×

This Summer, Take a Bus Tour of Foreclosed Homes

As foreclosed properties stack up in up-market areas of Long Island, New York, one company is capitalizing by taking potential buyers around the empty homes.

Foreclosure tours have sprung up around the United States as more overextended borrowers fail to make monthly payments.

Foreclosure Sign
CNBC.com
Foreclosure Sign

U.S. home foreclosure filings jumped 23 percent in the first quarter from the prior quarter, according to real estate data firm RealtyTrac.

One way to sell properties is to make life easier for potential buyers by ferrying them around in a tour bus.

That's hard for people who had properties foreclosed, David Farrell, director of tourism of the Long Island Foreclosure Tours told Reuters TV, but banks need to get the assets off their books.

"People have been evicted, it's a terrible thing," he said. "But for the most part people have been out of their homes for six months, a year. The people who lost, lost a long time ago. Banks lost, homeowners lost. Now what we have are two people who can win."

Banks benefit from getting homes off their books and buyers can purchase homes at a substantially reduced rate, he said.

Long Island Foreclosure Tours, a division of Foreclosure Tours International, took three buses of prospective buyers to about 10 homes each on Saturday.

"This is devastating to see how these beautiful houses, and up and coming neighborhoods can be so dilapidated, so gutted," said prospective buyer Cathy Germaine from Franklin Square, Long Island, who was on one of the tours.

But she said she was "sick and tired of renting" and was looking for a property to buy with her fiancee.

For sure, buyers can get a bargain compared with some of the prices paid in better economic times.

Among houses on the tree-lined tour was a $372,500 four-bedroom property in New Hyde Park which the previous buyer paid $475,000 for a few years ago, according to Farrell.

Another with three bedrooms in the same neighborhood which went for $550,000 in 2006 is now on the market for $324,900.

Tour-goers pay $50 each and get a $500 refund if they buy any of the houses they view, according to the company's website.

Farrell said he looks for properties which are bank owned and have been vacant for some time.

He said of the properties he was showing on Saturday the majority could be purchased for less than the cost to rent.

"To me, that's intrinsic value in real estate -- when you can live in a house and every month your bills are lower than they'd be as a rental. It's hard to lose if you're a long-term purchaser and it costs less every month to buy than to rent."