OfflineI am a bit confused. When I read about short sales and see some of the posts, I get the impression that when a property goes from short sale to foreclosure, the price comes down. On Tammys post today, she also was happy the price dropped when it left short sale and went to foreclosure.
I have looked at 2 rehabs that were both short sales. One they asked $70,000 and the other was $55,000.
The one for 70k is in my town and everyone knows it is a piece of junk. And not worth even close to that.
And when I ran numbers on it, the price was way too high for all the work it needed. I walked away from that. (I have a couple buyers wanting rehabs) and they also did not want it. But now that it is off the short sale and has been foreclosed, it is listed for $92K.
Now I have looked at another, with good numbers. The one for 55k needs carpet, paint, and the second bath was being put in, everything, plumbing and sink, toilet and shower stall are there, but not hooked up yet, and it does need the lead paint on the outside which is falling off, to be removed. Have a friend who does siding and windows, got an estimate of $13k today from him. He included fixing the porch too. I was going to offer $22k.
I called the agent today, and she said the listing ran out yesterday. The house is listed today at $129K. Why does everyone say the price goes down.
I still would like to offer the $22k and can't find recently sold homes except for one in the past 4 months. Other homes for sale within the same town, and comparable run around $122 up to $168.
So, am I missing something here?
I know the short sale and how they work. And the time it takes. The last time I went through the house with a contractor, which was Jan 9th, the agent did say it has been listed a long time, and will go into foreclosure very soon. But she also didn't think it was in the next day or two.
Any advice here. This is a nice area, good numbers, and rent in that area for that type of home was around $1100-$1300, which I personally think was a bit high. I would think more like 900.
Sandi
comps and question on short sale vs foreclosure price
Posted on: Fri, 01/14/2011 - 01:11
comps and question on short sale vs foreclosure price
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Of course area dictates pricing, whether it be a short sale or foreclosure. In the case where Fannie Mae is now the mortgage holder a few things happen, 1st, they usually have it listed at about 50% of the judgement;
(not the comp amount); 2nd, their BPO (broker price opinion) are usually high because they get any broker that's willing to walk thru it for the $ 50 fee, unfortunately the price they come up can just be pulled out of the air.
I've see houses priced high to start with(using real comps) & then upon inspecting them found central air conditioning units, water heaters, electrical panels, duct work, interior doors, etc. stolen & it hasn't been taken into consideration when pricing the property; 3rd Fannie Mae usually only drops the prices every 30 days. There was a property listed at 34,900; we offered 20,000; it was rejected; 3 weeks later it went to REDC Auction & we won the bid at 20,000 (plus 2,500 buyers premium). At closing Fannie Mae made about 3K less than if they would have taken the 20K offer thru the REA, go figure.
Sometimes you can get better pricing with a short sale because then bank has less legal expenses, but it is not only time consuming, but an extremely tedious process.
Just keep looking until you find a deal that the numbers work.
I remember not long ago you posted that situation about the auction, and how you got it after being turned down.
If I could buy and hold this one I would. Really is a nice setting and very nice little town, and good location for both Madison and Milwaukee.
Do you think if I were to offer something like $22k this would not even be considered now? Or should I wait and see what happens in the next month or two? I will certainly do a little more "due diligence" on this situation. This one I asked about does have very good numbers and if I could get it for the 20k range, may have a buyer.
But what are my chances now. Can't remember if she said it was with Fannie Mae, but I also think it wasn't. Will find that out tomorrow.
Thanks
Sandi
What you need to do is find what you think the houses will sell for, what the rehab costs are, what you and your buyer need to make and make an offer based on your exit strategy. What it is priced at where it was priced how it changed and why does not really matter. All that matters is what they will actually sell for and make your offer from there. Either it works or it doesn't!
Michael Mangham
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
I see you mentioned things missing. We went to check one out the day after the bank took it over,and the windows and doors had plywood over them, not unusual. But the lady next door came out and told that contractor came and took all the stained glass doors and windows, and he was sercurey it for the bank.
http://kendrickpropertymanagement.com/
http://rochesterapartmentrentals.com/?page_id=10
Good point with the offer. One of my buyers does a lot of rehabs around here, and already gave me some advice on this place. He said to make an even lower offer. And he may still be interested in it.
Numbers run good on it, and if I fix it, would sell for $70 which would give me about $18K. And FMV is $122k from what I have been able to compare to, and that is the low end. That is if I fix it up, if I sell it to my rehabber, I would be happy with 5k, and this guy already knows the numbers. He doesn't know where it is, but knows enough that said he would be interested if I can get it for $22 or less on my end.
And I do have 2 exit strategies I always use and never had a problem with them.
But think I will do more checking on this tomorrow and maybe offer the $22k, have nothing to lose. If they don't accept, I'll just move on and maybe check back again later if it is still sitting.
I do have 4 more I am looking at and 3 are FSBO so I feel like I am finally getting somewhere with having my name out there.
Side note here, I went to a sheriffs sale yesterday, and met several more investors that live in my area. We talked for about 2hours at the court house. It really gets easier finding more investors and rehabbers when we just get out to all these sales and auctions.
Thanks for the help!
Sandi
So does that mean the bank could show up and take the bathroom things not "bolted" down??
Why would they do that, do they throw this stuff out can't imagine the bank wanting any of it. Or do they sell it to someone trying to get out what they can?
Sandi