If a house sold 3 years ago for $67,000 and now a bank has it on the market for $35,000 .WHY? If I buy it and put $10,000 ( I know it depends on the condition . but for comentary sake …) into it and make it really pretty shiney ,you mean to tell me I SHOULD be able to sell it again for at least maybe $69,000?
Have you taken a good look at it??? Most of the REOs I’ve looked at with such a low price required the amount of work it took to bring it back up to FMV leaving a lousy or no profit margin. Everytime I think I see a good deal and then actually take a good look at it, I find foundation problems, major structural damage due to setteling; etc… requiring the amount of $$ it takes to bring it up to FMV. That’s not saying the good REOs with decent profit margin dont exist, just saying I haven’t found one worth it yet.
The reason a bank will sell below value is that they are penalized for having it on the books. I’m not sure if the law has changed but it used to be that if a bank had a $100K house on its books, it was prohibited from making $800K worth of loans under Federal banking rules. Pretty good reason.
Most REOs here aren’t good deals anymore. They realized that if they do quick fixes such as carpet and paint that they can command more money. We’re moving towards a seller’s market here anyway, so the house will sell at a ridiculous price even if there are still repairs to do.
You are absolutely right Deein Austin,
I’ve been looking at REOs for two years now (easy access as a Realtor) after putting a pencil to all the VISIBLE repairs needed and then having to guestimate a figure for non visible problems before spending money on inspections…I usually walk out backwards. To bad they are exempt from sellers disclosure. I think they should make a new law stating that banks must have properties inspected to provide potential buyers with reports (basically making it a banks sellers disclosure) before putting it on the market. Don’t see that happening tho