Foreclosures are NOT bargains
Realtor Notebook
By Teresa Boardman, Thursday, June 5, 2008.Radio ads, printed ads, Web sites, news broadcasts and television shows give consumers the message that they can find bargains or even achieve wealth by purchasing bank-owned homes. Media hype is all around and in my market we even have bus tours of foreclosed homes.
Real estate agents are bombarded with information on how to get rich selling foreclosures. Opportunities exist for investors and agents who want to run a high-volume, low-commission business. The homes and the opportunities are not as wonderful as the marketing leads us to believe.
For most Realtors, foreclosures are a growing part of the inventory and we work with them because we have buyers who want to purchase them. The process of buying a home from a bank is different than buying it from a private party -- it is slower, and there is more paperwork and it always seems like the bank doesn't really care if the home gets sold.
Getting these homes inspected is a challenge because often the water has been turned off by the city. The bank has a process and policies, which means it takes longer to get the simple things done that most of us handle on the spot with a phone call.
Large asset management departments handle foreclosures. Employees are in charge of "files," and they have hundreds of them. They get sick, take vacations and don't answer the phone. These employees play the role of the seller. They don't get to make decisions; they follow rules and they get paid vacations, and do not receive commissions or bonuses when their "file" closes.
Buyers' agents make less money on lower-priced foreclosures and end up doing about four times as much work as they would with any other type of sale, mainly because of the extra paperwork and because our buyers will have to make a few offers. About one in every two or three offers a buyer's agent writes will result in a sale that closes.
Often no effort is made to clean bank-owned homes or remove refuse. I have toured unheated bank-owned homes in sub-zero weather. I once had a client slip and fall on the ice on the kitchen floor. There are holes in the ceilings, missing windows, missing water heaters and no appliances. Snow accumulates on the sidewalks and stairs making it challenging to get to the front door. Sometimes a screwdriver is needed to remove the screws from the porch door to get to the door with the lockbox. Yet members of the media call me and ask if bank-owned homes are "staged" to sell faster. No, they are not staged, and they stay on the market longer than other homes do.
The houses tell me stories. A child's toy on the kitchen counter, phone numbers for the pediatrician and family dentist on the refrigerator. It hurts to go inside some of them. Clients ask why the homes are in such disrepair and wonder where the children are now. I don't know where the children are, but I do know that people who are losing their homes don't make repairs and that some of the homes were owned by investors who never made a repair and tenants were left homeless with little warning. In some cases, the tenants take their frustration out on the walls and the windows as they leave.
Buyers contact me and say they are interested in buying a foreclosure property. No matter what I say to them they don't get it until they see the home. Some foreclosures are in better shape than others. My clients make offers on them and we wait for weeks to find out if the offer was accepted. After going through that a couple of times, some buyers say no to foreclosures.
It is a myth that bank-owned properties are a bargain -- some are, but many are not. The bank-owned homes that are priced very low often need so much work that the cost of the repairs is more than the value of the home after the repairs are done.
It will be interesting to see what my town will look like in a few years. About 25-30 percent of the inventory of available homes is foreclosures and that number is growing. The number of foreclosures locally and nationwide will have a measurable impact on the social fabric of our neighborhoods and on our economy. Some will make money from it, but right now it is not obvious to me who the winners will be. I don't want to sell these homes, but they make up too much of the market to be ignored.
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog. Boardman will speak at Real Estate Connect in San Francisco, July 23-25, 2008. Register today.
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Submitted by Brecht Palombo on June 5, 2008 - 4:35am.
Its true bank owned property is a pain to sell and a much bigger pain to list, skinny margins, calls to India... but your headline is inaccurate and your position that there are no bargains is incorrect.
One of the things I specialize in is working with distressed property and the investors I work with do very well because they're properly coached and advised though what can be a trying investment process.
The winners of this episode will be those who saw the freight train coming and prepared by broadening of refocusing their business, by readying cash for investment, or by patiently waiting through the this past boom. Rents are going up prices are coming down and and an educated investor can do very well.
Your words are those of someone who has been slogging it out in the brokerage trenches in a crazy market and I empathize. Make no mistake there is plenty of money to be made out there and there are those of us who are profiting right now.
Brecht Palombo
Auctioneer
Investment Sales
Broker MA, CT, NH
http://www.provestre.com
http://www.tranzonap.com
http://www.tranzon.com
Submitted by LANNIE HALL on June 5, 2008 - 5:20am.
