Foreclosure fever takes hold of area investors, buyers

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After nearly a decade of working as a talent agent, Bryan Geers was tired of the Hollywood hustle and bustle and in 2008 moved to Charlotte.

In addition to representing producers and directors for cable and network television shows, Geers invested in real estate, mostly in Texas, where he said home prices were stable and the area was not oversold like the East and West coasts.

Although Geers moved to Charlotte to be closer to family and for a better quality of life, a bonus was that the real estate market was right for investment, most notably foreclosed properties.

Since arriving in Charlotte, Geers has bought two foreclosed homes, which he’s renting out, and hopes to buy at least two more in the next six months. But he’s not the only one looking for a promising deal, especially now that Charlotte-based Bank of America resumed foreclosure sales this month.  Bank of America was among other banks, including JP Morgan Chase & Co., that suspended foreclosure proceedings in October amid reports that some mortgage companies had been using foreclosure processes that might have been illegal.

“There’s a lot of competition out there, and I’ve already been outbid on several properties,” Geers said. “In this market, you have to jump on it immediately. Some months I’m up against 10 to 15 people on hot properties.”

Competition is especially strong for lower-end properties, typically below $70,000, a slice of the market on which Geers focuses. His rental properties include a three-bedroom home in west Charlotte off Freedom Drive he bought for $40,000 and a two-bedroom home in the Derita-Statesville Road community in north Charlotte he bought for $21,500.

Hit-and-miss

When it comes to foreclosed homes in the lower-end market, Geers said it’s hit-and-miss.

“There’s not a lot of great properties. They can be really beat-up,” he said. “When you’re looking at foreclosed homes in the $100,000 price range and up, sometimes the bank will come in and put in carpet and fix things up.  But when you’re below that, you really have to watch what you get.”

David Benham, who in 2004 cofounded Charlotte-based Benham Real Estate Group, which specializes in selling foreclosed properties, said there’s more competition between real estate agents in the Charlotte market than he’s ever seen.

Benham said his company started out selling just foreclosed homes but branched out to foreclosed commercial properties.

This year’s foreclosure moratorium slowed the amount of foreclosures, but a backlog of foreclosures is expected to hit the market between the third and fourth quarters of next year, inevitably softening prices, he said.

Tony Smith, president of Charlotte-based residential real estate firm Wanda-Smith & Associates, has been primarily selling foreclosed homes since 1997. He had to put dozens of foreclosed properties on hold because of the foreclosure moratorium, but now he’s the busiest he’s been since going into real estate.

“We’re running at an all-time high,” he said. “I think foreclosed properties will be the dominant inventory in the marketplace for the next 36 to 60 months, and I’ll double my business over the next few years.”

New faces

But the market is changing, Smith said.

“It used to be a niche market,” he said. “But what was niche is now the norm. I have more competition than I’ve ever had before. There’s a lot of new faces doing it.”

While he’s not new to the Charlotte real estate market, Scott Lindsley, a real estate agent with Charlotte-based My Townhome Realty, said he’s selling more foreclosed properties than ever before: about 90 percent of his overall sales since the summer.

“I had six closings in December, and all but one was foreclosed properties,” he said. “That’s what my clients are asking for.”

Lindsley said there have been multiple offers from investors and regular homebuyers on nearly all his foreclosure sales.

He said he’s working with a couple, Asia and Cory Davis, looking for a foreclosed home since October. But the Davises have been outbid on three deals that had multiple offers. Asia Davis, who had a baby in November, said she and her husband live in an apartment and are going to continue to focus on foreclosed properties, ideally priced for $105,000 or lower.

“It’s frustrating looking at homes in that price range because they go so fast, but we just have to be patient,” she said.

‘I wasn’t going to offend the bank’

Melissa Ellis, a 32-year-old nurse, bought a foreclosed condo this month, her first home.

Lindsley represented Ellis in the transaction, in which she paid $107,000 for an 800-square-foot, two-bedroom condo in uptown Charlotte.

The condo, which also features a newly renovated kitchen, last sold for $240,000 in 2006, Lindsley said.

Ellis said she hadn’t been looking for a foreclosed property and was considering another condo in the same development for $135,000 which had outdated appliances and carpet.

“Then all of a sudden this other property came up,” she said.

Originally, the bank had the property priced at $129,000, but the price dropped to $119,000 the day she was going to make an offer, she said.

She put in a bid of $90,000, figuring she had nothing to lose.

“I wasn’t going to offend the bank,” she said.

In the end, the bank wouldn’t go below $107,000. If Ellis wouldn’t accept that, the condo would be sold at auction.

“It was such a good deal, I couldn’t believe it,” she said.

Sam Boykin can be reached at [email protected].