This will be the year of the [tag-ice]REO[/tag-ice] sales.
Why the excitement?
Inventories of unsold [tag-tec]repossessed homes[/tag-tec] are rising. That means larger discounts. Although banks will often go the traditional realtor route to sell them off, that may not be the case in 2007-2008 as inventories of unwanted houses flood a downward market.
Exactly what is it about [tag-cat]REO’s[/tag-cat] that’s so enticing?
Banks don’t like them. They want to get rid of foreclosed inventories as soon as possible. That’s because bankers don’t like property management, period. As we know, it can get messy. You have to cut grass and all. Clean up after the former owners? And tenants? Nope, not on your life.
So that’s where we come in. Some of us would love to have the opportunity to pick up some more rental properties at a hefty discount that could take us all the way to retirement and beyond.
Warren Russell of Detroit already has. He recently bought a 1300 square-foot-house at auction for $1500. As reported by the Wall Street Journal Online, all Russell needed to do was some basic [tag-cat]rehabbing[/tag-cat] as well as painting and putting in some new windows for around $10,000. The house had no major problems. His plans are to rent it out. That’s a deal to tell his grandchildren about.
"[tag-cat]Foreclosures[/tag-cat] happen when people owe more on their property that the property is worth. When prices are going up fast, as they were last year and the year before, the number of homeowners in that situation steadily declines. When prices are flat, or going down, fewer homeowners in financial distress are able to use their homes to bail themselves out of trouble," said Marshall Prentice, DataQuick’s president.
The reason this new buyers’ market was so long in coming was because many people were able to get rid of their albatross houses or refinance. Then they could either pay off their loans or sit tight as prices went up. That party is now over.
Be patient. This market may take a little time during the next year or two to flourish. That’s partly because properties have to be worked through the default process. Meanwhile keep your eyes peeled on people who are having trouble with debt and can’t keep up with their payments. Their numbers are escalating.