I received a call from a really sweet, very well intentioned young lady the other day who was all excited about the possibilities of buying a foreclosure very cheaply. She had been trolling through one of the 8 million Foreclosures R Us websites and had found several deals that had fired her up. According to her, there was a 4 bedroom, 3 bath house on Halsey in Foster City that she could get for $26,819. If that didn’t come through she was also interested in a 3 bedroom, 2 bath house on Laguna in Burlingame for $12,227 or another house on Ribbon in Foster City for $14,707. Honestly, I’m really not sure what these amounts represent…mostly because I didn’t want to pay the $39.95 required to get more information, but I’m reasonably sure that neither this young lady, or me…or you for that matter, is going to buy one of these houses for those prices.
My suspicion is that we’re seeing a default number on something other than a first loan. Maybe it’s a small second that a homeowner is behind on…heck, for all I know it’s a car loan in default! I just know that in this area people are not buying houses at 1965 era prices. We chatted some more about this topic and inevitably I asked her if she had spoke to a lender about getting a loan…she had not. Turns out both she and her husband have jobs that are basically off the books. He’s a handy man and she walks dogs. They filed bankruptcy 5 years ago and she said they’re about to make their last payment to the IRS clearing them of a debt there too. If necessary they could probably come up with $10,000 for a down payment…as a gift. I hope it doesn’t sound like, in any way, like I’m making fun of these folks. She was sincere and really wanted to get on track. I offered to meet with them and help them create a gameplan that might pay off for them some time in the future, but it’s not going to be now.
It occured to me that just a few years ago there were lenders that probably would have given them a home loan. Stated income, zero down, sub-prime. It would have buried them then like it would bury them now. I don’t believe in get rich quick schemes. If you’re thinking about buying, spend plenty of time and energy creating a financial plan that will allow you to actually afford the home you’ll be buying and forget about the phantom $25,000 4 bedroom home in Foster City.