REO Foreclosures Input Needed..
Hello all,
I'm researching 4 seperate REO foreclosure properties and am curious what your inputs may be. I have checked county appraisals, retrieved foreclosure deeds from the register of deeds, reviewed area comps, performed exterior walk arounds, as well as peaked through windows. 
Each of these properties are in very well established suburban communities in Johnson County, Kansas.
#1 - 1350 sq ft duplex, 3 bed / 2 bath, $135000 asking
71 days on market. Built in 1982. FMV is probably $140000. Has newer vinyl siding. Needs some grade work for positive drainage. Standing water at foundation and pool (not swimming kind) on the backyard lawn. Assume mechanicals are original and may need replacement.
Taxes are $1750 per year. County appraisal is $133,400. Purchased at sheriff's auction for $140,750 4/15/2004 by the lender. Previous owner owned the duplex since 1997.
My thoughts: Offer $85k ($5k earnest money), rent for $950.
#2 - 1376 sq ft duplex, 2 bed / 2.5 bath, $170000 asking
66 days on market. Built in 1983. FMV is probably $170000. Needs new driveway, landscape overgrown, some masonite siding bubbling. Very desirable school district. Assume mechanicals are original and may need replacement.
Taxes are $1830 per year. County appraisal is $145800. Purchased at sheriff's auction for $164,968 5/20/2004 by the lender. Previous owner owned the duplex since 6/2002.
My thoughts: Offer $90k CASH ($10k earnest money), quick close, rent for $1200 (below market)
#3 - 2186 sq ft SFH, 3 bed / 2.5 bath, $260000 asking
18 days on market. Built in 1996. FMV is probably $300000. Needs new exterior trim, exterior paint, landscape overgrown, animal feces on deck.
Taxes are $3200 per year. County appraisal is $240000. Purchased at sheriff's auction for $230877 6/10/2004 by the lender. Previous owner owned the home since 2/2002.
My thoughts: Offer $180k ($15k earnest money), spend $30k to fix, sell for $275k.
#4 - 3675 sq ft SFH w/ 1000 sq ft finished basement, 4 bed / 2.5 bath, $458000 asking
*140* days on market. Built in 1998. FMV is probably $475000. Needs a days worth of clean up.
Taxes are $5800 per year. County appraisal is $469800. Purchased at sheriff's auction for $447983 3/11/2004 by the lender. Previous owner owned the home since new in 1998.
My thoughts: This one has me torn.... offer $300k ($25k earnest money), spend $30k in clean up and holding costs, sell in the summer for $425k
With each of these properties, I'd like to go to the listing agent direct. Perhaps the incentive of FULL comission on the deal will help?
I'm very curious to hear what you all think. "My thoughts" are simple, quick, gut feeling estimates.... subject to significant further analysis. I have a pre-approval for $750k, but can squeeze $150k in cash instantly if need be.
Thanks!
TLL
Numbers look good, but how do you purpose to convince the lenders to take such discounts?
[addsig]
Quote:On 2004-11-26 21:07, JohnMichael wrote:
TLL
Numbers look good, but how do you purpose to convince the lenders to take such discounts?
A very motivated lender? :-D
But seriously, I'm open for suggestions. The comps in the area support the ask prices, but they don't seriously expect someone to pay retail for "AS IS" product? I have taken lots of digital pictures so far of exterior as well as neighboring properties. My feeling is: "Here is my offer based on comparable properties, considering the cost required to bring this AS IS property to a comparable condition." This may work on 3 of the properties, but #4 is a, "Nobody is buying at this price point at this time of the year. Let me take it off your hands and I'll worry about it." (I won't write that in the offer. 8-) )
What are successful ask-to-successful bid percentages? Do you believe there is no hope based on my data? I've focused my attention on properties that have been bank owned for a relatively long time. My feeling is that there is some degree of motivation to unload before the winter. Am I incorrect to think that high ernest money, quick close deals aren't tempting?
Based on my info, what kind of deals do you believe would fly?
