San Francisco has never been a hot market for foreclosures and has become less so as a result of low interest rates, booming tech industry, and the improvement in the housing market. Maybe it is due to the extraordinarily low inventory of homes on the market that out of the blue I had two e-mails in one week from clients asking about buying a foreclosed property. I have known both buyers for some time. One of these buyers had been following the Bay Area foreclosure market for a year or more, but not exclusively, and the other buyer had never before mentioned buying a foreclosed home.
I am always curious to understand my clients’ plans for buying or selling real estate. The first buyer found a view condo on the waterfront that looked like a possibility. The second buyer thought that with rents so high and with what appeared to be incredible bargains available in foreclosed homes, it was a no-brainer to buy a low-priced home as an investment, rent it out, and reap the rewards.
My motto in all things that involve making money is: If it sounds too good to be true, it probably is. That said, I am interested in pleasing my clients, so I began my investigation of a few foreclosed bank-owned properties. This was an interesting journey following the steps below.
1. On a website specializing in foreclosed real estate, I reviewed the disclosure information for the waterfront view condo. This was the easy part. There wasn’t much to review.
2. Then I called the website information number to ask a few questions. The answer to my questions was that everything there was to know was on the website. Hmmm… I wondered what question I could ask that they would answer. After a few tries I couldn’t think of one, so I went back to the website.
3. Back at the website, I saw that the waterfront view property could be found on Auction.com, because it was going up for auction in three days. This was good news. I thought I would find more information.
4. Calling Auction.com, I found the line was busy and was asked to leave a message. I decided to send an e-mail instead.
Note: I wanted to know who the listing agent was and if I could make an appointment to view the condo. On the foreclosure website, the condo was listed as a one-bedroom, one-bath, but on Auction.com it was listed as a two-bedroom, two-bath. Considering the condo was midway up a one-bedroom stack, Auction.com had clearly made an error in the description of the condo or at least I thought so.
5. Next I sent an e-mail to Auction.com explaining the one-bedroom vs. two-bedroom issue. The next day I received an e-mail back telling me to e-mail to a different e-mail address.
Note: At the time, it had not occurred to me to write about this experience; I just wanted to get to the correct information about the condo.
6. I wrote to the new e-mail address explaining the situation about the one-bedroom vs two-bedroom discrepancy. Again one day later I received an e-mail back that said: “We are showing as a two-bedroom, the buyer needs to do their own investigation regarding the accuracy of our information.” I was making progress. A live person (I hoped) had written me back. There was a name and phone number in the signature of the e-mail.
7. I called the phone number in the e-mail and spoke to the customer service representative who had replied to my one-bedroom vs two-bedroom question. Though at first he stuck with what he had said in his e-mail, after chatting a few minutes he offered to look again at his file of information. To his surprise, the condo had been changed to a one-bedroom, one-bath.
8. Great! Next question: How do I see it? The customer service representative took another few minutes reviewing his information and found it would have to be bought sight unseen. There was no agent listed and there was no way to view the condo. Furthermore, the representative told me that Auction.com was the largest online website auctioning foreclosures and bank-owned property, and people buy real estate sight unseen all the time.
Well, maybe this would be all right, but Auction.com‘s Buyers’ Agent Agreement requires that buyers agents show property in person to their clients. This was a catch-22, and I could only think that Auction.com doesn’t want outside buyers’ agents involved with their sales. At this point I decided I had had enough of real estate foreclosure and auction websites, so I did not look further for information on the home my other client asked about.
I had barely thrown in the towel on foreclosure websites when I met a new buyer who also asked about foreclosures. Her father had bought and sold such property on the East Coast. We chatted awhile, and when I asked if her father made money buying and selling bank-owned properties, she said some worked out and he made money and on others he didn’t. I suggested this was something like income averaging in the stock market and that was a way of investing, but she was going to live in her condo and had one shot at buying the right condo. It would not be one of many. Admittedly she had just begun her search and had no understanding of how difficult it is to find a condo or home in San Francisco.
Here I am back to where I started: Who wouldn’t like to find a great bargain in a home? Remember if it looks to good to be true, it probably is.