Dear PoP – Foreclosures

foreclosure, originally uploaded by takingthechallenge.

“My neighbors just had their house foreclosed on. Kind of scary seeing the locks changed, though they moved out two months ago. Seems they left most of their furniture as if they were coming back. The banks contractor said they even left food in the fridge. I am of two minds on this. It must be awful losing your home like that, but it was my understanding that these folks had owned the place for 20 years and cashed out every cent of equity without putting a cent back in it. When I last saw them, they were driving new Cadillacs, so I don’t have too much sympathy. I know it will have a negative impact on my home value, but a part of me is glad to see them go, as they were not the best of neighbors.

Has anyone else had this happen in their neighborhoods? What has happened to the properties? Did they rot, or did folks buy bargains and fix them up.”

Well that is a pretty harsh reaction! But I, too, am curious as to what happens to these homes after they are foreclosed. Apparently this trend is going to continue for the next year or more. So, has anyone lived on a block where a home was foreclosed? What generally happens to the home?

21 Comment

  • The “foreclosure” sign is a big “no one is home” sign. If this property isn’t sold quickly, it can go to seed, become overgrown, attract vagrants, metal thieves, and others and consequently become harder to sell. If I was a neighbor, I would stay in touch with the listing agent to find out what’s going on, find out who actually owns it and keep the pressure on them to maintain the property. I would call the police if there’s any hint of a break-in on the property. I would also see what kind of enforcement the District building department can bring to bear.

  • A condo in my building was recently foreclosed upon. I’ll be interested to see what happens there, too.

  • Condo unit, that is.

  • The one next to me is going to Auction 28th. Not sure if that is a good thing or not.

  • I have been looking at some foreclosures sites as we would love to buy but a foreclosure is probably all we can afford.

    It seems that most of them in Petworth are above Upshur and then there are a whole lot of them in CH in the Harvard/Irving areas.

    I have my eye on a place on 8th street but I think it is a short sale, which, is harder to deal with than a foreclosure. Is has been on the market for a long time but doesn’t show any signs of damage.

  • I love the one on 8th as well but it’s in bad condition on the inside. Last I checked, it has an offer and is just sitting waiting… as is the case with most short sales.

  • There’s one on Varnum that’s huge and looks like a great deal from the outside, but I hear it’s a big $100K+ mess on the inside. You can’t totally tell it’s empty though — I think there’s someone mowing the lawn…

  • where is the one on 8th street located? between which blocks?

  • The house we bought was vacant for five years before a contractor bought it to flip. Our neighbor mowed the lawn and cleaned the windows for those five years so it wouldn’t look vacant and attract trouble. We may be the new “white” neighbors, but wow was he happy to see us!

  • Where is this house located?

  • The house across the street from us went into forclosure about nine months ago. So far it has just sat there

  • I figured someone would have put an offer in that place. You can wait months and months for an answer on a short sale and then the bank rejects it. The whole process is pretty ridiculous.

    I really didn’t investigate it much since we just moved here and are stuck in a 1 year lease. It is more a fantasy because I am so sick of renting but I am also too scared to fork over a ton of money on a place just to watch it go down in value.

  • Methinks some folks are gonna get mighty rich in the not so long run buying up a number of foreclosed upon houses at cheap prices.

  • DCDireWolf- In 1988 I talked for hours with my landlord about his practice of doing that. he owned 12 houses that he suspected were worth about 1.5 million and tried to buy one every year. By my back of the napkin calculations the houses today would be worth about $5 million, maybe $4.

  • Most working folks are living just 2-3 paychecks away from being put out on the street. The housing boom is over due to easy credit given to under-qualified buyers which inflated prices for everyone. Folks who get foreclosed on their properties won’t be in the pool of qualified buyers for years. Housing prices will be stagnant for years. The good thing is that DC has attracted many wonderful new residents who are transitioning DC into a more vibrant city in which to live in. If you are in DC, you’re doing good vs living at the end of a culdesac in the exurbs.

  • DCer,
    I have tried to do the same thing. I have bought fixer upper houses and apartment buildings. At least 1 or 2 every year. Being a landlord gives you a close to the ground feel of how swiftly DC is changing. The pricing power and the rents that landlords are commanding is very strong. I have seen a drastic improvement in the quality of the rental pool. More educated. More affluent. More diverse.

  • I have two friends who were living in a condo they were renting that went into foreclosure in February. 1 bedroom, newly renovated, stainless steel appliances, granite counters, etc. one block from CH metro.

    They got it at auction for $219k. It recently appraised at $280K.

    They really hit the real estate lottery!

  • Hi Julie – I see the southern CH/Pleasant Plains foreclosures as a very good deal. If you’re in a 1-year lease, you are in a great position to start looking & possibly negotiate. You’re in no rush and you have a clean place to live if you need to work on the house before moving in. Most brick rowhouses are salvageable, and it’s an even better deal if you find one with a basement. The work is really not that hard to do (demo + repair). You might feel more optimistic if you could see a very similar house that’s already been fixed up and is being lived in. A lot of people are too cautious about what can be renovated/updated.

    With a short sale, you would be ok if it’s a “bank-approved short sale”.

  • What happens with a property is foreclosed?

    Well, for one, the property sits there, occupied or vacant, as the lender or lien holder takes the necessary steps to gain possession. When this is accomplished, any occupants remaining in the property are evicted and the locks are changed. This is when we see the signs go up, with the vacant structure taking on a forlorn appearance as it not properly maintained. The lender or lien holder usually tries to dispose of the property as quickly as they can, often by auction or by a standard real estate transaction. But the selling of a foreclosed property, like many dealings in real estate, can be a slow, time consuming process. Eventually a buyer comes forward, the paperwork process begins anew, and after a while, we have a new owner.

    Many of you reading this, I realize, will be thinking, “well, duh.” But the question was posed and, as such, deserved an answer. Foreclosure is nothing more than a financial entity taking back assets (the property) in lieu of a loan that has defaulted on. Over the course of history, the process has little changed: when one borrows money and then, for whatever reason, cannot repay, there are consequences to be faced. In modern real estate practices this usually involves the “taking back” of property.

    What makes our ongoing foreclosure crisis particularly grating to some is that many home buyers—hundreds of thousands if not more—bit off way to much than they could chew, and now are crying foul. To be sure, some who signed on the dotted were bamboozled by lenders, but exactly how many and to what degree is nearly impossible to determine. Some blame must be placed on the hands of greedy lenders, of course, but, at the same time, there were a thousands and thousands of purchasers who were fully aware of what they were getting into (interest rate bumps, balloon payments, etc.), but took on the risks nevertheless.

    It appears the crisis is now cresting its peak. By the middle of next year, the worst will likely be over and normalcy will begin to return in the real estate markets. Let’s keep in mind that even in the best of economic times, foreclosures happen and more often than many of use realize.

  • I and most of my friends who “bought responsibly” in the 1990s have anecdotes about lenders and realtors lying to us about what we could afford. My wife’s secretary went to signing and her lender “accidentally” brought the wrong mortgage and she signed it anyway and then tried to get it switched to the right rate. sigh. I had one friend who bought and improved his house, but the looming arm was unaffordable and he had to sell quickly in 2005 and lost a small amount of money on the whole deal, better than rent.

  • I remember my loan officer trying to talk me into the worst loan, which he called an “arm” just like that, going on to say I could surely assume I would receive a salary increase each year…I quickly cut him off asking what is an arm – I was furious that he tried to slip that in because at the very first meeting I said I would not consider an AJUSTABLE RATE MORTGAGE! What a den of jackals.

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