) One of them was staying home to raise their child, the other worked. They had planned to refinance once the value went up, I assume now that they will be defaulting, or the second person will be going back to work soon.

It's only going to get worse here folks, and according to the recent RMLS data it is already getting worse quickly.

Click here to watch the full piece.

Thanks to Greg for the tip.

Real Estate Brokers = Expert Advice?

Ryan Frank has an interesting piece on Happy Valley, or "Foreclosure Valley" in the Oregonian today.

One part of the story featres the Andersons, an older couple who speculated on a $600+k house in Happy Valley and lost over $100k. That sounds like less than a 20% loss until you realize that they didn't put any money down, so it's a 100% loss. At least they cut their losses, unlike lots of others out there still holding out hope for a quick rebound.

The best line of the story though was this:

"She says she should have hired her own real estate broker for expert advice. "That was our mistake. My mistake," Aloma says, hanging her head, blinking back tears."

Expert advice? The same Realtors who didn't believe Portland prices would drop? The same Realtors who only get paid on a sale, so of course it's a good time to buy!

No Aloma, your mistake was not looking at reality and realizing that growth had peaked and was declining, that the party was over. But don't beat yourself up too badly, that data was nearly impossible to find in 2006. At least today it's not.

Foreclosures Double in Portland

(Karen Rider (foreground), an agent for a trustee sale officer, conducts an auction of foreclosed homes on the Multnomah County Courthouse steps just inside the building. Photo from the Portald Tribune)

In what should be no surprise to the readers of this blog (since I have covered it previously here), the Portland Tribune reports that foreclosures have doubled in the past year in the Portland area. In August 2007 Portland ranked 332nd out of the 383 largest metropolitan areas. By August 2008 we've moved up to 254th. (source: First American CoreLogic). Over 300 Multnomah county residents have been hit with foreclosure notices, surpassing the peak from the 2001-2002 recession.

Portland is no real-estate basket case like Las Vegas or Phoenix. But the national foreclosure crisis that initially spared Portland has arrived here in a big way, bringing more human suffering and dampening housing prices.

The number of Multnomah County residents in jeopardy of losing their homes has nearly doubled in the last year, based on the number immersed in foreclosure proceedings. Over the spring and summer, 300 Multnomah County homeowners a month got slapped with foreclosure notices – topping the peak levels reached in the last recession of 2001-02.

In August 2007, the Portland area had an enviable 332nd-highest foreclosure rating among the nation’s 383 metropolitan areas. But by August 2008, Portland jumped to 254th-highest, according to First American CoreLogic, which provides real estate data services.

“There’s a shakeout right now, and we’re failing on all cylinders,” said Portland real estate economist Jerry Johnson.

Portland took longer than most cities to emerge from the last recession and didn’t get as overbuilt as other markets, Johnson said.

But Portland home prices kept rising during the last recession, he noted. If banks and besieged homeowners try to dump too many discounted properties, he said, “you could swamp the market and kill the guys who are OK.”

Home prices are sliding in large swaths of the metro area, especially in overbuilt sectors such as Portland’s condo market and suburban Happy Valley. In early October, in the 97086 ZIP code that includes Happy Valley, there were 247 homeowners facing foreclosure on top of 95 homes seized by banks, according to VisionCore, a division of First American CoreLogic.

I encourage you to find the print version if you can, the charts in the print version are not included in the online version. Here are a few stats on the number of foreclosure notices by zip code for 2008:

West
97201: 21
97209: 52
97210: 17
97221: 13

North
97203: 121
97217: 128

NE
97211: 123
97212: 55
97213: 59
97230: 115

SE
97214: 29
97215: 39
97202: 58
97206: 178
97266: 202
97236: 194

So far the foreclosures seem to be hitting the North and the outer NE and SE the worst, which is not surprising given that on average those areas have lower incomes and owners are more likely to be one unfortunate incident away from financial ruin.

I will continue to look for more local data, this is the first data I have seen by zipcode, provided by First American CoreLogic.

Offtopic: Outraged Lehman Brothers' employees blockade the corporate headquarters

One Problem We Aren't Facing

This isn't strictly Portland related, but I thought you guys might be interested.

We had dinner with a friend from Boston who's been watching the housing market there, waiting for prices to drop to the point where they can afford something (patience...) and she had a great story.

Apparently there are so many houses that went into foreclosure, or were bought back by banks last winter, and ended up sitting vacant over the winter. The banks would turn down or turn off the heat to save money, and of course the pipes would freeze and burst. SHe has seen a number of houses that at a minimum have holes in the floor from water damage, and in the worst cases have developed nasty cases of mold.

I can't imagine that banks did this intentionally, but it speaks to the volume of properties that they must be dealing with, overwhelming their reduced staff.

