One local real estate company is offering a unique way to find a great deal on a home.
Picking up on a trend that has been popular in other parts of the country, Tanis Group Realty in West Dundee held its second foreclosure bus tour last month and will hold its third bus tour this Sunday.
During the most recent tour, more than 30 residents and potential investors boarded a luxury bus and were taken to different foreclosed homes throughout the area, including homes in Lake in the Hills, Algonquin, said Doug Kozlowski, a real estate agent at Tanis Group. Most of the homes were under $100,000.
The main purpose of the tour is to educate those interested in purchasing a foreclosure on the intricacies of buying HUD homes.
“The point of the tour is public education. HUD will give my office more of their foreclosed properties to sell if we educate people about how to buy these homes,” Kozlowski said. “It was not a selling experience, so the passengers learned and had fun.”
This area is at no shortage for foreclosed homes. In fact, foreclosures have been on the rise over the past six months in Algonquin and Lake in the Hills while foreclosure rate remains high throughout the Chicago suburbs, according to RealtyTrac.com.
“The HUD foreclosed home market is very strong … these homes last only a few days on the market, usually have multiple offers and often sell above list price,” Kozlowski said.
But Kozlowski said many people do not understand how to buy a foreclosure.
“HUD encourages offices that market their properties to educate the public about purchasing their homes. That is why we are making an investment in things like the bus tour,” Kozlowski said. “HUD homes are not purchased like traditional homes.”
The HUD website provides facts on what you need to know to buy a HUD home. The Tanis Group's foreclosure bus tour will be held this Sunday with check-in beginning at 8:30 a.m. at Elgin Public House, 219 E. Chicago St. in Elgin. The Tanis Group website has more information on how to register for this free bus tour.
Tanis Group Takes on Foreclosures
There was a time when only very savvy investors and a handful of realtors would sell HUD-foreclosed homes. During the housing boom in 2003, the Tanis Group did something most real estate agencies would not fathom at that time: It sharpened its focus on foreclosed homes, Kozlowski said.
“They (the Tanis Gropu) started creating relationship with HUD, Fannie May and the banks,” Kozlowski said. “The owner of Tanis Group must have been part visionary in the move — he told his realtors ‘At some point, no one is going to be able to pay for all of these homes....this is not going to last forever.’”
The move is paying off now. When the housing market crashed, Kozlowski said the Tanis Group emerged as an expert in foreclosures for the area.
“Now they are paying realtors very good commission plus bonuses if they can get the houses sold quicker,” he said.
The homes run the gamut from move-in ready to very distressed properties. Some of the most distressed properties are bought by investors who will "flip the homes," buying them at a low price before making them move-in ready and selling them.
"Many times these properties are very distressed and you would think they would not be desirable, but my office is selling hundreds of them a year and we are swamped with buyers," Kozlowski said. "Surprisingly, about 40 percent of our sales are now cash with no financing involved."
One of the big differences between buying a foreclosed home is that you must enter a bid through a real estate broker that is properly registered with HUD.
“Many, many realtors are not registered with HUD and they fear the process. So not only does HUD want us to educate consumers on how to buy their homes, they want us to educate realtors to try and take the fear out of the process,” he said. “There is still a stigma out there among some realtors that they won’t get the property paid for, that this is too much work, they they don’t understand the bidding.”
Foreclosures on the Rise
Illinois, and in particular, the Chicago suburbs, have been following an unfavorable trend lately as foreclosure rates remain high throughout the state.
While an average of one in every 730 housing units received a foreclosure filing in September throughout the country, one in 376 housing units received foreclosure filings in Illinois last month.
In August, the state had the highest foreclosure rate in the country, according to a BusinessWeek article.
RealtyTrac currently ranks Chicago as the highest foreclosure city in the nation.
Closer to home, McHenry County had one of the highest per capita rates for foreclosures in the state last month, with one in every 195 housing units receiving a foreclosure filing. That is well above the state average of 1 in every 375 housing units that received foreclosure filings in September.
Foreclosures have been on the rise over the past six months in Algonquin and Lake in the Hills, according to RealtyTrac.com. From April to September, there were 1,428 new foreclosures in Algonquin and Lake in the Hills while there were 624 new foreclosure in the six-month period before that (from October 2011 to March 2012).