This is a message to Brecht Palombo with all due respect. Your assessment of the picture is looking at the situation through rose colored glasses in my opinion. I am writing this comment with the newer less experienced agents in mind. You obviously have thicker skin and are more willing to deal with the slimier group of people because I too have worked with investors in my career of eight years and I wouldn't touch that group with a ten foot pole. You have to sell the buyer/investor three homes before one will actually close one because of the myth that foreclosure homes are such a great deal and there are 20 people bidding on a inferior house that will more than likely need more repairs than what the arrived value of the home will be once purchased and repaired. Finally, you get to sell them a $50K house with a smaller commission because most banks don't want to pay full commissions. You may sell 50 houses a year amounting to $2.5 million in sales but I would rather sell 15 houses a year to clean deal oriented clients with an annual sales volume of $6 million. Why kill yourself trying to sell 50 homes a year on those basis? I SAY WORK SMART, NOT HARD! Just a word of advice to the reader of you comment because that side of the business isn't as rosy as you have portrayed it to be. I've been there done that. Good luck to you though and God Bless.
Submitted by Leslie Warthman on June 5, 2008 - 5:31am.
Your article could have been written by me...word for word.
All of us who have been negotiating short sales know these traumas ten-fold.
This is the worst part: I am doing my part to solve problems yet I have to be exposed to the heartaches, time-consuming & profit-lessening frustrations because of the incomprehensible resistance by lenders to work efficiently. All I ask is to allow for an immediate sale that a fifth grader could do the math and see would be better for all because it gives financial investors some of their money back without costing them more - it unloads somoneone's financial burden they are not stepping up paying for anymore any way- and it can allow another family an opportunity to actually "afford" a home.
The sollutioins to prevent foreclosures and ultimately all the evictions are there...but the slow processing of loss mitigation is all WRONG! That's where immediate fixes are needed!!!!!!
I don't believe any act of Congress will matter much.
What is going on is a reflection of our society's family meltdown...problems deep rooted in dysfunctional lives. Anger and depression build with financial default. Economic disparity widened and was worsened by handing a disadvantaged individual keys to a home since they had no money to do needed repairs. This only started the mess.
It was a house of cards that collapsed because the few who profited were fueling the building boom and over-saturating the housing market with many cheaply built houses. Those are the structures that will now be the cause of blight- these houses can be in total disrepair in just a couple of years.
Because greed pumped out too many houses at the top and widespread lack of responsibility existed at the bottom, we're left dealing with these severe headaches in the middle right now. And many are NOT dealing well. Many colleagues are getting out of real estate for this reason!
Submitted by Jay Seville on June 5, 2008 - 5:38am.
Good piece. I wouldn't speak negatively of investors though. If they are not your type don't work with them and leave it at that. True investors with experience are cool. Idiots full of false bravado wanting to buy their 1st investment property who strut in calling themselves investors are comical....Big difference between the 2 groups. Much more common to cross paths with the latter in dealing with Arlington real estate than the former.
jay
Submitted by Anthony Branch on June 5, 2008 - 5:44am.
We have many foreclosed properties (though not St. Paul's percentage) in the St. Petersburg Florida area. Yes, the banks do not make it easy to sell homes. In fact, I have been shocked at how slow the big banks have been to respond to this crisis. Could it be they and their lobbyists expect somehow to be bailed out further by the federal government while Joe Homeowher has virtually been ignored?
In Florida, we don't have ice on our floors in winter, but the electricity is also usually always turned off here as well. Nothing smells more than a house and kitchen left standing in the humid heat of a Florida summer without any air conditioning!!
Submitted by Mack Perry on June 5, 2008 - 5:54am.
And I thought it was just in the Atlanta market that the banks and REO agents seemed as though they didn't care. Just Kidding. One thing I have found recently is that some of the banks are willing to fix these properties up so that they can get an FHA appraisal and inspection on the property. With FHA loan limits up to $346,250 in Metro Atlanta a large portion of the foreclosure properties fall into that price point or below.
Submitted by Teresa Boardman on June 5, 2008 - 5:55am.
Jay - good advice. There are two investors that I do work with and I enjoy it. I have known both for a long time and understand their business models so I feel like I can really add value.
Leslie - this is hard for all of us. Even writing it was hard for me. I see too much, and I am sure that most of us do. it is the phone calls from people who need help that get me. They call when it is too late and I feel their pain and am frustrated that I can't help.