Luckily we shouldn't have that problem here. But I have been seeing more and more houses that look like they've been empty for a while.

Chicago Cop Won't Evict Renters

A local sheriff in Cook County Illinois has decided not to evict renters that are evicted when their landlord falls behind on the mortgage.

"CHICAGO - The sheriff here said Wednesday that he's ordering his deputies to stop evicting people from foreclosed properties because many people his office has helped throw out on the street are renters who did nothing wrong.

"We will no longer be a party to something that's so unjust," a visibly angry Cook County Sheriff Tom Dart said at a news conference.

"We have to be sure that when we are doing this — and we are destroying some people's lives — we better be darned sure we're talking about the right people," Dart said.

Dart said he believes he's the first sheriff in a major metropolitan area to stop participating in foreclosure evictions, and the publisher of a national foreclosure database said he's probably right."

Good for this guy. He might go to jail for it, but it's nice to see someone doing something positive these days. If the banks were smart they'd try to sell the house to the renters instead of taking it back.

Free Fall Friday - 5219 SE Belmont St now $999k

Sent in by a reader:

"There's a pretty interesting house on Belmont Street on the lower slopes of Mt Tabor (5219 SE Belmont). MLS# 8088100.

It was purchased in June 2004 for $1.14 million. It's been listed several times since then, first (without a sign, but on the MLS) for something like $1.85 million, then a long period where I think it started at $1.5 million and dropped by degrees. I didn't keep track of the exact numbers. This summer there was an "estate" sale, and the lawn turned brown, a bad sign because the owner was a Willamette Week "Hydro Hog" in 2006 (http://wweek.com/editorial/3247/8039/) who disparaged his neighbors' brown lawns. Now I see that the owner since July is Deutsche Bank Trust which seems to have "paid" $1.3 million for it. Is that a foreclosure? [Yes, that means that was the loan balance and nobody bought it at auction so it went back to DB.]

It's for sale for $999,000, I went through it in 2004 and I'd say it's a lot of house for a million dollars. The current listing really sells it short, as It's formally known as the "Blaine Smith House" and was designed by Ellis Lawrence, a renowned Oregon architect who founded the School of Architecture at U of O and designed many of the buildings on campus. It was a lot better deal in 2004, though, as a historic property tax exemption ran out last year and the taxes went from $2,900 to $19,500, the assessor's Real Market Value being a whopping $1,735,990.

Schadenfreude bonus: The last owner was apparently a mortgage broker."

Trulia lists it as a 7 bedroom, 5 1/2 bath and 6700+ sq ft on a 27,000 sq ft lot, so yeah it is a lot for $1,000,000. It also has 3 kitchens I believe, which I guess is handy if you're hungry and don't want to walk a 1/4 mile to the main kitchen.

It's a beautiful house on a huge lot, I just wouldn't want to heat it. Or water the lawn.

Thanks for the tip Tom, keep them coming everybody!

Price Reductions and Equity Dipping - 5789 SW Salmon St.

Bearlee sent this in:

How's this for price reductions and equity dipping: MLS#8009198

http://www.rmls.com/RC2/engine/reportGenerator.asp

I drive by this one on my way to work each day. Initial listing price $450K, reduced to $399K, and now listed at $300K.

Purchased 08-01-1989 for $35,950.

And now it's a short sale.

The property is located at 5789 SW Salmon St. It's listed at 1476 sq ft, but PortlandMaps only shows 720, so I can assume the basement was finished without a permit. No photos of it either.

I wonder where all the money went?

Update - 2815 NE 57th Ave Sold!

A reader sent in an update on 2815 NE 57th Ave. (see previous post).

Quick summary: The house sold for $485k in Dec 05, after only 2 days on the market. It was bought back by the bank at auction in August 2007 for $400k.

The bank initially listed the house at $339k in May this year, and it just sold for $285k in July, after 62 days on the market.

For those keeping score that's a 41% decrease from the previous (fishy) sale at $485k.

It's also a 16% reduction from the recent listing price of $339k.

That comes out to $96.54 per square foot of finished space, way below recent rates, which according to Trulia have been closer to $200 / square foot.

I'd say it's fairly priced, if not cheap. Granted it's not oozing charm, but it is over 3000 square feet and has been redone recently, hopefully properly.

Granted this is a foreclosure, but if that's the new going rate for price/square foot, a lot of people are in for a shock.

Thanks for the update James!

632 NE Russell - Now $475k and Bank Owned

It looks like the owners lost their foreclosure battle, and 632 NE Russell - the house that inspired the great "is it IN Irvington, or looking in on Irvington" debate - is now bank owned. And $75k or 14% cheaper. That's $145k instant equity for those keeping track.

