isCan you really find foreclosed home that are like 60-70% under value?

Question

I was reading this article online a few weeks back and I remmber seeing that sometimes you can find foreclosed porerty for like 60-80% under value becuase banks do not like holding on to these properties and they want to get what little profit they can instead of just letting a house sit there a colect dust is this true?

Answer 1

Its True.
But finding them is hard work and lots of man-hours.

What you are referring to is an REO

Real Estate Owned.

This is when a bank takes back the property because it was not sold at auction.

The bank is in a pickle. Because the Fed's Have Laws for Banks.

for every piece of real estate owned they must carry double in cash reserves.

So if a house loan is $250k and they get it back that means they have to hold $500k in reserves that they can not lend out. So you can imagine the pressure they have to eliminate any REO's

What you are looking for is a piece of property that is worth more than the loan or loans left on it.

for example. House has 5 comps at 250k
the loan left owed to the bank is $25k

That means you can buy this 250k property for about $28k After closing cost.

With a spread like that the bank may even carry the New Loan.

They are out there!

But they are hard to find and the competition is Stiff.

Answer 2

You most likey will not find a REO (Bank owned) for 60-70% under market value, because a investor would have bought it at the auction and the bank would not have it. If it did not sell at the auction it was because the opening bid was to high. I appraise REO for banks and they list them at market value less repair costs and allow 10% for investors. Everone thinks foreclsoed home are the way to go for a good price. Most are not unless you can pay cash at the auction or do a short sale. The banks do not like to hold on to these prop, but they do not give them away either. They want to get every dollar they can out.

Answer 3

Sure, its possible but rare. Houses that are marked that low are usually seized due to involvement with drug crime. They where bought outright so there is no mortgage on them. The price that they sell for is almost always the associated property taxes. Most foreclosed homes sell for about 30% give or take 10% off market value.

Answer 4

Yes,it is true.However most are in need of repair.If you are' handy 'in that area,yes,you can get some good deals!I do not believe that the 60-80%, is true.I say its less than that.I've always wanted to do what you are asking,I hope it works out for you.

Answer 5

I see it all the time. The problem with these homes are they are in need of a major rehab (basically everything, kitchen, appliance, floors, bathrooms, sheetrock, electric, plumbing landscaping, exterior work). Another hurdle is that they are in such disrepair that banks won't lend on them ie. all cash buyers.

Answer 6

Occasionally, but not nearly as often as some people would have you believe.