Oregon Public Broadcasting

With foreclosure rates going through the roof in Oregon, bargain hunters may be tempted to try and pick up a cheap property.

After all, the hallmark of a buyers' market is when sellers are under pressure of one kind or another to make a deal.

But, as Kristian Foden-Vencil reports, there are plenty of pitfalls in this cut-throat business and the old adage ‘buyer beware’ still applies -- even if you’re getting 20 percent off.

Cast your mind back to 2006. The economy was humming. People were  flipping homes and boasting massive profits. That’s when phone operator, Trina Harrison and her husband bought a $285,000 house in Hillsboro.

Trina Harrison: “It’s the house that we were going to grow into. It’s a lot bigger than the one we had before. It was where we were going to have our kids and move into that.”

Sitting outside a Starbucks, she explains the marriage didn’t last.

In the divorce settlement, she got the house with the agreement that she sell it after two years.

Until recently, she managed the $1500 mortgage by renting out a room. But now that she’s had to put out a ‘for sale’ sign, nobody wants to move in. She can’t afford  the mortgage and now she’s in foreclosure.

Trina Harrison: “It’s horrible.”

She says it’s like losing a couple of years of your life.

Trina Harrison: “When I first was going through all of the numbers and working on it. It’s daunting. You realize that what you’ve worked really hard for. And I have, the plans just sort of get ripped out from under you so it feels like okay, I’ve got to start over now.”

The home is now on the market for $16,000 less than she paid for it. She’s got about three months to get rid of it before the bank takes possession.

But like the old saying goes: one person’s loss, is another person’s gain.

SOUND OF AUCTION – “In the event the trustee...."

On the steps of the Multnomah County Courthouse, on a rainy morning, an auctioneer wearing a cowboy hat and antler belt buckle runs a foreclosure sale. This is where homes like Harrison’s will end up if she can’t sell it.

Auctioneer: “The open bid of $216,716 going once, twice, three times, sold to the beneficiary in that amount...."

Things move quickly here and business is conducted in what seems like another language. After the sale, the small band of investors, property trustees and auctioneer disperses quickly.

They don’t seem eager to talk. But somewhere in the dimly lit chamber, someone handed over $216,000 in cashier's checks.

With a little bit of digging, it turns out the foreclosed home was in Northeast Portland. Another property, across the street, sold for $250,000 three years ago – meaning this house was likely picked up at about a 15 percent reduction.

That might seem like a good deal says Pat Savage, a foreclosure expert with Re/Max Equity, but buyers can get into big problems if they’re not careful here.

First you have to bring cashier's checks to the courthouse steps – no mortgages or financial chicanery allowed.

Second, people being foreclosed upon can get angry. Some will even trash their home in the hope of getting even with whoever’s picking it up on the cheap.

Pat Savage: “I’ve shown several. One of them had had a fire set in the middle of the living room carpet. One had all the appliances and everything removed, even things that shouldn’t be removed. Light fixtures of any kind. They punched holes in walls, punched holes in doors, remove carpeting, ruin whatever they can. It can be pretty bad.”

And a buyer often won’t know about the condition of the home until they turn up to put the key in the door.
But says Savage, for those with ready money and a steady nerve, there are deals.

Pat Savage: “On the courthouse steps, I would probably, it’s hard to say they’re all different. But probably a 20 to 30 percent discount. And some investors won’t purchase if it’s more than 50 percent. If you’ve got cash, cash talks.”

In a little over a year, the number of foreclosures in Oregon has risen about 140 percent. For subprime borrowers, the rate is still higher and growing faster. 

Despite the dismal numbers statewide, believe it or not, Oregon is still much better off than places like Florida and California.