Anthony - if you type "banks can't sell real estate" into a google search my blog articles come up number one. I am very concerned about the way foreclosures are handled.
Lannie - I don't work much with investors and do not see a rosie side to this at all.
Submitted by Todd Anderson on June 5, 2008 - 6:05am.
Here is a headline here that really grabs peoples' attention. Then an article follows that is written more from the perspective on the hassle that is involved for agents. The article does not look through the eyes of Buyer clients. They are the ones out trying to get a bargain. You are right that not all forclosures are a steal and we as Realtors may have to work a bit harder to show the value in a home that isn't bank owned or distressed, but that's just part of our job.
Distressed properties aren't going away any time soon and neither will the bargain hunter Buyer. Your statement that there are too many to ignore is correct, there are also too many potential Buyers out there to ignore. We as agents may have to work harder to educate Buyers and maybe get paid less in the end, but our focus needs to stay on our client and doing what's best for them; often times that is paying less for a home.
Todd Anderson
www.YouInParkCity.com
Submitted by Salesgirl McCarthy on June 5, 2008 - 6:30am.
I disagree with this statement. In the Northern San Francisco bay area we have micro markets where one neighborhood is fine and another may be suffering a bit more.
I am an agent north of San Francisco where there are mostly high end properties with certain areas of lower priced condos and homes in northern Marin County. We have had some great deals in this area with foreclosures with 5 to 9 offers on some. Most of the homes have been maintained with a few that needed more TLC. I think the REO's in this area have been listed with seasoned agents who specialize in bank owned properties and really have experience with them and the banks which makes a better experience for the buyers. It has been a win win experience and great value.
Submitted by Salesgirl McCarthy on June 5, 2008 - 6:33am.
Also, an example is a 3br,2ba home with great views and needed some work in San Rafael area in Marin County value of home in the neighborhood $775,000 went into foreclosure and sold for $409,000. Great deal.
Submitted by Scott Sowles on June 5, 2008 - 6:44am.
Great Article!
I'm so tired of buyers with tunnel vision toward foreclosures. I swear, buyers think that there's some secret place where all the foreclosed properties are kept - often the first question they ask me is: "Can you show me foreclosures". The best bargain in real estate isn't a foreclosure! It's the house for sale next to the foreclosure that's priced low because of the damage done to the market by all the foreclosed properties. This house is almost always in better condition and we're dealing with a seller that acts like they want to sell the property. Someone that takes some pride in ownership and the condition of their home. Someone that's paying a decent commission. Someone that has to answer the questions the Sellers Disclosure Statement.
I agree with some of the posts - foreclosures can be great for investors. I don't believe they're good for regular home purchasers.
No, Virginia, there is no Santa Claus. Foreclosures were fun when there were only a few of them. Now they're a pain in the *#%&#!
Submitted by Lenn Harley on June 5, 2008 - 6:51am.
Foreclosures are a small percentage of our inventory in the MD/Northern Virginia market. However, they are a significant percentage of our sales. It's price. Banks are pricing aggressively and negotiating. Home owner sellers are not.
Lenn Harley
Homefinders.com
http://www.homefinders.com
Submitted by Eric Johnson on June 5, 2008 - 6:59am.
I agree with most of the comments on this post -- a good post by the way. I think one of the problems that also needs to be identified is the criteria that the banks use when picking REO agents. When I sell REO properties, I make every effort to get the home in some semblance of repair. They will often pay for some repairs, general cleaning, and sometimes even new carpet/paint. There are far too many lazy agents that practice the proverbial "sign in the yard and entry into the MLS". Usually the picture on the MLS is from the tax assessor/public records. These are the homes that are red tagged making it impossible to inspect, reak of foul odors and often have leaks when de-winterized. When an agent has over 70 REO listings and they have no idea which one you are calling on, there is a problem (true story).
My point is that much of the blame lies on the bank's shoulders beyond just being non-responsive to the actual transaction. They need to hire REO agents that will work on these listings like they do a normal resale listing and the agents need to be empowered to make improvements to the house in order to get it sold.
Eric Johnson
door2denver.com
Submitted by Cyndee Haydon on June 5, 2008 - 7:29am.
Teresa,
Boy are your comments timely. I just had some buyers I've been working with make and offer and get their feelings hurt when it wasn't accepted and felt used to they took a better offer.
