It appears in our area, a ton of homes are getting listed with banks on the MLS. I’m guessing these have goen through foreclosure and nobody bid more than what was owed, so now it’s on the MLS.
Can deals be had here, or will the banks be happy holding these properties for months?
Sure, people get deals this way. I heard one person would bid in bulk to lower the per-house price down. My own experience has not been good with REO’s, but it could just be my area. I’ve bid on many REO’s, but usually the bank only counters with $1,000 at most. Then again, they aren’t on the market for months and months, either, which would have a big impact on the bank’s willingness to drop their price a lot.
I know someone that was able to buy a bank-owned house from the MLS for about $850k, and the house was sold 2 years ago for $2.5million. The taxes alone on the house are $35k/year. Of course the house needed some repairs and updating, but no serious damage of any kind. Crazy, right!?
banks are hot happy holding properties. they are in the business of loaning money, not repossessing or managing properties and having too many on the books looks bad on their reports.
Having said that, I’ve done a REO rehab, and one of my frustrations was that the bank didn’t know the true condition of the property. The realtor who was managing the property would just forward the contract (as they were obligated to do) with the message “not a reasonable offer.” Of course, the realtor is not hurt by letting the property sit vacant for 18 months (as this one did) since the bank is picking up the tab; the realtor benefits from a higher sales price.
My solution was to submit an offer that specifically stated that the buyer would be responsible for repairs listed in attachment “A” and then listed all of the repairs necessary to make the property salable along with estimates and photographs. Since the repairs (and photographs) were a “part of the contract” they got in front of somebody at the bank, thereby making them aware of the true condition of the property.
We’ve got a few in our area. I looked at a couple and one was particularly bad. It almost cash flows in my opinion, but there’s a lot of work to make it presentable. So the key is to get another look. Take a bunch of photos. (How do you photo bad smells?) Then submit it with an offer?
I think the banks are willing to hold this stuff, but as inventories climb (which they will over the next year or two) more deals will be able to be had I assume.