Memphis Foreclosures Attracting Non-Local Investments

MEMPHIS, Tenn. - Memphis ranks number one in foreclosure bargains. While that's good news for people looking to get a deal on a first home, the bargain basement prices also attract investors not vested in the Memphis community. That has some worried they'll do more harm than good.

It's a double edged sword. It's great news for people who can now join the ranks of homeowners, but not-so-good news for people living in those communities who will now be neighbors with empty, abandoned, run down homes that could possibly end up in the hands of investors many miles away.

Barry Less is a Crye-Leike listing agent who specializes in foreclosed properties. So, he wasn't surprised when Realty Trac, an online foreclosure authority, named Memphis as the number one place to find a foreclosure bargain.

"I knew we were up there pretty high on the list and there are some good buys in Memphis," said Less.

Less took us on a tour of one of those properties in Raleigh, a three bedroom, two bathroom home.

"It's being sold as-is but you can see it's not in too bad a condition," described Less.

Less says this property, owned by Fannie Mae, like many, is priced to sell quickly because of the large inventory of foreclosures and even more coming. He says typically, foreclosures sell within 30 to 60 days. Fannie Mae only offers the home to owner occupant for the first 15 days it's on the market. Homeowner Tiny Horn says that's only fair.

"Once they purchase the property, they can keep it maintained--the grass and the upkeep of the house-- but as long as it's in foreclosure, and no one's living in it, it's going to degrade," said Horn.

If Memphians don't jump at the chance to join the ranks of homeowners, it opens up the market to investors, who want a piece of the pie. Less says investors typically pay cash, close quickly and are strong buyers. The problem though, is when investors are unable to care for a property from a distance.

"The foreclosures continue because a lot of these out of town investors are losing their property because they don't make good choices on their investments," said Less.

Horn says she prefers her neighbors to be actual people, who live there, and will take care of the neighborhood. But, she says she understands it's not always easy to own a home.

"Now would be the perfect time, but a lot of people don't have jobs right now to pay the prices that they're asking."

Just to give you an idea of the Memphis market, the average bank-sale price through the first seven months of 2010 was $65,495.

While Memphis might be the number one place to land a deal, bank sales are down 21.2 percent over this same time last year from 3,619 down to 2,853, but non-bank sales are up 12.2 percent.

That's good news for the Memphis foreclosure market, and good news for you if you're in the market for purchasing a home.