Road to foreclosure in South Florida: A closeup of available homes

South Florida Foreclosure News

By Paul Owers |South Florida Sun-Sentinel

The latest trend in a South Florida housing downturn limping into its third year? Traveling tours of foreclosed homes.

Desperately hoping to drum up business, real estate firms across the region are starting to offer the roving service each month. The concept, agents say, began in California and has spread east to other states burdened by Foreclosures.

On Thursday, a zebra-striped Hummer limousine rolled to a stop in front of a vacant, two-story yellow house on a corner lot in Tequesta, the northernmost city in Palm Beach County.

Having finished sipping Mimosas, 11 people stepped out of the 30-foot vehicle and followed three real estate agents inside, opening cupboards, admiring the Mexican tile and wondering how much of a discount they could expect off the $290,000 list price. Then it was back in the limo and on to the next property.

Agents also have arranged tours in Jacksonville, Orlando and Naples. A few firms offer free trips, while others charge $20 or $25 a seat. Snacks, beverages or a bag lunch usually are included. Trolley tours are planned for Broward and Miami-Dade counties in the coming weeks.

"I think it's a neat idea," said Gary Fulmer, who was on Thursday's excursion with his wife, Elena, because they gave their Jupiter home to their daughter as a wedding present.

The tours are meant to be lighthearted and informal. Some critics might suggest that the trips are a tacky attempt to capitalize on other people's misfortune, but agents laugh at the notion.

"I say to anybody, 'You would understand what we're doing if you've ever been to an Irish wake,'" said Peggy Berkoff of North County Properties, which sponsored Thursday's four-hour tour of seven homes in Palm Beach County.

Foreclosure filings have spiked across South Florida during the past year as the housing market worsens.

Last month alone, 1,992 homeowners in Palm Beach County were at least three months behind on their mortgage payments and facing Foreclosure, more than double the 888 from last March, according to Realestat.com, a Plantation-based research firm.

In Broward County, 3,133 residents were on the verge of Foreclosure in March, more than double the 1,168 a year ago.

Scheduled Foreclosure sales also have been increasing, but at a slower pace.

Most of the people in default now got into trouble during the housing boom of 2000 to 2005. They bought houses they couldn't afford by taking out exotic loans or adjustable-rate mortgages, which enticed borrowers with low "teaser" interest rates that are resetting much higher. Because of the housing downturn, they can't sell or refinance and end up losing the properties to lenders.

Real estate firms can spend $4,000 or more on the tours, including the cost to advertise them. Agents don't necessarily expect buyers to bid on any of the tour properties, but they hope they will use their firms whenever they do enter the market.

On a trolley tour last month organized by Exit Team Realty in Coral Springs, many of the 28 prospective buyers asked whether they should even dabble in foreclosed properties, said Chip Isabella, the firm's vice president of sales.

It's a fair question, considering that foreclosed homes tend to be in poor condition, and negotiations with lenders to buy them can drag on for weeks.

"The buzz word right now is Foreclosure, Foreclosure, Foreclosure," Isabella said. "But at the end of the day, some people find that it's not necessarily what's best for them."

A common misconception is that buyers can "steal" foreclosed homes for tens of thousands of dollars less than the list prices, said Lisa Shuster, an agent who organized a recent tour for Prudential Florida WCI Realty in Coral Springs.

"If they see a home listed for $300,000, they're thinking, 'I can offer $200,000, and maybe I can get the property,'" Shuster said. "But maybe 10 other people are thinking the same thing. We let people know to have a sense of urgency."

Most lenders will knock 10 percent to 15 percent off the list price, said Henry Gustaf, sales agent for Ocean View International Realty in Weston. Gustaf's firm held a Foreclosure tour last month and is planning another in May.

"A lot of buyers think that the sellers will fix things," he said. "With Foreclosures, that's not going to happen. The banks are not extremely flexible."

Thursday's limo tour in Palm Beach County included a mix of working-class people looking for homes, as well as investors seeking potential bargains.

"Slowly but surely, there's a good opportunity for investors," said Joe Colacova, a hedge fund manager. "Not for a buy and 'flip' but for a buy and hold."

On the way to each property, Berkoff of North County Properties and colleague Andrea DiRico gave the participants a primer on Foreclosures and the depressed housing market. Mortgage broker Mike Rice chatted about credit scores and handed out tips for buying homes and getting loans.

Neighbors of the homes on the tour didn't seem to mind the spectacle of the limo, but they were curious about what was happening. "Is there a celebrity in town?" asked Ed Prebor, 82, of Tequesta.

Retirees Marie Mindala, 64, and Carl Coghlan, 71, are planning to marry soon and used the tour as a chance to scout for properties. One in Palm Beach Gardens was listed for $499,900 after selling two years ago for $930,000.

"Somebody paid $900,000 for this house? They were crazy," Mindala said.

"That's what the market was at the time," Coghlan countered.

Participants were exhausted after Thursday's tour, but they were better informed than when they started.

"It's a good education," Coghlan said. "The limo alone is enough to rouse your curiosity."