I’m interested in reo’s, but I would like to know if is a good way to make a profit or not. I have seen a few listings and the prices are close to the market price.Thank you
Howdy Txiki:
A lot of the REO.s are priced at market, especially if they are in near move in condition. Some banks will even paint and install new carpet as they know it will increase the value and help sell faster which is their main goal.
The worse the condition the lower the price and better the deal. I just bought a REO fron the MLS that was priced at $29000 on 1.3 acres in Dripping Springs. The land is worth the price I paid for the 1800 Sq ft house that needs tons of work. I estimated $55,000 and am under budget by $5000 and we are only 50% complete.
If you are thinking preforeclosure, this house had debt of $120,000. Not a good deal there. The best way is just to keep looking at deals. Even a HUD deal may work, depending on your investment goals. Just keep looking.
Hi , thank you for your help, but ( always a but) , the listing that I have access are all reo’s, so I would like to know what is ( average) a good price to offer for one of those reo’s? ( percentage maybe). Thanks again.
Howdy Txiki:
Our deal was listed at $29,900 and we offered $20,000. They said $24,000 was as low as they would go and we said OK.
What price range are your deals and what is your strategy and your source of funds? If you are like me and plan to use hard money and fix and resell you will need a bigger coushion because of the expenses involved. If you are buying to live in you can afford to pay more. If it is a buy and hold and you have cheap loan sources you can afford to pay more too but not as much as an owner occupied property. I know investors that are willing to pay 80% of the retail value (livable condition) for rental units. They want to make their money going in just in case the market goes south. There is no reason to pay retail even to get leverage. Most of the time the rent will not cover the payment.
Some of this is just pure guess work because I do not know you criteria and strategy. Some investors send out lowball offers trying to get a nibble on one deal and some concentrate on finding one seller that is ready to unload. If you see a REO that has been on the market for 90 days or more you will want to offer less on that deal too.
Also a lot of Realtors will not do this but a few will tell you what to offer, what the last offer was for instance, or what was turned down. If you have a buyers broker for sure they can find out a lot of the inside info and help you find good deals and they usually are paid by the seller as well.
Hope all this helps some how. I am just kind of writing stuff as I feel it.
Thanks again, my strategy is like yours, buy, fix and resell.
I was thinking to offer like a 20% less , witch is pretty much for what you have got the property.
Do you think the agent would help me when I do the offer? Do you have any experience with that? Thank you.
Howdy txiki:
The listing agent will help you or your agent will help. They have the forms and knowledge to help you fill in the blanks on the real estate commission forms only. They can not practice law or use other forms. Actually a lot of REO sellers will have special addendums to the earnest money contract that must be used. Do not let them scare you they are just more words saying pretty much the same thing and explaining the deed you will get etc.
The may have knowledge what the seller will accept but should not disclose that info to you as their duty is to the seller to get them the best price for the seller. This is how the law states the relationship but in reality the broker wants to earn a living and may spill the beans about the lowest possible deal to be had. The real estate commission calls it out of ethics but they allow buyers agents to disclose what ever they find out about the seller. I gave up my license after all the two faced ethics relationships came into being and fear of being sued because I had a license and wanted to but property cheap. Even dealing with HUD as a seller all agents know that 82 % net to HUD is the bottom line and get most of their investor buyers at the magic number some how.
The more offers you make the more you will get a feeling for what a seller will do and the more agents you meet and get to know you will build relationships where they will bring you deals that fell thru etc that will be good deals.
txiki, I just put a 80% contract on a small foreclosed 3/2 in SE GA. Listed 40K. Should sell rehabed for 55K. Rehab 4K-5K. I will not go better than 80% if any rehab to be done.
Thank you, I’m going to offer 80% of the asking price, and will let everybody to know if I get the property, thanks again.