I explained to them that not everyone has the stomach for the emotional rollercoaster these short sales, foreclosures and the such can put you through when you are actually buying it as a resident (even if it's a 2nd home for you) versus a hard-core investor (to them it's all business).
No matter how much you warn buyers about what the process is like and how it's no guaranteed bargain (Ex. Make an offer and it takes 5 months to close a short sale in a declining market) I can't tell you how many have been seduced by the media - thanks for giving a more accurate picture of things.
Cyndee Haydon
http://www.ClearwaterRealEstateTampaHomes.com
Submitted by Tom Dawson on June 5, 2008 - 8:08am.
Seems as if many realtors are caught between the proverbial rock and a hard place. When foreclosures in many parts of the country are approaching 50% of the market, you will probably have to work with them or starve. There is no question that your buyers who are looking for a home for themselves must be educated about the process. The foreclosure gurus have made everyone feel there is a bargian to be had and it can be done easily. Ceertainly not true. So it seems to me that your choice is to educate or only work with investors who understand that the process is slow and houses are trashed.
Maybe the big problem is that too many realtors got spoiled in the hot market of recent years. Multiple bids, etc. All you had to do was fill out the sales contracts and collect your money. Now you really have to earn your pay.
Submitted by Jay Thompson on June 5, 2008 - 8:09am.
T - we've had this discussion, move to Phoenix and your troubles with snow on the steps and ice on the kitchen floor are solved! ;)
I see buyers all the time (often from outside the US) that think they can buy short sale and REO properties for pennies on the dollar. This is simply not true in our market. Banks are aggressively (for the most part) pricing properties, and they are sometimes moving swiftly. There are "deals" to be had, but not "steals".
We've got places where REO/Shorts are approaching 50% of the available inventory. As such, you almost have to be willing to list, show and attempt to sell these properties -- painful as that can be.
What tears me up inside is getting the calls from people desperate to keep their homes. They watch as their dreams just drift away. We do everything we can to help, but often the cause is lost. It's quite sad.
Jay Thompson
Broker / Owner
Thompson's Realty
Blog: www.PhoenixRealEstateGuy.com
.
Submitted by Matt Case on June 5, 2008 - 8:10am.
I've got to agree as well. There are some bargains in the Foreclosure market, but plenty that aren't. And they aren't for everyone.
Handling foreclosures is a pain, and those who specialize in this have my respect and/or condolences.
I also agree it can be a terribly sad experience to take on, especially when dealing with removal of personal property... you have to steel yourself and try to turn a blind eye to the dreams and memories left behind.
And never, ever, ever open the refrigerator!
Matt Case, GRI
Coldwell Banker Schmidt Realtors
(231) 357-1609 mobile
(231) 882-8000 office
(231) 882-0374 fax
http://nwmirealestate.blogspot.com
http://www.2cases.com
http://www.benzierealestate.com
Submitted by Elizabeth Weintraub on June 5, 2008 - 8:21am.
T -- Our market in Sacramento is different because foreclosures here -- those in desirable neighborhoods -- are selling with multiple offers, sometimes 24 to 30 offers or more. And the buyers are still getting a good price.
True, some of them are missing front doors and all the copper has been ripped out, but about half of my sales this year are foreclosures.
Short sales, on the other hand, don't EVEN get me started . . .
Elizabeth Weintraub
Broker-Associate
Lyon Real Estate
Sacramento
http://elizabethweintraub.com
Submitted by Kristal Kraft on June 5, 2008 - 8:41am.
It is probably a good thing that buyers are looking to purchase foreclosures. Without selling them how else do you expect them to go away?
When the market gets saturated with foreclosures the asset managers will get smart and find alternative solutions. i.e. back in the 1980's when we had this mess, we rented the majority of foreclosures until the time was right to put them on the market.
The difference between now and then, the banks currently are outsourcing the management of reo's to companies who really don't have an interest in getting the property positioned right and sold. From what I see they are taking the commissions for themselves and skimming as much as they can from the people in the field who do the BPO's and list the property.
There is a whole new industry of middle men making a profit from agents hungry enough to actually PAY for REO leads! So they spread the REO business around enough to satisfy the lead seeking agents, while making a profit for aggregating reo business.
Guess that is capitalism and the American Way.
This too shall pass.
Kristal Kraft
Selling Denver Real Estate
Submitted by Sean OToole on June 5, 2008 - 8:58am.
