I’m not surprised at the amount of response I’ve had to the upcoming auctions. Many of the potential buyers I’ve spoken to during the last week want to know about all the different ways there are to buy property from distressed sellers. There are a variety of ways to play the bargain hunting game.
Trust me, the bargain hunter scavengers have been flying in circles, waiting for the right time to scoop down and grab some up. There’s plenty to go around, and plenty of room for anyone to start learning how to do it. Among others, 2 of the most savvy and well off real estate investors I know are ready to pounce now.
Why not you? Give me a call and we’ll help you put your plan into motion, or at the least, we can help you develop a plan.
Very often, these homes are listed with a Realtor, and can be bought by an owner occupied buyer or an investor for much less than their real value, if the seller still has equity. If the home has as much or more owed on it than it’s worth, there’s no “free equity” to buy unless the bank is willing to do what’s called a “short sale”. Short sales are real tricky for both the buyer and the seller, and every Realtor I know who ever tried one got a lot more gray because of it. Many times there’s weeks of waiting around for someone at the bank to call back, and then very often when you hear from them, they refuse the short sale offer.
There are many more investors chasing the pre-foreclosure segment than are attending the trustee sales. If they’re successful in dealing with the homeowner who’s being foreclosed on, the investor can gain control of the property for much less cash out of pocket than at the trustee sale, since they can get a new loan, or take over payments of the existing loan once it’s brought current.
If taking over the loan, giving the seller money to go away or a short sale doesn’t work, there’s still 2 more avenues left. The Next step, if you’ve got lots of cash is to bid on the property at the trustee sale.
Buying property at a trustee sale requires “cash in hand” as it can’t be financed, and there’s absolutely no contingencies for inspections, loans or anything else. The opening bid for a trustee sale is what the bank is owed including all fees, penalties, back interest, and the principal. If someone bids higher than the bank, then they have to pay their entire bid amount on the spot.
Most of the investors that I know who bid at trustee sales have tracked the property for the entire 4 months of the pre-foreclosure period. They’ve talked to the homeowner, and usually have made offers to take over the loan, or to buy it outright and pay off the bank, leaving the homeowner with a few thousand for moving expenses.
It usually takes a month or two for the bank or mortgage company to digest the fact that they now own a piece of property. They usually get “BPO’s” or Broker Price Opinions from several Realtors, or get an appraisal on it. Then they list it for sale with a Realtor. In today’s market, the Realtors who handle properties from the bank are the only overworked Realtors. The homes rarely get any more advertising than being put into the MLS. I rarely find pictures of them in the listings, and these listings are always great fodder for my “Worst MLS Photos Of The Day” posts.
Some banks are listing the properties at great prices, and they often sell at or close to the list price. (Which is true of any listing, by the way). But most of the banks, like most sellers are listing the prices at their wishful thinking price. Once an offer is on the table though, they are usually open to some heavy duty negotiating. The biggest problem faced by the potential buyer, his agent, and the listing agent, is that the banks are overwhelmed and it can takes many days if not weeks to get a response. If the property doesn’t sell in a reasonable time, they sometimes resort to the final option…The Real Estate Auction.
In the introduction post from last Saturday, I told the story of one of my clients and a Huntridge Cottage.