Just curious on how many of you out there purchase property that the bank owns and is listed through an agent.
And if you are purchaseing this property at how much of a discount, how much can you get them to go down from asking price. I am asking because currently there are a few foreclosed homes on the market that I am looking at in my local area, just wondering why the local investors haven’t bought them yet. If the bank would accept a little less than asking they would be some pretty good deals, following the 70% rule line of thinking.
I’m starting to look into that, too. It seems it’d be so much easier than a short sale. Here where I am (Dayton, OH area), there’s just a glut of REO’s on the market. They’re already on the market at below value & if you make a low offer - even any offer - it seems you’d get a good deal. Many of those in my market are already listed at least 20% below FMV. And some of them don’t need all that much work ($5k or less).
As far as the “local investors” you speak of, more and more I’m convinced that there isn’t any real competition. I haven’t done a bazillion deals, but I’ve been around the block & I’ve NEVER run into another investor for the same deal. It was different during the bubble when everyone (even the taxi driver) was an investor, but not now.
Even when I go to the REI club here, that’s the only time I ever see them or hear from them. I’m not convinced many people are doing anything.
I am looking at one right now, comps are 120k, and asking is 90k, but it needs 7k in repairs (all cosmetic). If a person could get it around 75-80k I think it would work. My thoughts are that even though they are not steals they seem to be easy pickings. What do you think naomik2263.
Look at the potential profit on that:
Say you get your offer accepted at $80,000, put in the $7,000 in work. You’re at $87,000, and you sell it for, say, $114,000 (because it is a buyer’s market). That’s a $27,000 profit (minus holding, marketing, closing costs). I’m able to sell pretty quickly - I have a buyers list & I market toward bruised credit individuals utilizing a variety of bad credit-type lenders. So it’s reasonable to expect a $20k profit over maybe a month’s time. Am I missing something? Granted, you do need money up front to buy from the banks, but I’ve got that lined up, hard money & private lenders. Heck, if you want, you could reduce the price to $110,000, do no repairs & sell to the same bad credit buyers who are looking for their own home & willing to do cosmetic repairs - that’s an even faster, easier payday. I’d love for someone to tell me what I’m missing. Why go through the hassle and paperwork of a short sale, not to mention not knowing whether your short sale will be approved, when you can make around the same amount with less hassle? Here in Ohio, the profit will be approximately the same - that’s research I have done. And the banks are more motivated to sell their REO’s than they let on, at least here, 'cause their REO’s are sitting.
Surely I’m missing something.
Do you really need money up front? I am fixing to put in an offer on the one stated above, I am not paying cash, bank just needs prequal letter saying the lender knows the current condition of the property. Is there something I am missing?
On a side note this particular bank has a few rules to follow, i.e. no option period, no disclosure, and no government financing accepted.
No realtor here will deal with REO investors unless they show a pre-approval letter or other funds availability (I know that from looking at their listings online: ALL of them require proof of funds and say so right in the listing). But, I can imagine if you have a serious buyers list with money/financing, you can wholesale to them without using your own money. But I’d still want to have the money available, just in case. You don’t want egg on your face not closing a deal when you’re dealing with banks.
Did you go after that property? Am very curious & have started looking for the REO broker to work with & looking at properties online.
Do keep in touch direct -
~Naomi
You wrote:
Wanted to go of the forum because I absolutely cannot believe the deal I just
looked at this evening, I think we are on to something here. I found a 2000 sq
ft house listed for 92,900, the county appraisal is at 167,432, the house is two
story, full tile, updated kitchen, awesome condition. Needs about 5k in repairs
(outdated swimming pool needs to be removed) but nothing major a little paint
and that’s about all. I just do not understand what we are missing in the
equation, I know you have to hold these properties for a minimum of 90 days but
that doesn’t mean I can’t have a for sale sign on it and close it on day 91!
They just received one offer already but if it is declined I am going to jump on
it (even at listing price it is at 55%), what do you think?
Never ever rely on county appraisal numbers for your comps. They can be off by 100’s of thousands of dollars.
Hi Gang…MLS listings are very underrated. I’m writing from West Central Florida and I’ve picked up 7 properties in the past year on the MLS. Two of the seven were in fact bank owned foreclosures. My experience is they price them aggresive out of the box. I assumed they would drop their price, but after serveral low ball, cash offers, I found that not to be the case.
Well, I don’t know about Florida, but I do know that here I have a list in 9 pt. font 4+ pages long REOs. A decent 3b/1ba REO in a decent area was listed at 49,900, when I did a simple Zillow search (which I don’t rely on, just for free “general idea” values - I use a pay service for more accurate valuations and a realtor when I really have to) the search came back at minimum $69,900 with comps all higher. Zillow’s value was pretty accurate for that property because I know the area of that house. I drove by it, and just a quick glance in the windows revealed a quick painting and new linoleum on the floor would bring that $69k price.
Maybe things are different in Florida, but I think with all these foreclosures going back to the banks, there are deals to be had in REOs for now and up to a year to two years.
Like I said I have 4+ pages in 9pt. type of these kinds of properties (at least 10 per page fitting my criteria in the areas I want to work).
That’s along my lines of thinking. MLS REO’s are underrated…basically meaning many people are not looking at this as a profit center. Sounds like you are and so am I.
I agree about Zillow. For a free service, not so bad but it can burn rookies bigtime. It groups property values in an area regardless of year built. Can be dangerous in tough areas that have new construction sales thus inflating the value of a similiar size home that was built 80 years prior.
…always printing money…
I’m an agent here in the metro detroit area. The “general” rule of thumb that I have heard is you bid 10% below asking price.
Yes, you are correct many of the bank owned properties that are listed with an agent are already priced aggresively as any good agent will want to have priced so they do not waste their time and dollars,(this does hurt our other non-REO listings but that’s another topic ;D)
The lowball offers by investors do get rejected, and if they do get received it’s usually after a long time of DOM (days on market), typically from what I hear 1 year. Many investors want too good a deal and I’ve learned that greed will hurt the investor (another topic also)
After a year and when the bank needs these properties off their books, yes this is the time where a low offer could get accpeted.
I’m not an expert on REO’s, and I’m new to the biz, so I’m learning this market of REO’s and here in metro Detroit, if one wants to buy REO’s it’s a buyers market, I’ve seen very nice properties sold recently for .27 on the dollar, this was a package deal, so it was an exception, yet someone got a very nice package of REO’s, about 140 of them.
It sure looks like forclosures are on the increase, which overall I hope comes to an end, because it’s not a good indicator of our economy, yes it does produce an opportunity for residential real estate investments, yet the bigger picture is a negative outlook for the national economy, consumer confidence, home values, employment stats, bankruptcy and so on.
Amazing our market kind of scarry and unpridictable. I am a realtor in So California I have seen many homes this last month that are 50 to 60 grand under market price ranging form 500 to 600 k staying on the market 100 plus days… Our market is slow so the price below market is not an indication that you will have a good return…
You mentioned your prices for the home and repairs, but there are taxes, realtor fees and possibly CFD, Mello Roos or city tax your not getting. All that does cut in to the value of your profit. I would suggest you visit the real estate office build a relationship with an agent… let them know you need up fron Compartive market analysis and that come the time to sell you will use them if they are willing to take a 4% listing when it comes time to sell. It can be worked out and they will work hard for you as you will need their services and they are hungry…
I’m a Realtor, if Homes sold here in 100 days, boy that would be a quick sale!
I do not think you can assign a contract for REO property or do a double-closing.