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.

Compensation for Improper Foreclosure

For anyone foreclosed on......visit the State of Washington Attorney General's site

Foreclosed Borrowers

Approximately $1.5 billion of the National Mortgage Settlement funds will be allocated to provide compensation to borrowers:

• With loans serviced by the five loan servicers affected by this settlement
• Who were foreclosed on after January 1, 2008 and before Dec. 31, 2011.

Borrowers who were not properly offered loss mitigation or who were otherwise improperly foreclosed on will be eligible for a uniform payment of approximately $2,000 per borrower depending on the level of response. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts. Borrowers may also be eligible for a separate restitution process administered by the federal banking regulators. The banks will be notifying eligible borrowers of their right to file a claim over the next six to nine months.

However, if you live in Washington state and are concerned your loan servicer may not be able to locate you, you may enter your information  on our National Mortgage Settlement Foreclosed Borrower Form and we will help ensure your bank has your most current information.

If you have not yet sold your house, and you are underwater on your mortgage, YOU MAY NOT HAVE TO DO A SHORT SALE! Please contact me first to discuss your options! Strictly confidential, no pressure, no cost, and no obligation. I buy houses that have NO EQUITY. If you are interested in learning more, please contact me at HomeLandInvestment@gmail.com or 425-270-7292.

More Foreclosures in Seattle

RealtyTrac reports that there are 1million homes nationwide that should have received default notices or gone to foreclosure auction, which will be delayed into next year. In addition, the length of time it takes to foreclose on a home has increased. Some believe that this "shadow inventory" of foreclosures will forestall the housing market recovery until at least 2015.

Seven investors and homebuyers showed up for yesterday's Tour of Seattle Foreclosures to take a look at five 3BR foreclosed homes in nice North Seattle neighborhoods of Broadview, Green Lake, Greenwood and Ballard. A few of them are considering making offers on these homes. As mentioned in my previous post, there are not a lot of foreclosures in these nicer neighborhoods of Seattle -- but do they represent a significantly better deal than prices offered by private sellers?

Let's take a look at the statistics for this particular area of North Seattle as an example.

According to the NWMLS, there were 28 sales of banked-owned 3BR single family homes in this part of North Seattle in the past six months. The median sales price of these homes was $332,500, and they sold on average in about 87 days.

During the same timeframe and in the same area, there were 354 sales of 3BR single family homes sold privately. The median sales price of these homes was $400,000, and they sold on average in about 47 days.

So while bank REOs represent only 4% of the total inventory, approximately 7% of all sales of 3BR homes in North Seattle in the past six months were REOs; they were sold at a discount of approximately 17% of other sales prices (eg. sold for 83% of the value of private sales); and they took 85% longer to sell.

So yes, REOs do represent an opportunity for investors and other buyers to get a home at a good discount. Patience and due diligence are key in finding the right bargains for homebuyers and investors.

Bank-Owned and Foreclosed Properties in N Seattle

Our final Tour of Seattle Homes this month features three-bedroom REO ("Real Estate Owned") or bank-owned properties. The Tour will be held from 1-3 pm this Sunday, August 28 - and no reservations are necessary. Just show up at 1pm sharp at the first house on the tour to pick up maps, directions, and more detailed information.

There will be five houses on the tour, each with a minimum of three bedrooms, ranging in list price from $269,000 to just under $500,000. These houses have an average size of 2112sf and have been on the market for an average of 95 days. Broadview, Greenwood, Green Lake and Ballard are the desirable North Seattle neighborhoods where these properties are located.

The first house on the tour is located in Broadview, at 12743 3rd Ave NW. A proposed schedule of homes on the tour will be posted on this blog tomorrow.

The Sunday Tours of Homes are led by myself, Wendy Ceccherelli, Designated Broker for Home Land Investment Properties, Inc. I am an experienced real estate investor, and the tour provides valuable guidance for first time home buyers, real estate investors and other bargain house-hunters.

To be notified of upcoming Sunday Tours of Homes, call our free 24/7 recorded real estate hotline at 888-621-4999 x4.

Sunday Tour of Bargain Homes In August!

Our Sunday Tour of Bargain Homes in Seattle will be starting up again in August. We will be featuring properties of special interest to investors, cash-buyers, and first-time buyers. Now is a great time to cherry pick from among the many motivated buyers in the marketplace! Inventory is up, prices are down, and mortgage interest rates have never been lower.

Here is our tentative schedule of tours, every Sunday in August from 1-3pm:
8/7 - Seller Financed Properties for Sale
8/14 - Estate Sales (Free & Clear) Properties
8/21 - Fixers
8/28 - REOs, Foreclosures

We try to focus on desirable Seattle neighborhoods and desirable home configurations (eg. 3BR/2BA) as much as possible, to find the very best deals for our buyers!