You can try but if they've been listed less than a few months you wont' get a huge discount typically. The 140 days, perhaps, but i'm guessing not nearly at that much of a discount. Also going to the Listing agent will not add any added benefit because all a listing agent does on an REO is enter a price into a computer and the bank says yes or no... so there is no "convincing" involved.
Quote:
On 2004-11-26 22:15, TLL wrote:
Quote:On 2004-11-26 21:07, JohnMichael wrote:
TLL
Numbers look good, but how do you purpose to convince the lenders to take such discounts?
A very motivated lender? :-D
But seriously, I'm open for suggestions. The comps in the area support the ask prices, but they don't seriously expect someone to pay retail for "AS IS" product? I have taken lots of digital pictures so far of exterior as well as neighboring properties. My feeling is: "Here is my offer based on comparable properties, considering the cost required to bring this AS IS property to a comparable condition." This may work on 3 of the properties, but #4 is a, "Nobody is buying at this price point at this time of the year. Let me take it off your hands and I'll worry about it." (I won't write that in the offer. 8-) )
What are successful ask-to-successful bid percentages? Do you believe there is no hope based on my data? I've focused my attention on properties that have been bank owned for a relatively long time. My feeling is that there is some degree of motivation to unload before the winter. Am I incorrect to think that high ernest money, quick close deals aren't tempting?
Based on my info, what kind of deals do you believe would fly?
Quote:
On 2004-11-26 22:47, Ruman wrote:
You can try but if they've been listed less than a few months you wont' get a huge discount typically. The 140 days, perhaps, but i'm guessing not nearly at that much of a discount. Also going to the Listing agent will not add any added benefit because all a listing agent does on an REO is enter a price into a computer and the bank says yes or no... so there is no "convincing" involved.
Thanks guys. Is it merely myth that the lender will get offended with low offers and not counter? I assume it's false. I'd like to demonstrate my level of commitment with sizable EMD's, do you believe that helps? Also, 2 of the properties are through Country Wide. Does this help my bargaining position if I can package them together?
make an offer you never know until you try
I have posted my lasted offer several times on here as I am quite proud of it and gloating a bit over the Ocwen bank folk (the are difficult lenders at best to deal with).
FMV$340K today's appraisal.
Appraised for $320K in 2000
Bank bought at auction for $300K, whay they were owed.
Offered $265K in October of 2003.
They accepted a 2nd offer of $205K in Nov. 2004.
A bank may say no the first time, but if you can support your offer and don't flood the bank with silly offers you won't damage your position.
I always ask for a contact at the bank as part of my contract when I submit an offer on an REO.
Excellent advise. I agree that these discounts are too high for property that's been on the market for a short period of time. The bank is probably receiving plenty of comparable offers.
BUT....we are in an ivestment forum...SO...all you can do is make an offer and see how it flies. I would write it up on a contract and attach the check for the earnest deposit to make sure it's taken seriously.
Don't expect a counter offer unless the discount is a bit smaller though. Bankers have huge egos. Good luck!
[addsig]
As an agent who lists a lot of REO properties, all I can say is GOOD LUCK - LOL. My lenders are being so stubborn with their prices; they've been over-pricing the homes to start and then not considering low, not to mention REASONABLE offers. I'm so frustrated I could pull my hair out.
All I can say is if the home was just listed, forget it. Give it some market time (3+months) before they'll consider a low offer. Even then, it might be tough.
It never hurts to know what they have into it (a search at the courthouse about what it sold for at the sale will give you a start) before moving forward - they will not take a loss until the home has sat for awhile and even then, a loss is a hard sale.
Best of luck - they can be awfully frustrating -
I have online access to the register of deeds. I know what they purchased these properties for at the Sheriff's Auction as well as what the original mortgage was.
I did walk through each of these properties and they are as I expected. My agent is not real excited about my offers, but I may press her to pursue for the heck of it.
I'd buy your agent a gift cert to a nice restaraunt if you want to keep her working for you.
Agreed, nbhomes!! LOL
Knowing what the bank has into it gives you a huge advantage because depending on the bank, they might just want to dump. But in my experience they won't take much of a loss until some time has gone by. Kudos for doing your homework and good luck!!