As we talk to agents about foreclosures we consistently hear two things: 1) buyers want foreclosures, 2) foreclosures are too hard.
Buyers want foreclosures for two reasons: 1) false perception due to consumer foreclosures sites and get-rich-quick infomercials unrealistically promising 50% off their next house, 2) the reality that banks are more aggressively pricing property than individuals. 37.7% of April home sales in CA were REO resales - banks may be difficult sellers, but there is ZERO question that they ultimately have to sell for whatever they can get (they aren't property management companies and they'll get shut down if they don't get them off the books). Bottom line - foreclosures ARE bargains, but not to the degree that some are promoting.
And yes, foreclosures are harder. But embracing them does not necessarily mean you have to become an REO agent, or do short-sale listings. It can be as simple as using foreclosure comps to get your non-foreclosure listings priced right, and to help your buyers better negotiate for the house they really want, foreclosure or not. Bottom line - they are a significant part of the market, and the more you know about them, the better off you'll be even if you choose not to do foreclosure transactions.
One thing is for sure - with defaults continuing to rise, and banks taking back almost twice as many homes as they are reselling each month, this won't be going away anytime soon.
Sean O'Toole
Founder / CEO
ForeclosureRadar.com
Submitted by Sean OToole on June 5, 2008 - 9:22am.
One more point - a number of folks in the comments have talked about low REO commissions. I know quite a few REO brokers, and a number with 100 plus listings. They are seeing commissions as high as 7% (3 to them and 4 to buyers agent). Yes, some REO outsourcers do take referral fees, but still rare for net commissions to be below 2.25%.
Sean O'Toole
Founder / CEO
ForeclosureRadar.com
Submitted by Armani Arbizi on June 5, 2008 - 9:49am.
This article by Teresa Boardman is a masterpiece of realistic data that I wish "responsible" government agencies (and Congress) would see and look into. Assuming earnest and true non-politicized concern to the problem, it should be more than enough to trigger faster and concrete resolutions. LENDERS: Please WAKE UP. This is a rare chapter in our social and economic history. It is an opportunity for your institutions to exercise true and dynamic leadership. Otherwise, this meltdown will not only continue to hit deep into your pockets, but worse, the present state of your integrity could suffer long and hard.
May I add a supplement to another realistic comment from LESLIE WARTHMAN because it hits the nail right on its big top! When you said:
"The solutions to prevent foreclosures and ultimately all the evictions are there...but the slow processing of loss mitigation is all WRONG! That's where immediate fixes are needed!!!!!!
I don't believe any act of Congress will matter much.
What is going on is a reflection of our society's family meltdown..."
Let me just add a dedicated AMEN, and AMEN.
Armani
Submitted by Danilo Bogdanovic on June 5, 2008 - 10:40am.
Teresa,
I agree with you that there's a lot of hype surrounding foreclosure/bank-owned properties due to media, gov't, etc. They know that we have to get through the inventory of those types of properties in order to see a rebound in the market. That's one reason they're hyping them up so much.
But I respectfully disagree with the blanket statement that they're not bargains. Yes, some, if not most are not. But that's with all types of properties. Traditional resales can be overpriced. Short-sales can be overpriced. And REO's can be overpriced. But there are always diamonds in the rough.
In my marketplace, Northern VA, many of the properties that are selling are REO's. The banks are starting to learn that they need to price the properties agressively in order to sell them and get them off their books.
Because of that, many are priced below market value even when taking into consideration the amount of money needed to bring them up to par with the condition of traditional resales.
Personally, I don't mind dealing with REO properties. The banks take a few days to 2 weeks at the most to get back to you. This is much better than short-sales, which can take up to 6 months for a response and have less than a 50 percent chance of being approved.
Yes, there is more paperwork, but it's just the price buyers and agents have to pay these days based on the current market conditions.
Danilo Bogdanovic
Real Estate Consultant, Realtor
http://LoudounScene.com
Submitted by Teresa Boardman on June 5, 2008 - 11:34am.
Dan - I agree there are some bargains out there. I guess part of my point is that just becasue a property is a foreclosure does not mean it is a bargain
Submitted by Ross M. Brown, R GRI on June 5, 2008 - 1:10pm.
The longer I am in the business, the more I see how history repeats itself.
Submitted by RK Ruthman on June 5, 2008 - 1:14pm.
Theresa,
Great post.