For $475k I'd still like a garage or two. But I'm just picky.

RMLS# 8060441

EDIT: We drove by a while back and this is teh view across the street. Think this might be one reason why it's not selling?

Extreme Makeover = Extreme Stupidity

It's the classic American fairly tale for the new millennium!

A family is down on their luck.

A stupid TV show gives them more than they could ever hope for to solve their relatively minor problem.

The couple squanders their luck and ends up right back where they started, pissing off all the people that helped them in the first place.

Here's the scoop. Extreme Makeover Home Edition gave the Harper's a new house worth $450k, $200k worth of additional furnishings, scholarships, and additional winnings. But apparently not the wisdom not to blow it all.

The house is now in foreclosure, as it was used as collateral for a $450k home equity loan used to fund a new construction business that is likely now failing.

That must have been one hell of a new business to need $450k in startup capital right away. And given the current housing market I can only imagine that even if they were successful, business has likely ground to a halt recently.

I guess I shouldn't be surprised. Americans don't want to take responsibility for our own actions and poor decisions. We want to win the lotto, or hit the reset button and make our stupid decisions go away like a bad video game. This show and others play into that. We all look on and say "boy I wish that would happen to me" instead of going out, working hard, and earning our success.

I guess it doesn't make for good TV to go in and help a couple solve their simple problem, and in the process teach them how to solve the next on their own. Teach them to fish, instead of giving them a fish, then letting them hock the fish to buy a bigger fish.

Here's the full text from Access Atlanta is quoted below, because frankly Lack-of-Access Atlanta is the only online newspaper that's worse than the Oregonian in terms of draconian registration restrictions.

Things couldn't look better three years ago for Milton and Patricia Harper of Lake City, who giddily accepted the keys to a small castle, plus enough money to pay taxes on it for 25 years. It was a product of "Extreme Makeover: Home Edition."

Now, the Clayton County house is a two-story, turreted example of how things can go wrong. It's in foreclosure.

The Harpers used the house at 5489 Ahyoka Drive as collateral for a $450,000 loan, Clayton County mortgage records show. Records at the law firm handling foreclosures for the lender, JPMorgan Chase Bank, say it is in foreclosure. The four-bedroom house with decorative rock walls and a three-car garage is scheduled for auction on the Clayton County Courthouse steps Aug. 5.

The Harpers, who declined interview requests when reporters knocked on their door Friday, told WSB-TV they got the loan for a construction business that failed.

Failure seemed an impossibility in February 2005, when ABC TV viewers got a look at the stunning home constructed in a subdivision three miles east of I-75. Painted dark olive and covered with specialty shingles, the home's domed door opened into a structure that featured four fireplaces, a solarium, music room and a porte-cochere that connected to Milton Harper's new office. The yard was a study in landscape art, with young magnolias, fieldstone and a Leyland cypress hugging one corner. A black metal fence ringed it.

It had taken shape in six intense days in January 2005, when Atlanta-based Beazer Homes USA and "Extreme Makeover" demolished the Harpers' old home, plagued by a faulty septic system. Professionals and volunteers came together to erect the largest home that the "Extreme" team had ever built.

Materials and labor were donated, but the home would have cost about $450,000 to construct. When they were done, the home dwarfed all the ranch and split-level structures in neighboring lots.

That was not all. Beazer Homes' employees and company partners raised a quarter-million dollars in contributions for the family. The sum included scholarships for the three Harper children and a home maintenance fund.

The Harpers, whom ABC chose from among 15,000 "Extreme Makeover" applicants, spent the week in Disneyland while 1,800 people swarmed about the site. The family returned to a new home, plus contributions worth about $200,000.

They opened the home to lots of friends, said Amber May, 18, who lives a few doors away from the Harpers.

"It will be midnight," she said, "and we'll see six cars and a million kids" at the house.

Another neighbor, Brittney Harris, said the Harpers seemed considerate.

"They're good, quiet neighbors," she said.

Perhaps they are, said Donald Williams, who was visiting Harris. But he doubted their business acumen.

With $450,000 "they could have just bought a business," he said.

A representative for Beazer declined comment. A representative of ABC offered an e-mail: "'Extreme Makeover: Home Edition' advises each family to consult a financial planner after they receive their new home. Ultimately, financial matters are personal, and we work to respect the privacy of the families."

Law firm McCalla Raymer LLC, which has a team of specialists handling JPMorgan foreclosures, confirmed that the Harper home is on the calendar for auction next month.

The news left Lake City Mayor Willie Oswalt wondering what went wrong. He recalled a chilly January day when he and a handful of others wrestled an aged beam into place in the home's living room. The Harpers' future seemed just as solid, he said.

