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Property values are all over the place. Appraisers are tip-toeing around, not sure what to do about values in today's market. Most of the time, they just appraise the property at the sales price, thus not rocking the boat.
Oceanfront condos that were selling for $330K, are now selling for $110K. Yes, that's right: they are selling for a 66% discount off the 2005 price!!! Sure they are bank owned, but then again, what isn't these days?
Most of my business is now foreclosure based (about 75% of it). Bank Owned properties are relatively easy to deal with. There is no rhyme or reason to it all and it all hinges on which asset manager is handing that property and what day of the week it is. I have seen banks turn down a $430K offer, only to accept a $330K offer several weeks later on the same property. Lose $100K? Are they crazy? What do you think?
Incapable listing agents have a preponderance of these properties. They do little advertising, they are hard to reach and deal with and frankly most of them are quite obtuse. Going through a transaction with one of these "foreclosure hogs" is like having root canal for 4 weeks. PLLLLLEASE!!! Will some asset managers pay attention and spread the business around to more capable agents? We are having a real problem here, one that contributes to this deluge of "stale" properties.
Luckily there are a few capable ones and I prefer to deal with them. They will actually work to get these bank owned homes sold and once I bring an offer, we generally manage to get the deal closed. Thank God for you Foreclosure Queens (you know who you are, and so do the agents in the area - I, myself, am working toward that status right now, having some great bank clients that actually listen to me and take my advice).
My advice: 1. Stay away from short sales. They take forever, and many of them eventually go to foreclosure. You are told you have the property, but you may never close on it, all the while losing other better deals.
2. Bid, bid, bid! There are neighborhoods where we don't have a single comp for over a year. Evaluating property in such a neighborhood is difficult. Make an offer! You may write 20 offers before one sticks, but one will eventually do so. Don't be afraid to bid on the same home several times. That $489K home that you bid $270K on last week? Come back and bid $290K this week! If that doesn't work, bid $300K next week. I just sold a home with a similar scenario. The Buyer ended up paying only $310K for a home priced at $489K.
3. If a deal is what you're after, you can't fall in love with the home. Just as it is in Life, you'll end up paying more for it if you do...
4. Work with an REO experienced agent. I started work on my REO certifications at the end of 2007, and that was a very smart thing to do. I know how to navigate the REO waters and it makes a world of difference to my clients' pockets... Don't expect me to taxi you around and treat you like a Diva; it's just not going to happen. I will give you a daily supply of listings and you'll be on your own to do all the driving around and previewing property. Once you find what you like, I will arrange the interior showing with one of my agents. If you like what you see, that's where I come in and earn my keep. You will do very well. When all is said and done you will be sitting pretty financially, having garnered an extraordinary buy, for pennies on the dollar. Time frame for success? It can happen in one day; it can happen in three months. Patience may be required.
5. CASH is King! Making a Real Estate Purchase in Cash is not all that unusual nowadays in our REO World. Don't expect the Bank to believe that you have money either; you have to actually PROVE it. Bank statements illustrating your dough should suffice. You have to attach it to your offer, along with a serious earnest money deposit. You want to impress the Bank to take your offer over all the others, don't you?
6. NO CASH? No problem! Just apply for a loan with a reputable Lender BEFORE you start shopping for Bank Owned properties. Banks will not accept your measly Lender letter anymore. They want hard proof that you can BUY that home; the Bank wants a "Commitment Letter". That means that you've submitted all your tax forms for the past two years, your formal application, your pay stubs etc. The application was run through underwriting and they deemed you worthy of the loan for that specific amount. Are you starting to see a pattern here?
7. BUY, BUY, BUY! Today's market will be referred to as the Market that made and broke people. You don't want to tell your grand kids: "if only I had bought in 2009..."
Tue Jun 30 2009, 22:09
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