OfflineOver at money.cnn.com, there is an article about foreclosures, and the first sentence puts you on alert for some big numbers:
“There’s a three year inventory of homes in foreclosure for sale, and that’s devastating home prices.”
Here are the bullet points:
-Foreclosures represent 45% of sales in California and Arizona.
-Nationwide, foreclosures in the first quarter represented 28% of all existing home sales.
-The average REO is selling for about 35% less than comparabe non-REO properties.
-In New York State, the discount for REOs is more like 53%.
-In the first quarter, the REO discount was approaching 50% in Illinois, Ohio, and Wisconsin.
-Short sales were selling at an average 9% discount to comparables.
The current estimate is that it will take three years to burn through the current inventory of distressed properties, currently estimated at about 1.9 million properties.
Opportunity knocks, and we DGers are answering!
Lois Ermatinger
RE/MAX Preferred
First of all, God Bless all of the good people who contribute and encourage on this site...thank you all for keeping me believing that I can do this, and to keep me going.
This all really hits home literally because a block behind where I live now is an all brick home 2BR 1B, large detached shed, less than a half a mile from every school in town, with a lot size of 8300+ that is a foreclosure. It is a Fannie Mae HomePath property and they have it listed around 50k.
I know there are a lot of other details that go into the negotiation for the price of a property, but how close can I get to that 50% discount (based on where the Illinois average is approaching)for this particular one and how should I go about doing this?
I know the only way I can get closer to reaching for the stars is by standing on the shoulders of giants. Any and all input would be appreciated.
"Fortune favors the prepared mind" - Louis Pasteur
This highlights the importance of doing local research to find out what the local trends are. You can see very clearly that the discounts that are possible are different depending on what state you invest in. It also will be different depending on the area within the state you live in.
Do your research. Talk to real estate professionals, and meet with other investors as much as you possibly can. You'll get to know your local numbers very well, and you will then know how to take advantage of these stellar opportunities.
So Larreygale, on that property you mentioned, I'm sure it's listed with an agent, and you can tell that agent to run through some numbers with you to find out what would make it a profitable deal. Then you can make your offer through that agent. Don't worry too much about percentages. As long as you can cover your rehab costs, your holding costs, your closing costs, and any commissions and profit for yourself. Then just make the offer. It's generally better to run the numbers very specifically the first few times until you get the hang of things, and then you can run off of percentages once you've got a little more experience.
Happy hunting!!
Makes a lot of sense, especially since every deal is different. I will start researching my local market more so I can get a better feel and really crunch the numbers to start out. Thanks again.
"Fortune Favors The Prepared Mind" - Louis Pasteur