Back in March I commented on Trulia that bank foreclosures were not being sold for pennies on the dollars:
..."There are bank owned properties available in all areas of Connecticut, and more coming on the market every day. However, banks are not giving these homes away for "pennies on the dollar". If the bank owned properties were sold that way the over-all value of area home prices would drop...
I do agree with you that some, not all, foreclosures have beared the wrath of their previous owners. Interiors destroyed, cabinets ripped off walls, and even the outrageous "dog dookey" everywhere. But, those did sell.
Because homeowners and foreclosures are now in competition for the buyer, the real estate professionals are the ones that are not getting the bargain.
I have not had a bad experience with a bank attorney. In fact, there should be plenty of motivation for everyone to do their job, and do it well. People are losing jobs, college students are graduating, and life goes on whether you have a good work ethic or not.
Submitted by Chris Whittaker on June 5, 2008 - 1:40pm.
About 80% of our open escrows are bank owned REO's. I looked at a property yesterday for an out of state investor and there were 4 real estate carloads of people outside waiting and 2 groups of buyers with their agents inside looking. Reminds me of 2004 where you had to bid above list price to get the home. I've adapted to this shift in the marketplace by working with buyers again (since the majority of the sellers I speak with bought their home after 2003 and/or took out equity which puts them in the short sale category). The banks price the homes here with a 2 week "strike price" and get list or better in less than 3 days. It's frustrating and exciting at the same time. Most of the homes I've been through have no personal property left since the REO agents get them "trashed out." I get so many calls a week from sellers upside down, I'm ALMOST numb to it. It is sad though.
Chris Whittaker
O'Keefe Casto
Las Vegas
www.buylasvegasonline.com
Submitted by zia montesi on June 5, 2008 - 2:07pm.
Foreclosure & REO in our primarily Second Home and Investment Resort Market here in the Outer Banks of North Carolina [ a barrier island 200 mi long from VA's southern boarder ]is a trip... prices range from less than $200,000 on the mainland, where those of us who work for a living reside, to over $4,000,000. The range is due to those owned by self-employed service / support staff impacted negatively by seasonal employment having purchased nothing 'affordable'[there was nothing for $150,000 before] and have lost their income or bought a house they really couldn't afford when growth was extensive 4 short years ago... and the drop in new construction / building permits to those investors visiting the beach for their yearly escape. We have watched DOM increase from often 1 day to many times more than 180 days. Prime oceanside properties have sat and sat for over 500 DOM. Sellers often have taken $2-300,000 hits in negotiation after what they felt was underpricing when listed just to be rid of the mortgage terms / intereset only / balloons having come due in past 3 yrs. Its interesting to say the least!
Zia Montesi Broker / REALTOR
www.zouterbanks.com
Submitted by Lenore & Alex Wilkas on June 5, 2008 - 10:22pm.
Like Salesgirl McCarthy, I too work the San Francisco market, specifically on the Peninsula where we have a very healthy market and prices are up in the stratisphere. Foreclosures are great buys here. Yes, they are a pain in the a** to do, the banks are jerks, the escrow companies incompentant (especially if coming out of Southern CA where the real estate business is done dramatically differently than in Northern CA), but foreclosures have opened up the opportunity for first time buyers to get that house rather than a condo. Many are getting multiple offers and going within days of listing. That is, if they are priced to sell and in reasonable condition, which most are. It's sad to walk into these homes that were someone's dream, but alas one's loss is always someone elses gain.
Remember, real estate is local and what's going on in your market is not going on in mine or in Salesgirl McCarthy's, or many other markets around the country.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Lenore Wilkas
Prudential CA Fine Homes International
Read Our Blog @ www.SanMateoRealEstateNews.com
Submitted by Wendy Polisi on June 6, 2008 - 2:24pm.
This is a great piece!
I am an investor, but do everything I can to stay away from Foreclosures. Believe it or not, I think Short Sales are more profitable and easier. It is still a drawn out process, but at least you can save someone from a Foreclosure and they can move on with their lives!!!
Submitted by Ron Taylor on June 8, 2008 - 5:54am.
"It is a myth that bank-owned properties are a bargain" is true in most cases. That is why we work in the pre-foreclosure market and not the REO market.
By working with the homeowner who is in a pending foreclosure situation, we are able to inspect the home while the utilities are still on and ask questions about the condition of the home.
As a North Carolina Auctioneering and Real Estate firm, we try and offer a unique approach to the homeowner and the lender but yet, as already mentioned, the lenders are still not willing to face reality.
