Buying REO's?
Good Afternoon,
I've seen websites that will show you REO's for a small fee but am very reluctant to signup for...not the question I want to address at this time but say you do find a REO you want to purchase can you contact the bank directly on this property?
What I mean is can I walk into the bank and say, My name is such and such and would like to purchase this home. Is it that cut and dry?
Thanks..
[addsig]
Alot of the properties are listed on the MLS and follow the normal purchase rules as buying a house from a person. Get in touch with an agent and they can search and find them for you.
Are you planning to rehab or flip? In all honesty, it is very hard to get REO properties for a profit theses days. Because every jack,Joe and their mother are bidding on REOs for even more than the bank is asking for. They are mainly owner occupants who want to buy cheap,fix and live in it.
Anyway, I suggest you get hold of agents that list REO and get on their list of investors to call when something comes up.
No it's not necessarily that simple as many banks will not sell their REO properties to "individuals", this includes investors. Some, after having had to deal with the foreclosure process, push all of their properties to other agents to market. Those that I've spoken to WILL however give you the contact information for the agents they deal with. Prices at this point can vary GREATLY from what the bank foreclosed for. (Understandable to some degree from their perspective). Stay the path though. That property you're willing to purchase from some other bank is out there. Maintain your diligence.
Most banks that own property in your area will be from out of town or if local, they will either have a local agent to list with or they might even transfer that asset to a third party liquidation source. There are a few giants out there that handle the majority of REO properties.
In most cases, REO property is listed with local foreclosure agents. This will also be true with VA owned properties in most areas by the end of this year. HUD properties are still handled by third party sources such as bestassets and have to be purchased through a local agent.
I would recommend that you find one of your local REO Realtors and have that person be responsible for finding deals that fit your criteria. A simple internet search should reveal who these folks are in your area.
thanks,
Chris
For HUD governement foreclosures check out the goldenfeather website. They have a list of brokers who can make your bid. If your a teacher or a police officer, it's possible to buy properties for 1/2 price -- the properties are generally in areas which need police officers to live but for someone in these professions its a good way to be guaranteed at least a fifty percent profit on your first deal.
most i know of already have someone assigned to the by the time you catch it at a sight theres already a listing agent.
I am an agent and investor in Utah.
I am starting to bid on REO properties as a buyer. Folks, it is a JOKE!
Many agents are making money selling REOS due to ignorance on the part of the buyers:
1. The idea of buying a "foreclosure" makes buyers think they are getting a deal, when they are not. In reality, most REOs here sell for full to 98% of market value. Ridiculous if your are an investor.
I pulled the "SOLD REOS" for the last 180 days off the MLS and they were selling for full listed price, some $2000-$5,000 off asking price. Ridiculous when the properties are priced at market value. It benefit neither the buyer if they ever resell nor an investor. Because locally our prices are too high anyway.
2. LIsting agents or REO managers demand that the buyers put up 2% of the purchase price, copy of the earnest money check and letter of approval, which is ok. except for the 2% part. Most earnest money amounts are around $500. They make it so high that it's impossible or hard for you to back out of the deal when you get your appraisal and the so called "foreclosure" is bought at FMV, in other words, you are not getting a "deal".
By the time the appraisal comes in and they time this just right, it's too late to back out of the deal without losing your $2,000, $4,000 earnest money.
3. The buyers will have a "price" problem when they try to resell those homes because they bought them at retail.
4. REOs managers and often their assigned agents don't even bother to reply to a lower than listed price offer or counter. My experience is that if you are an investor trying to buy for profit, that your offer is automatically filed in the round file. They are looking for the "average" home buyer to bid on the REOS not agents or investors because they KNOW you want a deal not some overpriced hog.
5. The agents cringe when they get a lower than market value offer and don't look at your offer favorably.
Conclusion: For our local market, REO managers aren't interested in giving you a deal so you can make money. They are trying to liquidate their properties at nearly full market value. While this is ok for them, it doesn't benefit the investor seeking to buy deals.
I won't buy anything unless I get a minimum of 20% profit. It's not worth it. If the market goes bad and you have to liquidate/sell these properties you are STUCK with them. If rents drop, you are STUCK with them etc. And why pay full market value for REOS in the first place as an investor? Rents are high and you can't get a higher appraisal if you sell on contract.
Those LISTING Services. same joke. Most properties are listed with a local agent and you will run into similar propblems above.
The best way seems to be "pre-foreclosures" and in maybe "short sales", once it gets to be an REO, it's too late. The REOS start acting like a real estate brokerage "demanding" full market value for everything in their inventory and looking for "traditional buyers" off the street.
[ Edited by roiclicks on Date 08/06/2003 ]
I agree with previous post. In Colorado once the bank has gone through the foreclosure process and gets property back, they list with local agent at retail. I always try to deal with properties pre-foreclosure. As for the listing sites, Every one that I have seen are offering no bargains.
Colorado: must be similar to Utah. You'd think that FORECLOSURES mean, less expensive properties. Not so. They are listed at market value.
[ Edited by roiclicks on Date 08/06/2003 ]
It seems to me that REO managers just want to list with an agent and get regular buyers, not investors.
To my knowledge, some of these REOS already got their money through the Mortgage Insurance process? So why are they selling at retail for?
