Bank REOs for Sale

Many investors find that the best prices and best deals on real estate are on foreclosures, or distressed properties. Many investors look at short-sales, which are pre-foreclosure sales, on properties that are worth less on the open market than what is owed on the property. Other investors buy at auction, which is the end of the foreclosure process, where properties are purchased for cash to the highest bidder on the courthouse steps.

I am now looking at post-foreclosure properties that have reverted back to the lender. Banks call these REOs or Real-Estate Owned properties. Most investors tend to wait until these REOs are listed on the Multiple Listing Service. There are 58 active REO listings in Seattle on the NWMLS today. There were 261 sales on the NWMLS of REOs in Seattle in the past six months. These REO houses typically sell for 102% of list price within the first 30 days on market.

However, it is possible to purchase these properties directly from the bank BEFORE they are listed on the open market. This is the space in which it is possible to find the best deals, at the best prices, and with the least amount of competition. From time to time, I will use this blog to identify these REO properties in Seattle that I think may be of interest to investors and other bargain hunters.

Here are just a few I like right now.

One is a fire-damaged property on Delridge Way SW in West Seattle. It is on a 4986sf lot zoned NC2-40 (see previous post for examples of commercial zoning and uses). The value is in the land here. The current tax assessed value of the land is $248,400. However, the bank had advertised this property previously for over 200 days on market at $235,000 and it did not sell. I spoke with the bank REO department, and they are willing to negotiate and open to receiving offers now. This property would be of particular interest to a small builder or developer, keeping in mind that there will likely be a parking requirement by the City as this is not in a designated Urban Village.

Another land parcel is located adjacent to Westcrest Park in West Seattle. It is a 30,075sf raw land parcel zoned SF7200. So it is possible to build four homes on this parcel. The tax assessed value of the land is only $129,000 and the previous owner defaulted owing $93,000 in taxes and penalties to the bank. This parcel will eventually be listed for sale, based on a bank appraisal of value.

The third property that I like is a charming 1946 view home in West Seattle, with 4 bedrooms and 2.25 bathrooms, and 2160sf. Zillow puts the value of this home at $493, 274. The last sale on this property was for $350,000 in 2002, and Realist puts the current value around $521,000. It is not yet determined when this will come on the market.

If you would like additional information on these or other REO sales in Seattle, please message me privately at HomeLandInvestment@gmail.com.

Happy Investing!

Institutional Investors Rush to Residential Foreclosure Market

National Public Radio reported today that the inventory of pre-foreclosure homes has increased 22%. That is because lenders have discovered that it is often less expensive to accept a short sale, rather than foreclose on a property. A "short sale" is a real estate transaction where the underlying lien holder (the lender) agrees to accept less for the house than what is owed. As the inventory of foreclosures, pre-foreclosures, and bank-owned houses has increased, institutional investors have rushed into the market (perhaps in response to Warren Buffett's comments in February about the investment opportunities with single family homes? see our previous blog on this topic). Here are some snippets from the national media about this change: "Large Wall Street investors rushing into the foreclosure market have raised between $6 billion and $8 billion, with the intent to acquire between 40,000 and 80,000 foreclosed homes nationwide in the months ahead." - Housing Wire "Landlords have always tended to be mom-and-pop outfits. That appears to be changing. Fast." - Fortune Magazine "The business of buying foreclosed homes, renovating and renting them out is morphing from a largely mom- and-pop business into the next big thing on Wall Street." - CNN Individual investors are finding it difficult to compete in this market, where the institutional investors can come to the table with quick and ready cash. In order to compete, individual investors with ready access to cash are the most likely to succeed in this arena today.

Listings Fall! Come See Inventory on our Homes Tour Today!

A scan of inventory on the NWMLS shows that the number of listings in Seattle has fallen, perhaps because there is a bottleneck in processing foreclosures. Our Sunday Homes Tours this month will focus on inventory for both foreclosures and other opportunities for investors, cash-buyers, and other house-hunters.

The first tour of the month will be today at 1pm, and focuses on seller-financed listings. The tours are free, and no reservations are required. Just show up at 8818 30th Ave NW in Ballard, for maps and directions. I will be leading the tours.

Our tour the last Sunday this month will focus on foreclosures and bank-owned properties. There is plenty of inventory for the tour! But for more details on the recent news story about falling inventory, please click here.

For more information on our Sunday Tour of Homes in Seattle this month, call our 24-hour recorded real estate information hotline at 888-621-4999 x 4.