The light at the end of the foreclosure tunnel

Foreclosure : Foreclosure Home For Sale Sign and House with dramatic sky background.

Written for Enchanted Home, the Taos News

The present conditions of the housing market favor prospective buyers. Among a plethora of negativity brought up by the economic downturn, there is still light at the end of the foreclosure tunnel.

One positive note, here in Taos, is that around 75 % of the people buying repossessed homes are locals, said Kathy L. Hall, of Century 21. “When a house in Llano Mesa that was a second home for a couple from another state went into foreclosure, Mike Laughlin, a taoseño who had wanted to buy a house for years, was able to get it,” said Hall. His payments now are less than what he had paid for rent and he is thrilled to finally have his own home.

If you are planning to buy a foreclosed home as a permanent residency, this is definitely the time to do it. Certain lending companies are giving preference to future homeowners over investors who would fix a house and sell it again. “Even if the investor offers more money, they’d rather loan to buyers who are going to live in the house,” said Hall.

As a result, people who haven’t been able to afford a house can now get financing for as little as 3 % down, plus a few perks. “Because houses are often left in poor conditions by the previous owners, the new ones may even get a renovation mortgage,” said Hall.

Linda Valaika, Broker/Owner of Remax of Taos, along with her husband Phil Valaika, highlights some positive aspects of selling foreclosed houses. “When a foreclosure property sells, no matter how low the sales price is, the whole neighborhood benefits,” she said.

It is true that a low sales price brings the value of comparable properties down, but once the new owner makes capital improvements to the property, its value will increase. It is beneficial for the neighborhood to have an occupied property rather than an abandoned one where illegal activity can occur. Employing local contractors to make the capital improvements also benefits the community.
A foreclosed house is a liability for the bank that owns it. Once a bank has a foreclosed property on its list, its value is subtracted from what the bank can loan out. When it is sold, the bank has a cash infusion and more money to lend, so everybody wins—the bank, the community and the new house owner.

Public foreclosure sales are advertised every Thursday in the Mercado section of The Taos News. When a bidder is successful at a courthouse sale, he must have a cashiers check and be ready to close in approximately 10 days. These properties are sold “as is” so buyers need to do their homework prior to bidding on a property either at a courthouse sale or for an online auction. “The homework should include researching the physical and legal condition of the property,” said Valaika. “Knowing the condition of the septic system or the roof is as important as finding out if there are liens and judgments on the property.” Sophisticated investors usually have a higher risk tolerance than most buyers for these types of sales.
Buyers are better off waiting until a foreclosure property is listed with a Realtor.  Realtors provide buyers with all the information and inspections they need to make an informed decision about purchasing a foreclosure property.  Buying a foreclosure through a Realtor is the same process as buying a regular property, although there if often less room to negotiate on price and terms. “But it is definitely safer than buying at an auction,” said Valaika.

The foreclosure inventory for the Taos area is approximately 10% of the MLS listings. If Angel Fire, Red River, and Eagle Nest are included, the inventory level is closer to 15%. “Still, we are faring much better than large metropolitan markets where as much as 50% of the listings are foreclosed homes,” said Valaika. And for aspiring owners interested in foreclosed properties, there may be a few good deals waiting for them… provided they shop diligently.


Kathy Hall is a Texas native who moved to Taos in 1985. She can be reached at Century 21 Real Estate, Taos, N.M. 829 Paseo Del Pueblo Sur Taos, New Mexico 87571. Tel: 575-758-0080 and 800-336-4826.

Linda and Phil Valaika opened Remax of Taos in 1992. Linda has worked in all facets of real estate over the last 37 years and is a Certified Distressed Property Expert. They can be reached at RE/MAX of Taos, 723 Paseo del Pueblo Sur, Taos, New Mexico 87571. Tel: (575) 758-5400, (866) 737-540,