My New Blog

Posted by Aaron Kelly on 02/15/2008 08:35 PM

Comments (7)

short sale, foreclosure, reo, buy property

Edit

Delete

7 Comments on Advantages of buying an REO property compared to buying a short sale

I don't tie up a buyer's EMD during the short sale process; I include an addendum that states it is understood and agreed that the purchaser's deposit check will not be deposited until the contract has been ratified and notice has been delivered indicating the third party has approved the contract.

I prefer REOs to short sales any day of the week;  between listing agents who have no experience with short sales and sellers who don't qualify for a short sale, I'd rather work with foreclosures because the process usually seems to be more straightforward and it doesn't take nearly as long to get an answer from the bank. 

02/15/2008 08:44 PM

by Susan Haughton Alexandria, VA REALTOR®

Delete Report as Spam

I agree 100%!

02/15/2008 08:46 PM

by Vanessa Plante-McDonald, AA, BS, MBA

Delete Report as Spam

I agree with Susan and 85% ofmy sales are REO properties.Waiting on a bank to give a answer on a short sale is very hard on the buyer unless they are investing etc.The banks will work with reasonable offers and even pay for home warranties if approached with complete packages and all terms spelled out but remember you will get the banks addendums which are written in the banks favor.There are some great deals out there and in my opinion a savey buyer with a agent that understands REOs will get the best ones.

02/15/2008 08:55 PM

by CAMERON WILSON ~ MURRIETA / TEMECULA / MENIFEE CA. ~ REAL ESTATE

Delete Report as Spam

99 times out of 100 you and your buyers would be better buying an REO over a short sale.  I could really get into a rant of my general opposition to representing a buyer in a short sale (maybe I'll save that for one of my blog entries one day).   One of the many things I do not like with a short sale is that you are dealing with 2 parties that want the transaction to take place but the judge, jury, and executioner for the transaction is a third or even forth party, really unrelated to the contract.  If you can get signed agreements from the Lender as to what they will take, great but I can tell you from experience that most major lenders will not sign anything at any time during the transaction.  They tend to want to keep their options open until the last possible minute.  Another thing with short sales is that you are basically dealing with Monopoly Money.  From the list price, to the negotiated price to anything else in the agreement, its all hypothetical.  You can get a few weeks down the road until you hear from the lender and then they decide that what the seller and buyer want to do is not what they are willing to take short.  In addition you have possible state and federal tax leans, 2nd mortgages/Heloc's, and Mortgage insurance Companies to deal (they all could throw a monkey wrench in the deal with).   And this part effects the Sellers agent more then the buyers but if anything becomes "close" to what the lender is willing to do but just not enough, guess what the first thing they try to do to make up the difference, they try to slash the commission. 

www.michaelpiercerealestate.com 

02/15/2008 09:18 PM

by Kansas City Real Estate - Michael Pierce

Delete Report as Spam

Aaron, add me to the REO property column. The unknown/time factor with short sales is just frustrating and often futile with unrealistic lien holders.

02/15/2008 09:19 PM

by Maple Valley WA Broker/Owner Colleen Fischesser 425-432-5400

Delete Report as Spam

My vote is for REOs.  As a listing agent for REOs and having done short sales, hands down REOs.  Many conventional sale opportunities are not out there yet and we need to clear the REOs from inventory.  Does  not happen quickly with a short sale.

02/15/2008 09:53 PM

by Melanie Ross, GRI Benicia Ca & Vallejo Ca Real Estate

Delete Report as Spam

I just walked away from my first short sale because of the time delay/uncertainty.  About three weeks after we submitted the offer, the listing agent lowered the sales price below what my client had offered.  When I asked him what the lender's feedback was on my client's offer, he replied that the lender hadn't responded to the offer at all.  I was curious as to why the listing agent was lowering the price if he had no idea what the lender was prepared to accept.  After reading the comments above, I will try to stick with REO's.  Thanks for the good advice.

02/15/2008 10:04 PM

by Alice McCarthy, Atlanta Real Estate

Delete Report as Spam

I recently submitted this blog on a real estate blog site and got some interesting reponses from other realtors and real estate professionals:

If you're interesting in viewing other blogs on similar topics, visit my blogsite at: http://activerain.com/aaronkelly 

I was walking around the Country Hills area of Brea today farming the area with John (a fellow agent at RE/MAX). As we were dropping off some market update on door hangers, we noticed a house that desperately needed some TLC. John was saying that this place would need tens of thousands of dollars to be in good enough condition to sell in this market. I agreed that maybe a new garage door would make a big difference in the curb appeal, but I suggested that most buyers can barely afford $600,000 for a house now that sub-prime loans have been harder and harder to get, so perhaps a house like this would sell better if the owners just tried to sell at a lower price. However, this may have a negative impact on the market value of this beautiful area of Brea. Considering many upgrades only get about 75% return, what's the best suggestion for a property that needs some TLC? Use equity to beautify the property, or just sell it like it is at a lower price?

Responses:

6 Comments on Upgrade for curb appeal or sell at a lower price?


Hi Aaron,

It's really about what is best for the seller, and not what is best for "the neighbors". Unless the value of the property is at or very close to the value of the lot, it is best to "spruce" it up best you can. Painting has a much higher return, usually a 200% return. Not sure where you got that 75% for all improvements number, but it isn't accurate. New windows have a low return, paint has the highest return. Some modest landscaping...maybe the owner could paint and plant, reducing the cost and increasing the return.

Lots of options unless it is as or close to lot value and a builder is going to buy it and tear it down. Then improvements are a waste of money.

04/11/2007 by ARDELL DellaLoggia

--------------------------------------------------------------------------------

Do the cheap fixes. Paint, fixing simple broken items, do knobs, clean up yard. I would consider cheap carpet if it is really bad and a hirer priced home. We do not recommend spend a lot of money to fix up the house. Just do things that are cheap that makes it look nice. I would not do anything that cost a lot of money, most of those things do not get there return back.

04/11/2007 by Jason Vombaur

--------------------------------------------------------------------------------
If you don't do the basics, they buyers if you have any....are going to pound the seller into the earth with concessions, closing costs, warranties etc!

04/12/2007 by Jim Crawford

--------------------------------------------------------------------------------

With so much inventory on the market, if the house looks shabby, I don't think it will get much action. It is definitely necessary to make the front look appealing, or nobody will want to view the interior of the house. The seller needs to spend money to make money. By investing as little as $2,000, I'm sure the outside of the home could be fixed up. Paint the front door, new mailbox, plant some flowers/rosebushes, oh and a new doormat (yes, this actually makes a difference)! Take care of any broken steps, etc.

Also, nothing helps the inside and out like PAINT!!!! (a little staging would be great too). The seller would be wise to make this investment instead of having continual price reductions.


04/12/2007 by Maureen Graziano

--------------------------------------------------------------------------------

Paint! And clean up the yard. First impressions set the tone for the rest of the showing. If the house color is neutral (like NOT orange) paint the front door a complimentary red. Red doors can make the front of the house pop!

Terry Haugen - STAGE it RIGHT!


04/12/2007 by Terry Haugen

--------------------------------------------------------------------------------

This is where a stager would come in very handy. Is the garage door damaged? If not, it can be painted. color choice is critical and a stager can help with that. You may be able to get away with just sprucing up the yard, rather than re-landscaping.

A lot of things you can do will not require dipping into the equity. Also, you have to consider value vs. appeal. Will it increase the selling price? Maybe not, but it can get it SOLD.


04/12/2007 by Kimberly Wester - Details Staging and Redesign