Ohio Mortgage Borrowers Take Advantage of Foreclosed Property Deals

No carpet. No kitchen. No problem.

Those sort of defects don’t scare away Toledo real estate investor Matt Dewood when he finds a house in a popular area where he knows he can turn a nice profit by giving the place a facelift.

With foreclosures soaring across northwest Ohio and southeast Michigan, the 30-year-old investor who specializes in flipping houses has plenty of prospects - and not just ramshackle places in older areas of Toledo.

“There’s a ton of opportunities out there,” said Mr. Dewood, of One Way Properties in downtown Toledo.

He and other pros offer advice to prospective buyers on how to find and snag foreclosed homes, known as REOs, or real estate owned by the lender.

But first, the experts dispelled a myth.

Sheriff’s auctions of foreclosed properties aren’t the happy hunting grounds many would-be buyers believe. Odds are good that the successful bidder in the Toledo area will be the bank or other lender holding the Ohio mortgage on the property.

To protect their interest, lenders typically submit opening bids for the loan balance. Home values didn’t rise in this region as much as they did in some other areas of the nation during the long housing boom.

Rod Culler, a Toledo real estate agent specializing in foreclosed properties, urges getting professional inspections.

Therefore, unless the homeowner has built up significant equity, these properties seldom represent the kind of deals auction participants are seeking.

Mortgage-holders get subsequent sales proceeds before other creditors.

Although there are exceptions to this rule (such as abandoned properties sold for delinquent taxes), the greatest opportunity for prospective individual buyers begins after the lender has taken deed to the property and put it up for sale.

For example, a newer McMansion in Lucas county - four bedrooms, five baths, nearly 5,000 square feet - in the upscale Country Walk development in Sylvania Township was appraised at $575,000 for a sheriff’s sale a year ago.

It was acquired by the lender and was resold seven months later for $315,000, or $260,000 below the appraisal, according to the Lucas County auditor’s office.

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