Let's break this down -
1. There's the question of REO homes for sale in Orange County. There are several ways that REO (Real Estate Owned or Bank Owned homes) are sold in Orange County.
a. The method of sale that is most accessible to all potential Orange County buyers is through the So Cal MLS system - when the bank has assigned the property to a local listing agent and that agent makes it available through the Multiple Listing Service. This is the Retail Market for Orange County homes today - and it includes standard, equity sellers; short sales; and REOs.
b. Another way that Orange County home buyers can acquire REO homes in today's market is at the Court House steps when the home is sold at a Trustee's Sale. There is actually an auction on the property outside the designated Court House, and if the bank gets the price they are looking for, and you have cash or cashier's checks, you can buy the home. This method of home acquisition is highly competitive and there are people camped out every day at the Court House who do this for a living. If you want to get into this game, I'd recommend spending some time at the Santa Ana, Placentia, and Orange locations to see how the pros get it done. This is the discount market in Orange County.
c. The Wholesale market for REO homes across the country, not just Orange County is buying tapes. This is buying REO homes from the bank in bulk. You pony up the $$$ and you may end up with properties in 7 states, ranging from low end down town condos, to single family homes in the suburbs. You then decide how to handle the lot - fix and flip into the Retail Market, hold until the market appreciates, or whatever your particular strategy may be. This is also very competitive, tends to be locked down by a group of well capitalized investors with a ton of bank connections, a proven track record, and a ton of skin in the game.
2. The second part of this question is the "40% - 50%" off. The answer is, that depends. 40% - 50% off what? Off of today's market value for a similar home in a similar location and in a similar condition? Not in today's Orange County Retail Home Market. No way. You're competing with people looking for homes to live in. In one of the most desirable settings on the planet. Even if you are paying cash, you won't get that large of a price cut. The banks want to minimize their losses and usually sell to the offer with the highest net to the bank - regardless of where the money is coming from. The only way you'll realize that huge of a price cut in the Retail Market in Orange County today is on a complete fixer - and those are priced with the magnitude of the work that will need to be done built into the price. So it is really not a 50% discount, it is 50% lower that the exact same tract home down the street because that's how much it will cost in Retail Construction prices to bring the home up to the same condition as the one down the street? Make sense? The only way you can be a winner in this kind of scenario is to have access to Wholesale re-hab resources. And just so you know, there are huge players in the market, too. Again, well capitalized corporations with their own in house crews, warehouses full of travertine tile, granite slabs, and stainless steele appliances ready to swoop in for their own version of Extereme Make Over Home Improvement - because time is money. The fix fast and sell even faster.
I hope this helps any of you out there looking for a good deal on a home in today's Orange County Real Estate market. The best deal today? Anything you buy 5 years from now.
Altera Real Estate
Mission Viejo, CA