Retail Prices: Reos/HUDS
Buying pre-foreclosures seems to be the way to go because most REOs are liquidating at retail (FMV) and HUD homes are the same. See the following example:
Housing and Urban Development (HUD)
Case 521-460833
List Price $110,000
Appraised Value $110,000
Bd/Ba 3/1
Sq Ft 0
Year 1984
FHA Insured Yes - 203(k)
Escrow Repairs 2,530
Appraised at $110,000 for sale at $110,000. These reos and huds are geared towards the home buyer and not the investor. In fact, I am yet to see a deal on REOs lists, HUDS or anything bank owned.
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No offense meant, but you haven't really looked then.
This year, we bought a bank owned for $45K and sold it one week after closing for $60K, no repairs. If we would have made the repairs (est. $3K), I'd have marketed it for about $75K.
We're closing next week on the selling side of a HUD home we bought. Bought 2 months ago for $67K, closing costs and repairs of $6K. Sold after 2 weeks of marketing for $90K (we agreed to pay closing costs of $4K).
The deals are out there. You just have to know when it is a deal, and how to find them.
As far as the HUD FMV estimates, they are for the 'as is' condition. The property may be worth a lot more is repaired. In my HUD example above, they had its' FMV listed at $75K, but fixed up, we sold it for $15K more than that.
Roger
Dear fellow investor, i feel your "pain", and maybe then some.... try getting a deal in New York or nearby New Jersey.... ooch. However, I have discovered this site about a week ago and have encountered some very promising prospects on the TC realty section Check into it.
You have to be patient. I just used HUD and bought a condo that listed for $68,800 (fair market value) but upon further research, i discovered that it had been listed for a while. the new appraisal is $82,000. so when i got ready to make a bid after my due diligence, HUD had dropped the price to $54,800. I bid $53,000 even and got them to pay closing. I walked away with a $82,000 property for $53,000. You just have to pay attention to the list dates and do your research. HUD does have great bargains but patience is the key.
[addsig]
I guess it all depends on your local market. For those of you who want to see for free what prices are going for here, email me and I will give an url that allows you to search for properties here so you can have an idea how little you can buy for the money.
I must agree that I have to have patience but so far I haven't been so lucky. As a realtor for 10 years I am very familiar with my market and we all know that things are way overpriced here in Utah, even the REOS. Foreclosures abound. I receive, for one county only, over 120 notices of default per week. Most of these are maxed out 2nds.
Hi all.
I'm new here and would like to offer my two cents. I'm a Realtor in Illinois and deal mainly with foreclosure properties.
Based on what I've seen and from what I've purchased myself, pay close attention to how long the property has been on the market. I know, it sounds like common sense, but it makes a much bigger difference with foreclosures as compared to owner occupants.
If it's been on the market 60 days or longer, lowball your offer. fMaybe only offer about 60 percent of asking. I've never had an offer where a bank hasn't countered.
They're not like dealing with an owner occupant who may feel insulted and not even want to deal with you.
I just saw a house that was started at $99k, and was gradually dropped to $63k. It sold for $48k. With about $15k worth of work, it's market value will be about $130k.
The longer it's on the market, the more money the banks lose from having to pay property taxes and property management firms to maintain the property, cut the grass, plow the snow, perform routine checks on the property.
And if you're buying a foreclosure and plan on fixing it and selling it up, make sure your Realtor pulls comps in the area and does a sample market analysis for you to give you an idea of how much it will sell for once the work you plan on doing is done. This will help you make an informed decision from the beginning.
I must agree with you. The only issue with a property that's been on the market longer than 60 days is how resellable it will be, neighborhood, repairs,etc
There is usually a reason why a property will sit. Locally, I've observed 2 things:
1. Location-condition
2. Price too high
I bid on foreclosed properties daily and so far I only got one. My goal is to purchase 15-20 over the next few years. So far, bidding under market value hasn't gotten me anywhere, say $80K on a $100K property.
<IMG SRC="images/forum/smilies/icon_cool.gif"> [ Edited by roiclicks on Date 08/09/2003 ]
Besides the 60 wait period, there are great deals in REO, but you have to act fast. Get to know realtors who deal in forclosures and have them alert you the moment one comes up. I have bought three this year. I had to make offers on the spot with earnest money in hand and be pre-approved by a mortgage lender.
1st one: Two-family paid 50k, $6500 in repairs, appraised at 90k.
2nd one: Four-family paid 88k, less than $3000 in repairs, appraised at $113k (before repairs were made).
3rd one: Two-family paid 59k, $8000 repairs, appraised at 105k.
These are the ones I got. I've made offers on three others but didn't get them. All of the offers were made the day they were listed. Act fast!
Ron
I'm new to the foreclosure process and was wondering how do I obtain a list for my area (N.C.) Most of the foreclosures I've found are listed by realtors for fmv. I'm trying to locate them while they are still owned by the bank or pre-foreclosure
Thanks for any information!
DMAC, do a search for HUD on the net (i can't post URLs yet) and you just put in your state and it will give you the list. Here are some others you might want to look into.
Bankruptcy Court
IRS
GSA
Tax Liens (unbeatable deals, unless you get one for free)
VA
Fannie Mae
Freddie Mac
Call your local banks, they might give you the run around, but it's sometimes worth it.
[addsig]
In my experience, HUDS in CA are retail priced or if not, end up being over FMV after all bids are in despite having the need for repairs.
It's a real trajedy for a REI, but more of a trajedy for a buyer who plans to make it their home because they've paid so much for it in its "AS IS" condition that they could have easily bought an owner-occupied for the same price but in 'MOVE-IN' condition.
Anyway, I'm not saying all HUDs are like that only the ones I've come across during this "SELLER's" market in CA.
I particularly like REO's...only out of state. I've asked for $4000 credit for repairs after receiving a home inspection report and in the end, the bank has given it.
Another funny that happens here in utah, at least the ones I have seen. You put an offer on an REO condo, say $55,000. The condo was listed for $74,000. (true life example) then your bid gets accepted. You close. Next thing I know I look on the MLS and the price of the condo was listed at $59,900. I think the banks and or some agents are manipulating the listing price. Now using this logic, just think if you are an agent for REOS and get all these listings. By modifying the listed price to approximately what the REO sold for it does 5 things:
1. Makes it look like you sold close to market value!
2. You can use this to impress other REOS managers
3. Buyer gets screwed. Thinking he bought something worth $74,000 that's now listed as $59,900.
4. Messes up the appraisal (comps)
5. REOS can impresse their managers saying "look what a great job Mary The Realtor is doing for us!"
I think this ought to be illegal. But as long as the seller signs a form wanting to change the listed price, I think it is legal. I ought report this practice to the Division of Real Estate but I don't see how it would have any legal grounds. But I have seen this done. They usually change the price right before closing.