Has buying foreclosures become a speed sport?

If you are someone who has been thinking of taking advantage of the current Real Estate Market crisis and all those foreclosure properties that have been hitting the market, you are not alone, you are however thinking too much and not acting fast enough.

What I mean by that is that there are many people already out there trying to do just that, they are making offers and trying to buy these properties. You have individuals looking to buy their personal residence, small investors looking at one to four properties and you also have major investors looking to buy in bulk or at the very least very large quantities of bank owned properties also called REO's.

There are in fact so many people trying to buy them, that when you put it together with some of President Obama foreclosure prevention efforts, particularly the foreclosure moratorium, the outcome has been that it brought the inventory of homes in the $300,000 range which is the average REO listing price way down, according to the California Association of Realtors it went from a 10 month inventory to a 3.5 month inventory in one year. Nationally REO's went down 26% from June of 2008 to June of 2009.

Some areas like Sacramento which was one of the hardest hit areas by foreclosure's are even down to a 30 day inventory or less.

So, how is this translating into the actual buying process? Well,people who are looking to buy these homes basically are getting just one shot at making and offer, they have to offer what has been now called their "highest and best" gone are the days of negotiating, starting low and getting a counter offer. If you have been writing offers and trying to buy a property for the last 6 months, by now you know that if you see a good one you act on it quickly, you come in at asking price or over asking price and when you are looking you better be ready to move fast or it won't be there by the time you are ready, this means having your financing in place, pre-approval and proof of funds as well as down payment all ready to go.

When you look at what has been happening it is very interesting to see that some of the properties in this up to $500,000 price range come into the market and go into pending sometimes less that 2 hrs later. Before banks were leaving properties on the market for 3-4 months before accepting an offer, however some banks finally figured that it was costing them too much in HOA's, taxes and other fees so they are moving them very quickly.

The other reason some people have mentioned as to why are trying to get this properties out of their books quickly is because they are concerned of a new wave of foreclosures inundating the market sometime next fall.

One of the ways that they had managed to lower the number of foreclosures was by trying to do loan modifications with some of the homeowners, I have to say that from what I have seen not many of these have worked out, most people have gone to the next option which is attempting a "Short Sale". From the ones that were modified, it has been reported that 53% of them have fallen back into arrears, making Loan Modifications only a temporary extension of the problem but not a solution, and one of the reason for that concern regarding a new wave of foreclosures.

Short Sales and Loan modifications are 2 other subjects that I would like to address on a later post, there is a lot to be said about them as well.

But in closing, The market for REO's at the price point we have been addressing here is a hot market and the more information you have and the faster you can make an educated offer, the greater the chances of your success in acquiring one of these homes. You will be in a much better position if you have an experienced team and a clear strategy.

If you want any information or need any help getting started just contact us and we will be happy to help

What constitutes an "Amazing Deal" ?

Last weekend I was holding an open house on 2 very attractive properties. Yes 2...Let me explain, this are 2 brand new homes, one next to the other, with many upgrades, absolutely move in ready including landscaping front and back! Did I mention they were priced about 400k less than the same floor plans across the street? and that is not considering all the upgrades and landscaping the neighbors put in after closing.

So as I said, I was holding this 2 homes open with a great turnout, however when I asked questions I kept getting one answer in particular over and over....I love the house, however....what I am really looking for is a "Killer deal"! OK, I can respect that, so I asked, What does a "Great deal" look like to you? How will you know when you have found one? It surprised me to see how few people had an answer. If you do not know what you are looking for looks like, How will you know when you have found it?

I open this question to all of you, I would love to hear your feedback, I am sure many of you do have a very clear picture and that is what I would like to hear.

Of course what constitutes a deal varies from area to area but to be clear you should do some research before heading out, be sure to know the specifics of the area and some of the things to consider are:

1. Look at the most recent numbers (up to the last 2 weeks) for that specific area you are considering, it can be as specific as that floor plan in that particular development on that side of the street.
2. Know how the market is behaving, how this area has behaved so far, does it offer something to back this prices, is it in high demand, why is it so? many of these questions can be answered with the help of a local realtor that is very familiar with such area.
3. Think about the pros of this particular home, some of the things it offers might have a greater resale value than other very similar homes (i.e. Newer home, upgraded flooring, kitchens or other areas, pool, large lot, end of cul de sac, etc.) or it actually might be harder to sell than other homes due to some specific characteristics (i.e closeness to power lines, smaller lot, noise, traffic,etc)

One word of caution, I have seen a few listings with a price that were well bellow market, in some cases this have turned out to be what you can consider as a bait and switch or a hook. When you make an offer on the property they come back saying that they have received many offers so the bank (in most cases) or the owner, are looking at all of them but will only consider yours if you go a little higher since you are bellow the others, (still at a price where is bellow market comps) then they come back again and again telling you that you are amongst the favorites and are now so close until you realize you have now reached market price or above. Not such a deal after all...in the process you let some other homes you liked go into escrow where you could have actually NEGOTIATED a better price.

Now having said all of that, please remember that you are buying a home, this is where you are going to spend every day for hopefully several years so it is very important to remember that even though price IS important, getting something that will make you and your family have a better quality of life in your day to day is also a very important factor.

So remember, clear picture before you head out, get the correct data and happy hunting!

If you would like any information on a specific area please let me know, I can always help you or find someone who can.

Best regards,

Rina

Rina Podolsky

Prudential California Realty

Honor Society

Fine Homes Specialist

rina@my858realtor.com

www.my858realtor.com