The tours are free! Please post a comment here or contact me directly, if you are interested in any of these tours.

Foreclosure Inventory

Sometimes it's hard to find some valuable good news to report. On those days I just have to report on the jaw-dropping news that makes you go hmmmmmm.

A new report from Lender Processing Services revealed that foreclosure inventory levels were more than 30 times that of monthly foreclosure sales volume last month. And the average loan in foreclosure has now been delinquent for an astounding (record) 537 days, while 30 percent of those in foreclosure haven't made a mortgage payment in over two years (lots of free rent). The numbers indicate a huge foreclosure backlog, exacerbated by the ongoing robosigning scandal, which should put downward pressure on home prices for some time as mortgage lenders are forced to sell them on the open market.

Additionally, February's data showed that foreclosures related to option arms increased 23 percent over the past six months, making them the worst types of loans out there at the moment.

--Submitted by Katherine Swanberg of TriStar Finance

Buying Bargains- Bank-Owned Property

I have several websites that may be of interest to the local real estate investor. Check out my website www.homelandinvesting.com for more investor information about buying bargain properties:

Buying bank owned properties
There is a lot of interest in buying bank owned properties these days. A lot of information, some good and some bad, is floating around about the subject. Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know “the secret formula”. The fact is that there are no secrets, and to make money does require effort.

What’s an REO?
REO stands for “Real Estate Owned”. These are properties that have gone through foreclosure and are now owned by the bank or mortgage company. This is not the same as a property up for foreclosure auction. When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process. You must also be prepared to pay with cash in hand. And on top of all that, you’ll receive the property 100% “as is”. That could include existing liens and even current occupants that need to be evicted. A REO, by contrast, is a much “cleaner” and attractive transaction. The REO property did not find a buyer during foreclosure auction. The bank now owns it. The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing. Do be aware that REO’s may be exempt from normal disclosure requirements. In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.

Is it a bargain?
It’s commonly assumed that any REO must be a bargain and an opportunity for easy money. This simply isn’t true. You have to be very careful about buying a REO if your intent is to make money off of it. While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it. When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale. The bargains with money making potential exist, and many people do very well buying foreclosures. But there are also many REO’s that are not good buys and not likely to turn a profit.

Ready to make an offer?
Most banks have a REO department that you’ll work with in buying a REO property from them. Typically the REO department will use a listing agent to get their REO properties listed on the local MLS. Before making your offer, you’ll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know about the condition of the property and what their process is for receiving offers. Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it. As with making any offer on real estate, you’ll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender. After you’ve made your offer, you can expect the bank to make a counter offer. Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer. Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends. It’s not unusual for the process of offers and counter offers to take days or even weeks.

Seattle Cash Buyers Part 2

Seattle cash buyers included three quit claim deeded properties (see previous blog post), bought at 26% of tax-assessed value; and 15 properties bought with Bargain and Sale deeds, most likely purchased at the King County foreclosure auction. These auction properties were purchased at 69% of tax-assessed value. Seven of these auction properties were non-owner occupied, and presumably purchased as an investment.

Of those single family homes purchased for $400,000 or less with a regular warranty deed, cash buyers paid 76% of tax-assessed value. 19 of these 45 properties (42%), were bought by investors as non-owner-occupied rentals.

Thirteen (11%) of the cash purchases in Seattle in the last three months were for properties over $1 million in price. Three of these were not identified as owner-occupied properties - perhaps they are vacation homes for affluent buyers?

Seattle Foreclosure Tour

You'd have to be asleep to have missed the fact that home foreclosures are on the rise in Seattle, as in other housing markets. Some 400 properties go into foreclosure each week in King County. That represents a huge opportunity for investors and for homebuyers looking for even greater deals on already depressed home prices.

Several local companies offer home foreclosure tours, and they provide a fine first-hand overview of the type and variety of properties that may be bought before, at, or after the foreclosure auction (more on when to buy foreclosures in a subsequent blog).

One such tour is being offered by Ballard Partners tomorrow, and it is open to anyone interested in joining us. I will be there - just be sure to let them know that Wendy Ceccherelli of Home Land Investment Properties referred you. You may just show up, no reservations necessary, but feel free to contact me in advance if you wish.

This is a bus tour which begins at 12noon at Romio's Pizza on Lake City Way this Thursday (tomorrow) and is scheduled to conclude by 3 pm. There are six properties that will be featured on the tour. Should be fun!

I'll be blogging more about buying foreclosures, but in the mean time, leave a comment below to let me know what kind of information on foreclosures might be of most interest to you.