Buying foreclosed real estate

Sylvia Porter

October 17, 1990|By Sylvia Porter | Sylvia Porter,1989 Los Angeles Times Syndicate, Times Mirror Square, Los Angeles, Calif. 90053

The advertisements on radio tell about the killing to be made by purchasing real estate that has come on the market due to the failure of savings institutions. One lucky fellow even got a house for a dollar, the announcer exclaims.

All you have to do, these commercials say, is call a toll-free number and subscribe to a service that will send you all the information. The commercials are completely legal, as is the service they provide.

But the impression you may get is misleading. First, the information provided by the company is available free, or at very low cost, directly from the U.S. government. Second, the Resolution Trust Corporation (RTC), which is handling the sale of this kind of real estate, is doing everything it can to keep the prices up.

"The RTC is selling these properties at market prices," says Kate Spears, an RTC spokesman. "There is no fire sale.

"We need to get the greatest amount of money possible from these properties, so we're asking a fair price. The more we get for them, the fewer taxpayer dollars will be necessary to make up the difference."

There's another reason it would be foolish to sell this kind of real estate at ridiculously low prices: it would further depress an already sliding real estate market, forcing more savings institutions into trouble. This, in turn, would require additional RTC intervention -- and increase the number of properties it had to sell.

So while there are good values available, there are not properties for sale at giveaway prices.

"Most of our sales are handled through real estate agents working under contract," Spears said. "A lot of these properties -- most, in fact -- were on the market long before we became involved."

The RTC inventory includes almost every kind of real estate: homes, shopping centers, apartment buildings, office buildings. Potential buyers should remember that they are on the market for a reason. Often there is an economic downturn in the region.

In any case, you can find out about these properties easily, without having to subscribe to anything. There is a document called the "RTC Asset Inventory" that's available at any Federal Document Depositor Library -- an imposing name attached to a local library that has set aside space where you can look at federal documents. There's a good chance your local library is one of these; if not, its reference desk can tell you the location of the nearest one.

The "RTC Asset Inventory" is just that -- a listing of all properties the RTC has to offer. It is updated every six months, most recently in July. Of course, things have been happening fairly quickly in the savings industry, so even a listing published in July will be to some extent outdated. The Resolution Trust Corp. has taken this into account and offers a couple of ways whereby you can get the latest information at modest cost.

The one you are most likely to use involves a toll-free number, (800) 782-3006. You call the number, explain the kind of properties and locations you're interested in, and a custom-made listing is printed and sent to you.

"You need to be specific -- for instance, single-family homes in a certain town or county," Spears explained. "You can't simply say 'everything on the East Coast.' "

There is a charge for this. The minimum charge is $5 for a list with up to 50 entries. The cost is 10 cents per entry beyond that.

For those who have home computers, the RTC has its listings available on both floppy disk and CD-ROM, as well as an on-line computer that you can dial up using your computer and modem. Prices for these products and services vary. To get more information, call (800) 782-2990.

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