OfflineHello fellow DGers!! Got an issue I am facing in my area. I live in Fort Worth Tx and I am noticing that I am not getting offers accepted anymore. I was offering 70% of asking and doing well last winter with that. Then, after the acceptances/counters stopped, I raised all offers (the ones that hadn't sold yet) to 75%. Still nothing at this point. Raised again to 80% and still nothing again. I just had my realtor pull all the cash solds in the area. After MUCH sorting and organizing, I found there were 158 properties sold in the last 90 days cash. 76 of which were investors, 46 were owner occupants and 36 were not recorded yet. Now, out of the investors, the lowest price I saw below asking was 74% of asking. There were only a couple of those. Most of them were high 80's to 90's even over 100% of asking. Now, someone wise recently told me that's every wholesalers dream. The problem is when your making offers trying to get them low, the banks have no reason to accept a lower offer when these other investors are paying too much. So, I am wondering if anyone else is seeing this trend in their areas and what they are doing to create better deals. Thank you for your time.
Investors paying too much!!!
Posted on: Thu, 06/07/2012 - 03:58
Yes, definitely seeing the trend in my area in AZ. A year ago 60% of the market was distressed sales. Now it's only 30%. Investors in my area are "swarming" and bids are very competitive, even at the trustee sales. If an REO hits the MLS and it's a really good price, it will have 15 offers by the end of the week. You have to make offers OVER the asking price to get something accepted here. It's been difficult, but this also means that the market is turning.
If I had money to buy and hold, it wouldn't be such an issue, but I'm buying to Fix N Flip and I NEED to get the price low. It takes a lot of leg work and searching and putting in offers to find something.
If you're wholesaling, that also means there are many buyers in your area and you should have trouble selling.
You know I meant to say the last sentence "you SHOULDN'T have trouble selling."
What are the FMV's on those properties? Because FMV is more accurate to crunch numbers than the ask. What if the ask is already 70% below FMV? That would make sense, right? Or are investors paying over the FMV expecting it to go up?
I'm confused. But will probably run into a similar problem here in FL.
mbjoseph:
Good point about the MLS. Did REO's not always get hit by multiple offers? I know that down here there's a 15 day grace period that only lets Homeowner Occupants bid on the property, then it opens up to investors. Is it the same where you are?
Marc
New REI in SWFL!
HUD homes have a 30 day period here where only owner-occupants can bid, then it opens up to investors. Other REO's do not have any restrictions on who can bid, but often have a 90 day restriction on re-selling.
There were always multiple offers on REO's, but it's just gotten really intense this year. When I first started this journey in 2009, I used to target properties that had been on the market more than 60 days. Now it's really rare to even find those.
I think investors that are purchasing for buy and holds can offer more on the property. All they care about is if it will cash flow. But for me, I want to fix n flip and have to be super careful about buying. It's great to get a property for $50K...but if the neighborhood values are only 75K and it needs a bunch of work, it just isn't a deal.
Thanks for clearing that up about HUD's. Something else to do research on and ask my agent about. He's in for a doosie tomorrow morning. Boy do I got a list of things I want to get done. Trying to keep a quick pace.
I get what you're saying about buy and holds. It's why as a wholesaler I intend to build my buyers list with both types of investors. In the meantime, going to try to wholesale some MLS listed REO's using unique strategies to get around the "no and/or assigns" clause before I get to the marketing for finding my own homes stage.
Marc
PS. 90 day restriction on re-selling? And often? Hmm... more questions to ask.
New REI in SWFL!