Jan. 25, 2008 -- With home foreclosures at a 20-year record high in California and up 68 percent nationwide, real estate agents are trying out new ideas to keep the housing market alive.
Foreclosure bus tours in which home buyers visit a number of foreclosed properties in one outing, are popping up across the country.
At one tour in Pismo Beach, Calif., 40 prospective homebuyers spent four hours on a bus, checking out 10 homes, all at fire sale prices.
One couple, Mike and Mary Hays, were recently married and looking for their dream home. One house they saw sold for $450,000 three years ago. Now the bank owns it, but it could be Mike and Mary's for $318,000.
The downside, of course, is that thousands of families have lost their homes.
"It's sad, but everyone is looking for a bargain," said Jim Fisher, another prospective buyer. "You don't know the circumstances of why it's a bargain, but it is."
Mellody Hobson, president of Ariel Capital Management and "Good Morning America's" financial contributor, says it may be a couple of years before there is a rebound in the housing market.
Hobson offers some advice for people looking for a home in this buyer's market, and for people who want to protect themselves and their homes from foreclosure.
Advice for Homeowners:
If you are an existing homeowner with an adjustable rate mortgage and are able to lock in a 30-year fixed rate mortgage, do it now. In the past couple of weeks, mortgage rates slipped below 6 percent for the first time since 2005.
If you are one of the many homeowners at risk of losing your home, leave no stone unturned in terms of working out a solution with your lender. You also should look into all the government programs recently introduced to help struggling homeowners see if they qualify for aid. Click here for resources from the U.S. Department of Housing and Urban Development.
Advice for Potential Buyers:
With a foreclosure sale, you are most likely buying the home "as is," which means there are a lot of unknowns about the condition of the home. Visit the property and do a thorough visual inspection.
Be sure to find out what other homes in the area have recently sold for, which can help you have a better sense of the market in that area.
Perhaps most important, it is essential to do a title search on the property to find out what you can about the house: Does the owner owe money elsewhere? Is there a second mortgage on the home? Are there any outstanding legal claims on the house involving the current homeowner?
If a homeowner has neglected to pay property or income taxes, the government could have a lien or claim against property. Ultimately, the title will not be free and clear until all liens are paid -- and if you own it, you owe it.
Foreclosure auctions are usually advertised through legal notices in the classified section of your local newspaper. You can also call the office of the recorder of deeds in your county to get this information. Some real estate companies even have agents who specialize in foreclosures.
Avoid Internet sites and subscription services that provide foreclosure information for a fee, as it can be difficult to decipher which are just out to take your money.