The Foreclosure Report

Back To The Basics In FLorida

The Orlando Sentinel reports from Florida. " Joseph Peri is hunting for homely houses in Orange County. As a new franchise owner in Winter Garden for HomeVestors of America, Peri is ready to buy properties that need some work. HomeVestors is the company known for its 'We Buy Ugly Houses' signs, though the homes are not always ugly and other companies sometimes rip off the slogan."

"Florida has been one of Home- Vestors' best markets, with 42 franchises, second only to the company's home state of Texas. And there's no shortage of houses for sale, a virtual smorgasbord."

"'I'm looking at some from $50,000 to $550,000. It's pretty spread out,' said Peri, one of two HomeVestors franchisees in the Orlando area. But these days, many of the homes for sale in markets such as Central Florida can't be bought, rehabilitated and sold for a profit."

"'We've enjoyed tremendous growth in Florida historically, and we still have pockets of franchises doing well,' said John Hayes, CEO of Dallas-based HomeVestors. But the sharp run-up in home prices in recent years, the lack of equity that owners have in many of the properties now for sale, slack demand among home buyers and other factors have made the business more challenging."

"'I don't know how some [owners] are able to pay the taxes and insurance,' Hayes said. 'But this is temporary. We're just riding through this transition with Florida.'"

"Hayes said he expects Florida lawmakers will find ways to bring down both property taxes and hurricane-related property insurance, and help boost existing-home sales. 'They are not going to allow an exodus from the state,' he said."

"Ron Smith, an independent housing-rehab specialist in Apopka, said he gave up his sideline business a few months ago after 20 years of working the Orlando area."

"'It just got a lot tougher. I went to work full time with a roofing company,' said Smith, who used to buy and fix up homes to sell, or to rent until he could find a buyer, as many as four or five times a year."

"Smith said his best years were the late 1990s through 2004, when 'it just went crazy.' So many buyers were bidding up prices, it got harder to compete, he said. Then, earlier this year, sales went flat as thousands of homes flooded the market at inflated prices."

"'I didn't believe the market here would go 180 degrees, but it did,' Smith said."

"The median resale price of an Orlando-area home was appreciating as much as 36 percent on an annualized basis by mid-2005, before settling back to single digits by mid-2006 and turning negative in April for the first time in five years."

"Ed Rogner, who has been a HomeVestors operator in Orlando for the past six years and in real-estate sales locally since 1978, said the once-thriving market's sharp turn has surprised many veterans. 'I've never seen it like this,' said Rogner. 'There are just so many sub-prime loans out there. People will call us and want us to buy their home, but there's almost no equity. We can't do that.'"

"And when the company does close on a sale and puts the property back on the market, 'you're competing against all these other houses.'"

"The Orlando area's median sales price as reported by Realtors leveled off at about $250,000 beginning in April 2006 and recently dipped to about $240,000 as the inventory of listed homes jumped 50 percent in that period to a record 24,435 in April."

"Andrea Tolbert of Sanford, who has been buying, rehabilitating and selling homes in the Orlando area since 1999, said the market is more challenging but still workable for savvy investors. 'It's tougher to sell but easier to buy,'" Tolbert said, because of the record inventory of existing homes for sale by Realtors. 'Of course, you've got to be careful,' she said. 'We're going back to the core basics,' with much slower price appreciation."

"Tolbert, president of a real-estate networking and education association in Winter Park, said she still is able to make a profit buying and selling homes by focusing on those worth $100,000 to $200,000. 'There are always buyers in that range,' she said."

posted by Ben Jones @ 3:25 PM