I have been focusing on bank owned properties for a while now and I have some experiences that I want to share with you, as you might find them useful in your own investing career. It is observable that banks now are a better grasp of the market and therefore list their properties at prices that are very close to their current real market values.
That make the properties more attractive right off the bat for end buyer users who will be competing with us investors on the same ground snatching away some deals. It is pretty common in the area where I operate, Tampa Bay, that some bank owned properties get sold within one week of their listing.
Maybe they still appear to be listed because the bank takes a little of time to process the final contract, but I do find several times that the home is already under contract when I put in my offer. That is fine because it helps keep the market moving and because creates a strong contrast with those properties that instead have NOT been priced right and have been sitting on the market for a few weeks.
The old rule is always valid that end buyers prefer to have homes that are ready to move in and shy away from the so called “handy man specials”.
They often don’t know how do deal effectively with the rehab or they just plainly don’t want to mess with it. This leaves room for lower offers to be placed and accepted and for a profit to be made as investors.
Banks will lower the price of the property by themselves after it has been on the market for a little while and usually are ready to let it go at your price, or almost, when the listing has been going on for 3 or 4 months. You need to be on the watch because you must be quick in making the offer just after the price has been reduced otherwise you might lose the opportunity.
I have seen that a good approach, that might be working also for you, is to place offers as soon as there is some change in the status of the property. That includes also placing offers as soon as it is listed: you will get several rejections since you’ll be coming in much lower than the first asking price, but other investors will be doing the same and so you’ll have a pulse of your market as well as you will accelerate the price reduction cycle on the bank side; unless some end buyer purchases at full price or even higher.
It is quite a satisfaction when you hear back from the listing broker that you an another investors have come in with very similar proposals: that means you are estimating the property correctly. It is even more fun when the broker tells you that you have beaten your competition for a few hundred dollars and the bank has accepted you offer.
Persistence always pay off.
Roberto Mazzoni
P.S. My friend Mark Jackson dropped me a line yesterday evening on Skype chat telling me that his REO Goldminer launching program is going to be over much sooner than expected. They opened the gates yesterday at noon and by 5 pm it was almost sold out already! He and Sam Bell have been doing an amazing job, the platform allows you to keep track of all REO markets and network with other investors as well http://budurl.com/reog
Tags: Mark Jackson, REO, REO Goldminer, Sam Bell