I get a list of over 115 notices of default every Friday. However so do 1,000 other people and we're all mailing to the same distressed owners. So they get a lot of "junk" mail. Meeting in person would seem to be a better way to get a deal if you've zeroed in on a particular property. But it can also be a big waste of time.
So far, I have been able to purchase condos for rental from motivated sellers who list on the MLS at regular prices but are willing to take a much lower offer. The non REO agents have been nice to deal with too. In fact, I've been luckier with them than with REOS who won't drop their prices.
The only way I see making money with REOS is by becoming a listing agent for them! (
REO's are on a deal if you make them a deal.
Heres what I do: I research the propty. Find what the selling price was and when & loan rate, terms. Find the current TMV and comps for the same type house in area, unless you already know.
After finding the sale info for the propty I Figure the "True" owed amount (balance) of the loan. Walk through the propty if I can - not I try to look at MLS's or FSBO in the neighborhood. Most neighborhoods are cookie cutter.
It will depend on how long it has been held this will also reflect whether you can make a deal out of it. Distressed held props are good for this. (Reminder the interest rates have started to go up so this can affect your deal, neg or pos I am not sure yet haven't had to deal one yet based on this event)
Asking price difference from loan balance.
Get your funding info lined up.
Figure offer that will work for your goals.
I get one for 32% under market with potential to be 35-50% after repairs it is a good thing. If they dont accept wait a little while and make another offer or resubmit same. If it goes away, let it there are others. Don't make a career out of chasing a propty just do your work move to the next, revisit if you have to.
Soon you won't have to chase the realtor, REO officer, auctioneer etc... you deal with they will keep an eye out for them for you if you get a couple thru them.
Works for me. You fix up and resale at market or just under to sell quicker. I will even hold the paper if the sell price and all related issues are right. First one is the key, second will make you a good contact, third may be brought to you etc....
Get other opinions.
We have an REO right now that my agent called to my attention, warned me that a CA buyer was flying in to see that day. We did our research, walked it, made our bid all that morning before he got there (not her cust) locked it up and even gave his agent a lead on something I didnt want! Which he bought.
We bought 33.25% under as is value, 25K under the original sold price 2 yrs prior and after we are complete even with minor rehab with a Title 1 for rehab loan at low% will give us a 47% ROC .
Was that a deal? I think so.
I can't find any banker that deals direct in my area all handled immediately by a RE agent.
When you say "that my agent called to my attention" you are referring to your real estate agent?
Thanks
Mike
I live in New York" and (unfortunately) agree with everyone who has commented..... except for Dreamin in Gun Barrel Texas, who must be buying property way off the beaten path, for sure not near any cosmopolitan city where real estate is hot as a "poker"! For sure it would be "dreamin "here to think any half-way desirable and even not-so desirable property is going to be had at 30% off for the taking.
I think there are 30% off deals or better in any market. You just have to look harder. I have a cousin in the dreaded SLC Utah market and he has done over 1 million no money down in the last year, 24 yr old college student. I am planning on moving there or somewhere like it. I have yet to see a market that didn't work as I have friends all over the place that are doing it on a regular basis. I do think that the more spendy markets are a little harder and require more work and more $$.
When I moved to my current location with 127 licensed contractors for 5000 people I was told I couldn't do it here. I have hit #1 in my market and I have a crew going full time, year round.
You too can do it in your area, get rid of negative influences and thoughts and figure out a way to make it work for you. It is amazing what the mental computer will spit out if you ask it the right questions i.e. "how can I get REO properties at a sufficient discount to make a good profit?" "HOw can I make this market work to my advantage"
I strongly believe in this and have faith in positive thinking and hard work.
[addsig]
I myself have acquired 2 Forclosures. One a Hud and one a VA. Both I got for about 20% below market value. Both needed about 100 hours of labor and about 2000$ in materials. I live in Raleigh/Durham NC. The market is not very hot here so its a lot easier to scoop up deals.
I am in the tampa bay area - and in the foreclosure sales here the bank representing companies do their best to keep new investors/ bidders out of the sales as much as they can by bidding almost 90% of the retail price. Once they pick up the properties; they simply clean up the yard and inside - and sell it at marketprice. The market here is so hot that even a fixer-upper sold by these companies seems to be getting 100% of the market price (in ok neighborhoods).
Personally, I picked up my first house in foreclosure sale recently for about 75% of its retail value (4 weeks of non-stop attending/research).
I feel that when fixing and non-repair expenses are paid - I will have spent another 15% of the retail price.
Therefore, I am starting to scout FSBOs and pre-foreclosure deals for my next purchase coz as I feel foreclosure sales and REO properties don't seemed to have much equity left for investors to play with in the hot markets.
by the time you see the foreclosure its been assigned to a listing agent.
ITPRO15--
Contact me!
I deal mainly in REO property, and we live in the same town!!
Joe
In most cases you can not walk right into the bank to discuss the REO with them because the bank is halfway across the country. Most of the REO's in the country are owned by a handful of banks, they ALWAYS list them with a realtor. Because these banks are federally insured, they are required to market the properties in a competitive environment (this doesn't always happen). But if you can find out who the listing agents are in your area that handle the bulk of the REO's you can usually get the information from them long before you can any company what sells lists.
[addsig]