Oregon- Buying And Selling Foreclosures

Home buyers target foreclosed properties

While buyers find great values, sellers find it tough to compete against bank-owned prices

By Greg Stiles -Mail Tribune

The wheels begin turning the moment Mike Thomas discovers another house is in foreclosure.

The Jackson County sales manager for Gorilla Capital views every property headed for auction, does a title search and then inspects the house.

"I'm looking for a viable investment," Thomas said, even as the median price for Jackson County houses continues to tumble and foreclosures abound.

Gorilla Capital, which bills itself as the largest purchaser of foreclosures in Western Oregon, applies a counter-cyclical approach to real estate. The Eugene company buys houses at auction for bargain-basement prices, then resells them, advertising on its Web site, Craigslist and the multiple listing service.

"We've sold 12 houses, with a 13th pending, this year and haven't had a property for more than 90 days," Thomas said.

Picking up houses for resale can be a dicey game, considering county real estate prices continue to fall.

"For every property we buy, 10 go back to the bank or somebody outbids me," said Thomas, whose goal is purchase 10 to 15 houses annually. "We're looking for properties in the $80,000 to $160,000 range. That's what's affordable for people trying to get home loans now."

According to Southern Oregon Multiple Listing Service figures, the median sales price for existing Jackson County houses slipped to $186,900 in November. For the rolling quarter ending, Nov. 30, the county's median price tumbled 12.3 percent to $213,000.

During November, 14 of 20 houses sold in Central Point were either owned by the bank or short sales, dealt for less than what was owed, according to Roy Wright of Roy Wright Appraisal Service. In east Medford, nine of 32 sales were bank-owned or short sales, while in Ashland just one of 10 sales was bank-owned.

"If it doesn't say foreclosure on the sign in front of the house, buyers don't seem to think they're getting the same value," said Ron Galbreath, an agent with John L. Scott Real Estate in Medford. "Sellers don't want to compete against foreclosures, because they think they're having to sell for below market value."

Interest rates have dropped to around 5 percent for standard mortgages and there is political pressure to push rates closer to 4.5 percent. That has attracted both investors and home buyers.

"There is still lot of cash out there," Galbreath said.

As an example, the asking price was recently reduced by $30,000 (to $234,900) for a bank-owned house on Pumpkin Ridge Drive in Eagle Point. That stirred up plenty interest, Galbreath said.

"They had eight offers in two days," he said, "including three that were all cash."
The cash bidders were all asked to make their best offer and the property sold for well over asking price.

Eagle Point was one of seven county markets to see increased sales activity in the past three months.

"We've seen inventory continue to dwindle, but there is still a fair amount of inventory our there," said SOMLS chief executive Steve Blanton. "Our sales numbers are moving upward compared to last year. Nationally, the level of sales are comparable to 1998 to 2000. We're in a more normal market from the 1990s perspective, it just feels a lot different than it used to."

Lower listing prices and interest rates are causing home buyers to pick up the phone, said John Mafrici, of the Oregon Association of Mortgage Professionals.

"People who were on the fence can now qualify," Mafrici said. "The most important thing is they need a job and a debt ratio (no higher than) 45 percent of their gross income, including the new house payment."

Posted in: Oregon- Buying And Selling Foreclosures