We have approached the lenders to let us auction the North Carolina property after a shortsale has been agreed upon but in most cases, they refuse the offer and want the payoff plus legal fees, disregarding the fact that the property is upside down financially, viz., the debt is higher than the value of the property.
CBS ran a story last week about the squatters that were living in these vacant homes without the utilities or water on. What a mess! How long will it take the banks to face the reality they are not going to get what they want from these properties?
Ron Taylor<><
President/Broker/Auctioneer
The Restorer, Inc.
D/B/A Taylor and Sons Real Estate & Auctioneers
252-257-4822 (Office)
252-257-1302 (Fax)
www.canSellnow.com
Submitted by Rick Belben on June 9, 2008 - 11:03am.
The public has become brain washed into thinking that foreclosures are the biggest bargain. Just look at all the full page ads in newspapers & infomercials touting them. I agree with you totally they usally are not a bargain. Yes there are some good deals on them - but as you mentioned in your post you do a lot more work than if you were dealing with a typical resale. It does not matter what you say to people they believe what they want to believe.
Rick Belben
Amerivest Realty of Central Florida
Orlando Real Estate
Orlando MLS
Submitted by Miss L.S. on June 10, 2008 - 11:21am.
Just think...if the banks worked with the homeowner BEFORE the home was foreclosed on, while still in the Short Sale situation, the homes might be in better shape (not as many desperate people "taking it out on the walls"), and the banks wouldn't have to be sellers.
If the banks put more power into helping people get through short sales and took less time to respond to the people who actually want to buy the property, everyone would profit.
Submitted by Michael Espiritu on June 10, 2008 - 12:32pm.
Sean O'toole and Kristal Kraft had some great comments. I work in the SOCal area of San Bernardino-Riverside Counties where almost 50% of recent solds are in some type of foreclosure. I am seeing multiple offers on REO's here and if a seller is not using recent comps from 45-60 days then they will be unrealistic on pricing.
Foreclosures and short sales are here and will continue to dominate the market.
If any home is not priced correctly it will lanquish on the market. I have represented many clients who got great deals from foreclosures.
Some properties are less than one or two years old and are in great condition except for the front and backyards due to lack of water.
If I am an agent in southern California and I do not work w/ foreclosed properties then I am missing a great opportunity.
Who said it was going to be easy???
Bottom line is there are bargains if you know your market and know the inventory. NO client of mine will ever overpay for a property in this market. There are too many choices for the consumers and they'll just go the next property.
In the Corona area we had a client who purchased a 3500+ sf home in 2008 for $419,000 and the seller paid $850,000 in 2006. That,my friends, is a bargain!
Michael Espiritu
Broker
Copeland Wealth Management /CWM Real Estate
Redlands, CA
Submitted by Diane Cohn on June 10, 2008 - 7:01pm.
Michael, everything you just said pretty much holds true for Reno, NV, except that our REO sales are running at 55% of total. Banks are big companies and take a while to get organized. While short sales seem to rarely go anywhere these days, REOs are starting to move with aggressive pricing and multiple offers. Yes, there's more paper, and they take a little longer, but they can be great deals.
Teresa, great piece. You really got the conversation going!
Diane Cohn
Realtor, ABR
Chase International
www.renorealtyblog.com
Submitted by Jim Lee, Knoxville TN Realtor on June 17, 2008 - 7:05am.
I'm an investor myself so I don't work with a lot of other investors because we're often targeting the same properties.
I agree with your assessment that they are much tougher to work with than a normal transaction.
Jim Lee, CRS, ABR, GRI, NAR Certified e-PRO Trainer
Realty Executives Associates, Knoxville, Tennessee
www.KnoxvilleHomeCenter.com mailto:Jim@JimLee.com
(865) 693-3232, My Personal Toll Free # 1-800-662-2488 ext. 163
**********************************
Submitted by Lynn Brescia on June 29, 2008 - 5:12am.
I agree with some of the comments about the banking industry. I think if they could work with homeowners who right now are struggling due to higher rates, but who are still trying to hang on to their homes, by coming up with some kind of short term relief and making it easier for these families to keep their homes, we would all benefit in the long run. I know of a few cases where due to the current economy the household income has gone down but they are still trying to make payments and are unable to refinance to get a better rate due to the changes in the industry, cannot sell due to the market changes, and are at a point where they get behind and cannot catch up, and may be looking at a short sale or foreclosure.