ORLANDO, Fla. --- The white bus rumbles into the quiet suburban neighborhood, heading toward a foreclosed home that sits empty. Neighbors, young and old, cock their heads in curiosity or point at the slow-moving coach.
Once the vehicle stops, about 20 potential buyers file out and become detectives, opening cabinets and drawers; knocking on walls; and asking about the price, the previous owners and what repairs might be needed.
Welcome to the Foreclosure Bus Tour, a six-hour expedition to show Orlando-area homes and educate potential buyers on the vagaries of snatching foreclosures in a state where the housing market has struggled over the past two years. Real estate agents have also organized tours in California, where the idea seems to have originated, and other cities including Phoenix, Detroit, Kansas City and Jacksonville.
The Orlando prospects included working-class people looking for a family home, speculators seeking a bargain investment and even a Brit trying to take advantage of the weak dollar. To avoid embarrassing owners, the bus stops only at empty homes.
"I thought it would be nice to have a look at some American houses all at once, see how the market works," said Geoff Lamont, a London tanker truck driver who was on vacation and dreams of moving to Florida with his wife.
"You see some nice, nice properties that are much cheaper than you can get in the U.K. It's been good. You can get a feel for how a place is," said Mr. Lamont, 50.
The homes were in the market after lenders took them over from owners who didn't make mortgage payments. In February, Florida trailed only Nevada and California in the percentage of homes in foreclosure.
For Janice Ziesig, the owner of Z House Realty Group in Orlando, the tours allow her to show homes to many people at once. A cost of $45 per person or $65 per couple covered the tour, house information, teaching sessions, a continental breakfast and lunch.
The March 15 tour also included a mortgage broker; a home inspector who pointed out details such as structural issues, water damage and electrical problems; an attorney who answered questions about title insurance and short sales; and real estate agents with information on square footage, when the home was built and other key information.
The group dynamic, with 20 people from different backgrounds and income levels, made for constant dialogue with the experts.
"A day like this is a great laboratory and a great classroom, and it almost gives you a stepping-off point that when you do go to buy, it gives you areas you need to dig deep into," said Ken Nuckols, who was looking for a home.
The first house -- in a subdivision with single-family homes, tennis courts and abundant green space -- was an example of a fixer-upper that needs "a little lipstick and rouge," Ms. Ziesig said. At $201,000, the three-bedroom, two-bath home that was built in 2003 looked fine from the outside, but inside it had visible water damage on the walls, carpet stains and other issues.
Some were intrigued at the low price and the chance to fix it up. Others weren't.
"Either it was people who weren't very careful when they ripped stuff out or the people who owned it just didn't take care of it at all," Mr. Nuckols said.
Between stops, mortgage broker Cecil Moore answered questions on home loans and risk, telling the riders to get a deal that fits their budget to avoid foreclosure themselves.
"Go with your gut instinct," Mr. Moore said. "If you feel like something is not right with your financing or any aspect of the transaction, it's important to feel like ... you have the ability to bring things to a halt."
TIPS FOR BUYING FORECLOSED PROPERTY
- Hire a real estate agent, who can help determine whether the property is a good deal for the neighborhood and help put together your offer.
- Have a real estate attorney on hand to wade through the sales contract and state-specific regulations. For example, some states have a redemption period that allows the original owner to satisfy the debt and take back the home during a specified period after a foreclosure.
- Get a home inspection. Most lenders won't do repairs themselves but might give a little on the price.
- Ask for a warranty deed, which guarantees that the lender is passing a clear title onto you. If you receive a quick claim or specialty warranty deed, look up public records to see whether there are any outstanding building code violations or liens, such as federal and state tax liens, on the property.
- Get title insurance to protect yourself. Remember: Title insurance only covers what you paid for the property, so increase it if you put money into the house for renovations.
- Get pre-approval for a mortgage before putting in an offer. Often, the lender is willing to arrange financing, but it's not required.
Source: Ralph Roberts, the founder of Detroit-area brokerage Ralph Roberts Realty and co-author of Foreclosure Investing for Dummies.