"It's aggravating," said Oswalt. "It just makes you mad. You do that much work, and they just squander it."

Foreclosures in the Portland area and central Oregon top 2002's dot-com drop

Ryan Frank has an interesting look at Foreclosure's in today's Oregonian:

Anyone who has been reading this blog knows that while foreclosure's here aren't YET as bad as some other areas, they are accelerating quickly. But this is an interesting comparison to the last recession.

Mortgage defaults in the Portland area and central Oregon rose 97 percent in the first half of 2008, compared with a year ago.

That's not too surprising considering homeowners in 2007 still enjoyed the tail end of the housing boom, and the housing market is now in full swoon.

What's more surprising is the number of defaults -- typically the first step of a foreclosure -- through June 30 rose far higher than at the peak of the last downturn in 2002, according to records in Multnomah, Washington, Clackamas and Deschutes counties. Those cover the Portland area and the peak-growth Bend region.

Roger Erickson sums it up:

"We're just seeing the tip of the iceberg," said Roger Erickson, a principal broker at Americana Properties Inc. "It's going to get a lot worse before it gets better."

Lenders hire Erickson to sell properties they've taken back from borrowers in foreclosures.

Erickson said he had five foreclosures to sell in early 2008.

Today, he has 22.

Foreclosures up 129% in Oregon in June '08

RealtyTrac released their June report today, and things continue to get worse for Oregon.

Total foreclosure filings totaled 2047 in June 2008, up 133% from the 880 filings in June 2007.

Notice of default (NOD) were up 73% from 541 in June '07 to 938 in June '08.

Notice to sell (NTS) are up 215% from 303 in June '07 to 953 in June '08.

Finally, bank owned properties (REO) are up 333% from 36 in June '07 to 156 in June '08.
My take on this data is that as financing has become harder to find and prices have started to decline, more and more owner's are unable to sell or renegotiate their loans are the houses are going to auction.

Bank owned properties are increasing significantly due to the increase in houses going to auctions, and the lack of credit for the usual players who typically buy the houses at auction. Other sources have told of houses at auction bringing no bids, either due to lack of capital for buyers, or a belief that the houses are overpriced.

For those buyer's who are interested in buying a foreclosure, this article "How to buy a foreclosed home" in the San Francisco Chronicle is one of the best descriptions I have seen recently about the pitfalls and traps of trying to buy a house in any stage of foreclosure:

As bank repossessions continue to mount, it's a question that is being asked more and more often. The answer is, foreclosures are available and reasonably priced - but don't expect a screaming deal.

"More than 50 percent of our customers come in wanting a great deal on a foreclosure," said Pat Lashinsky, CEO of Emeryville's ZipRealty, a brokerage with more than 2,200 agents in 19 states. "The percentage that actually do (find one) is significantly less. When you find a good deal, there are five or six or seven offers, and you're up against professional investors."

Finding a foreclosure is straightforward, according to a range of industry
experts: Decide on a budget and geographic area; get prequalified for a mortgage; work with a buyer's agent; check the MLS - the same steps you take in buying a nonforeclosed property.

But there are potential obstacles in navigating the unfamiliar territory of the properties known in the trade as REOs - short for real estate owned by banks. "It takes a certain breed of borrower to buy a foreclosure," said Joe Metz, a Realtor-broker with Re/Max Active Realty in Fremont. "I hold a lot of REOs open on weekends. I can tell if a buyer is new to the whole thing; they just get really upset with the condition of the house."

That's because banks don't do more than a very basic clean-out of foreclosed properties. They don't paint. They don't replace carpets. They don't remodel.

"We explain that if you want a staged house, you'll pay 50 grand more for it," Metz said. "This is a deal. These are all things that can be corrected with your checkbook."

Here are more factors to consider in buying a foreclosure:
-- They're discounted, but not giveaways. Banks usually determine an asking price after hiring several real estate agents to give opinions about a property's value.

"Banks are getting very aggressive on pricing," said Glen Bell, a Realtor with Keller Williams Realty. "We're seeing them priced at 10 percent to 15 percent less than non-REO properties. Reducing prices to attractive levels has become their strategy ... to unload assets."

However, it's important to remember that banks, and the people who work for them, are skilled at analyzing prices and market conditions.

"Our experience is the bank has a number (the asking price); they will hold that for a while," Metz said. "If they don't get that number for three or four weeks, they will lower the price a little more. Banks are very smart about how they do this. They move them very quickly and for about as much as anybody could get."

-- They can draw multiple offers. Don't think that you're the only one with the brilliant idea to buy a foreclosure at a discount. "We've seen multiple offers in about half of our sales and pending transactions," Bell said.

Anybody have any brushes with foreclosure's they'd like to share?