In much of the country - especially Florida, Arizona, and Nevada, the states hardest hit by foreclosures - the chief buyers of repossessed houses are either investors able to put down all cash or the 25 percent that lenders typically require, or first-time purchasers using mortgages insured by the Federal Housing Administration.
Nationally, investors gobble up more than half of the bank-repossessed properties.
"Most are rehabbing and renting them quickly to obtain a positive cash flow, then refinancing the property and taking the cash to buy another one," Sharga said.
They are looking at three- to five-year investments, he said, "so the current short-term depreciation of real estate values isn't a big deal."
Other investors are doing wholesale flipping, Sharga said, buying "the most absolutely discounted properties, doing minor repairs, and flipping to another investor, buying 20 cents on the dollar of the last sale price and selling for 50 cents."
But in the Philadelphia region, especially the northern and western suburbs, where Prudential Fox & Roach agent Donald Sepety works, 85 percent of his primary buyers include first-timers and "pharmaceutical-company employees in the higher end of the market, who are going to fix up these houses anyway."
The first-time buyers Sepety sees are acquiring houses in the price range of $130,000 to $330,000 - which, in the geographic areas where he works, has been less affected by delinquencies and defaults.
In the last year, he has sold about 25 repossessed houses, from one in Malvern for $579,000 to one in West Norriton for $130,000.
"I handle two a month," Sepety said. Having to deal with the banks and the legal system, "that's all I have time for."
