Today I was reading advice about about how to purchase bank owned homes. It's interesting that as you read through various processes across the USA, you can note differences with how the banks work with foreclosures. I saw a few things of interests:
1. One writer spoke of the 'great' deals offered. He mentioned a home at that sold for $500,000 3 years ago being sold for $250,000 as a foreclosure. Great deal? Not at all. The owner could not sell the home for what they paid for it. They lost the home. That's no great deal. Its the tragedy of what is happening in America. The market ran up speculative prices with homes and the ordinary home owner got caught up in it. Some were speculating, but some truly needed a home to house their family - yet two years down the road they lost it. Homes are valued only at what the average family can afford within that neighborhood or zip code. I just read a brilliant numeric analysis of how to price a home, and I'll share that as soon as I have permission from the author. It is brilliant, and I will start using it on every time I look at a home for my investors.
2. The agents that sell foreclosures. They are a mixed bag to be sure. Take for instance the home I wrote about on Friday - the home which has the front door blocked from the inside making it impossible to get in the house. My partner put a call into the agent the same day - but received only voice mail. She left two more voice mails - but never had it returned. I called the agent on Saturday - and received the sweetest voice mail stating that she only worked Monday through Friday and did not work on weekends. In a working economy - one in which people work Monday through Friday and look for houses on the .... weekends....you'd think she would make herself available at least on Saturday. But unfortunately she did not - and my client, a cash investor, could not get into the house. In these situations, I always wonder if the bank understands the "dedication" of the agent they have designated to sell the house. Frankly, were I the asset manager, I would be monitoring closer - but I'm not the asset manager, and I'm beginning to feel that things are just done differently from how I do them!
3. Negotiation - actually pricing and negotiating bank foreclosures is tricky. Every one believes they are experts in pricing, and the bank tries to always get what they have into the house. They seem to get offended when the recieve a low offer - one the perspective buyer believes is the fair value for the house. Often they won't even answer. Often, the agent does not even submit! After all, they work on commission - and it's in the agents best interest to get as high a price as possible. Therefore, they often tell you about the 'value' of the home in their opinion, and as a buyer - you can only believe them. In this, I advise all buyers to become experts - understand what home values are - how to value them, and how to buy them. There are experts out there - and I'd like to meet more!
As I complete a couple of presentations for my institutional investors, I continue to be amazed at the great profits investors can make, if they are cautious and really know what they are doing!
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