Banks Fixing Up To Flip
I was informed by a real estate agent that several banks in my area have recently deceided to fix-up and repair their REOs themseleves to sell at FMV rather than sell them as is. The banks are requiring their REO agents to front the repair money, manage the repairs, sell at FMV, and get reimbursed for the repairs at closing. The agent gets their commission. The bank keeps any profit.
Because of this new "policy" the realtor wold not even entertain an offer, or discuss other REO properties until the repairs were completed (even though the stress of doing this was obviously getting to her). Has anyone else run into a similar situation? Is this becomming commonplace? Please discuss if you have any similar experiences. Thanks.
It sure isn't here in N. CA.
They will sit on things for ever, w/ totally unrealist prices.
I have been told similar situations on REO here in Denver, however I never heard anything about the realtor fronting the repair costs!
That doesn't seem believable at all.
By the way, I have also seen these bank fixed up REOs back on the market. What a freak'n joke they are. The common denominator on most of them is they spend too much money and over rehab on some things in the house, and scimp or just paint over other things, the house ends up looking like a freak show inside. They hired painters who painted over the peeling wall paper in the dining room and the molding leaving un marks, and drips and just a horrible finish, while at the same time they put in a hard wood floor in the kitchen.
Or they patched a 2 foot hole in a textured wall and didn't even attempt to put any texture over the flat patching while at the same time they replaced the interior doors with hardwood 6 panel doors.
Or they replace the garage door with a brand new, expensive garage door but when you open the garage door, the cement floor is cracked and heaved 6 inches.
The banks should stick to losing money by not qualifying their borrowers, which they were good at. Now they are branching into an whole new area to lose money in, buy going into the fix and flip market.
that they are making their REO agents front rehab costs so they can get a commission is such a joke.
If I were the agent I'd tell them a few unsavory words, and would get out of the REO business FAST!
If a few realtors in the area are willing to accept those terms from the bank and focus their efforts on doing REO rehabs, they likely wont be doing it very long.
Dave is right. And so is The Rehabinator, the work done by their subs usually is a joke and really sucks. It costs more to correct their mistakes and redo correctly.
There were other posts on this site saying that sometimes last minute contracted work is still being done on the day of closing. Could be an advantage to cut costs but has to be evaluated closely per property.
I would stear clear of those specific banks properties (but follow them) and see what their "policy" becomes. And work w/agents that have a different focus if they cant or wont be negotiable on the rehab costs. Otherwise there's no margin.
SG
Hmmmm....I think I have a new seminar/bootcamp to pitch. It'll be called Rehab on the Realtor's Back. The premise is this: find a junker, find a gullible agent, list the property for full price, offer agent 10% commission BUT require the agent to pay the cost of the rehab and manage the project. Sounds like a winner! I'm off to the Board of Realtors to try this out, I'll let you know how it goes!
Many realtors own prop mgmt co's. I walked into a bank REO in GA the other day & they were fixing up the place w/new everything it looked like. I've seen this in a few states.
I actually found some pretty good contractors to work on my inventory while looking @ bank REOs...LOL! At the end of the day, you have to do the math, re-habbed or not.
It's time change your stratagy , when
you can't get a good deal at or after the
auctions ,look at these homes
befoe they go to auction...