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Friday, November 13, 2009 11:00 AM

Recession reality: Study says Ottawa has one of the highest foreclosure rates in state

By VICKIE MOSS, Herald Public Affairs Editor

Ottawa landlord Jerry Wallis said he has pretty good renters.

But since the economy began to sour, more and more people are asking him for extra time to pay the rent.

“More people ask me to hold the check until Friday or whenever they get paid — ones that  never had a problem before,” Wallis said.

The recession hit the housing and real estate markets especially hard, experts say. One study shows Ottawa has the fifth highest rate of foreclosures by ZIP code in Kansas. The other four ZIP codes all were in Kansas City. The study was done by the Local Initiatives Support Corp., a national group that says it helps residents transform distressed neighborhoods into healthy and sustainable communities.

Last year was tough, Realtor Tammy Ellis, with Century 21 Lantis, said. That seems to be changing, she said.

“This year has been much better,” Ellis said. “I think people feel a little bit more stable about the economy. They felt they could step out and see if they could make a purchase.”

The foreclosure process and tougher credit restrictions also make this a difficult time for homebuyers, Ellis and Realtor Betty Birzer, Reece & Nichols Town & Country Realty, said.

Foreclosed homes generally fall into disrepair, which lowers their values, and skittish lenders make the process more difficult for potential buyers, they said.

A house that goes through the foreclosure process typically will sit vacant for about a year, Birzer said. That includes a three-month period after the sheriff’s sale that the mortgage company is not allowed to do anything to the property, including mow the yard, to give the owner a chance to redeem the property.

The longer a house sits vacant, the more likely it will fall into disrepair and become what’s known as a “fixer-upper.”

Most homes that are not fixer-uppers will sit on the market in Franklin County about four months, Birzer said.

Foreclosures also affect appraisals of other homes in the neighborhood, Ellis said.

She gave the example of a house previously valued at $150,000 that was foreclosed, fell into disrepair and now is valued at $125,000.

“That skews the rest of the market,” Ellis said.

Both Ellis and Birzer said now is the time buyers and sellers should turn to a professional Realtor.

Birzer recommends struggling homeowners seek advice from a Realtor early, before they end up in foreclosure proceedings.

“That’s what we’re here for,” Birzer said of local Realtors. “We’re a service business. We’re here to help you. Pick our brains. Ask us questions. We’re here to help people figure out their options.”

A real estate purchase is a major investment, Ellis said. It helps to have someone familiar with all the little details, she said.

“It’s very tough,” Ellis said. “Lenders are very tight right now.”

“You can be in dire straits at the 12th hour if you don’t have somebody helping you who knows what they’re doing.”

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