Is It Too Late Once A Foreclosure Hits MLS??
Im an appraiser looking to buy a REO or two..I see many listed on mls but most people seem to try and get them b4 they are listed??? is it too late or become a bidding war after their listed on MLS?? just curious. Thanks.
Purchasing REO is safer than bidding on a property at a forced, public foreclosure auction... but you will pay a premium for the opportunity to inspect, and have a look at the title. And, you'll be competing with other speculators.
Most institution lenders that take back property will use a real estate broker to market the property. Will you find a bargain on MLS? That depends. In a Seller's market, probably not too often.
The brokers who work REO will have a short list of prequalified, ready, willing, and able purchasers for their REO listings. Some will go into contract virtually sight unseen.
The MLS is what the economists call an "efficient market". That means that anything that sells in this way is likely to sell at a price very close to its value.
The exceptions to this rule are the key to finding bargains on the MLS. You must find products that are undesirable in some way and have, therefore, been under-valued by the marketplace.
Ways in which a property can be undesireable from the MLS point of view: It can be dirty, need repair, be unconventional or be marketed wrong.
Just the other day a fellow I know was bragging about the great deal he got on a house he lives in. The broker had it listed as a three bedroom but one of the "bedrooms" was only accessable through another of the "bedrooms". As a result everyone who looked at it said, "this isn't a three bedroom, its a two bedroom with a den" or something. People looking only for two bedroom houses didn't look at it because it was a three bedroom.
As a result the property had been on the market kinda a long time (for the location, its a hot neighborhood). The seller was in a hurry to move out for some exotic two year vacation they had planned and needed the money.
My friend made an offer at what he thought was a bargain price with no contingencies. Needless to say he got the deal.
The point is that the broker had listed the property badly and that this marketing error had created an opportunity.
So, your odds of finding a conventional property at a bargain price in the MLS are slim, but lots of people have made money on slim odds.
But by far the easier method of finding bargains in the MLS is to look for a property with something that makes it undesirable. As a friend of mine succintly puts it, "I buy distressed property, i remove the distress, and I sell the property." It is a simple formula but a good one.
c/k has made a clear defin. of the mls and as he said i to have found/sold a prop. that was a 2b 3500 sq. ft. that i remodeled to a 3b and made a hefty profit.
as an appraiser I see tons of deals that will net someone the deisred 20%. Those REOS have a stigma that really drop price. I know the deals are there just not sure if it becomes a bidding war.