Short Sales, Foreclosures, Auctions and Real Estate Owned by Banks (REOs)
Let Sage Property Solutions Guide You To a Successful Purchase
The real estate market is in some turmoil right now. And even if you think there is calm water ahead, it is essential that you, and perhaps more importantly, your Agent, understand the various types of transactions that are out there.
- Courthouse Steps Auctions
- Other Auctions
- Short Sales
- Real Estate Owned by Banks (REOs)
Let Us Take the Mystery Out of It
Honestly, whatever your background, haven’t you felt just a twinge of concern in recent months and years that you may be missing out on the “special transactions” going on in Short Sales, Foreclosures, various types of Auctions, and Bank Owned Properties, or “REOs?” There are investors out there making a killing, right? And all you have to do is type on of these key words into Google in order to get twenty companies promising to clue you in on the secret…for a price.
What if we offered to do something much more traditional and much less mysterious for you, in pursuit of the best possible real estate deal? What if, instead of charging you to “let you in on the secret” we simply offered to be your Agent and help you pursue whichever of these avenues will get you the best price on the type of property you want? That is exactly what we are offering to do.
Let us find you the best deal, whether it’s a Short Sale, foreclosure, property at auction or REO.
More of the “Mystery” Debunked – Foreclosures
More about those “secret deals” that the “in the know” investors are doing. Since there is not really any big secret, we can give you some answers right here, for free. Purchasing foreclosures actually means one of two things: either you are going to spend your time chasing people who are late on their house payments (and we mean a long chase because the foreclosure process usually takes more than a year and as much as three or more years), or you are simply purchasing property that is owned by a bank. We can help you by suggesting that you forget about the former and aggressively pursue the latter. Ask us how.
Let us help you pursue foreclosed properties in the most sensible and effective manner.
Next Stop in Debunking the Mysteries: the Courthouse Steps Auctions
Guess what, we’re happy to tell you that you don’t have to spend the next five years of your life standing on the courthouse steps wondering if any one of the twenty-seven properties you have painstakingly researched will actually come up for auction today. Why not? Isn’t that what goes on on the courthouse steps? Yes, that is exactly what goes on on the courthouse steps. And here’s another insight: when one of those twenty-seven properties that you have painstakingly researched comes up for auction you will probably be bidding against a competitor that you simply will not be able to outbid.
Who? Is it those well-connected guys (and gals) with cell phones who sometimes bid in two auctions at once? Hey, why can’t I bid against them? Isn’t my money good enough? Here is the sad news: it’s not the guys (and gals) with the cell phones who are bidding in two auctions at once who are your real competition. There is a reason the guys and gals on the cell phones are scrambling: they’re being out-bid by the banks. That’s right, the bank that is foreclosing on the property that you just spent months tracking, the bank that coordinated this very auction on the courthouse steps, in most cases this same bank purchases the property at auction! And the worst part of it is that the bank usually pays much more than market price. The banks outbid everyone else at auction on the courthouse steps for one simple reason, because they pay more than the property is worth.
This should be enough information for you to decide to avoid the courthouse steps, however, you may be wondering why in the world the bank would coordinate a sale on the courthouse steps and then buy back the property at more than market value. The short answer is, because the bank does not know how much the property is worth at this point and does not want to make a mistake and let it go for too low a price. Sure the bank is happy to sell the property to anyone who will pay more than the total value of loans on the property, but in today’s real estate market that does not usually happen. So the bank has to buy it back. And the property becomes an REO or Real Estate Owned by a bank. We can help you obtain properties that have become REOs…at the best possible price.
Let us help you access ninety percent or more of the properties auctioned on the courthouse steps, without getting cold and paying all cash.
There are other auctions besides those held on the courthouse steps. We’ll help you understand these too: they are known as private auctions. A private auction is simply another means for the seller to offer a property to retail purchasers. Some of those properties that get bought by the bank on the courthouse steps and become REOs (Real Estate Owned by the bank) are later auctioned off in private auction. What is the point of a private auction? Marketing. A private auction such is simply another way for the seller to bring attention to a property. And private auction often follows regular listing, so you have a chance to buy the property the regular way, then you get to try for it at the private auction. It’s just more fun added to the game by the seller, and, unlike the courthouse steps auction, it is a process that is fully managed by the seller. What does that mean? It means if you want the property you are going to have to pony up market price whether you do with a regular offer or at an auction.
That said, private auctions can be fun, and, if you’re pursuing a particular property that we have helped you carefully research, you can get a discounted price buying this way. It’s one more tool in our tool belt for obtaining a property for you at the best possible price.
Choose us as your ally at auction, so you can save money when the opportunity arises.
Now we have entered upon a mystery of mysteries. Why? Because all the mysteries we’ve looked at so far are not really that mysterious. Short sales are, up to a point. They are mysterious in that they are negotiations, usually amongst multiple stakeholders, usually without clear rules of engagement or mutually understood goals. Throw in any effort to find a prospective homeowner and encourage that particular person to pursue a short sale with you rather than risk foreclosure, and you have tilted the playing field of reality so far that you can have virtually no confidence in any particular outcome. This is a little like researching one hundred properties each week and then taking your research notes to the courthouse steps each day for five years hoping for a great deal. You may find one. But you will have traded away your former life, whatever that was, for a life with a cell phone on one ear (calling your hard money dealer) and your hand up for the auctions hundreds of times.
In short, as with the courthouse steps, short sales are not a direct way to initiate a property acquisition. Unlike the courthouse steps and more like the private auctions discussed earlier, the short sale is a tool in our toolbox for obtaining the best possible price on a purchase or sale: if you are a seller who owes more than the value of your property, you may want to consider a short sale. Call us about that. If you are a buyer, the short sales will come to you; you don’t have to go looking for them. Your decision, as a buyer, is simply whether dealing with a short sale is worth the (significant) hassle of dealing with a short seller. Now, while we acknowledge there is a bit of mystery in the short sale process, does this really sound as mysterious as some people have made it appear? If you’re a buyer, short sales will come to you in the form of regular listings that we will review with you, if you wish. The only mystery is whether you want to deal with this particular type of purchase. By the way, we’re up for it if you are. We’ve done it before and it isn’t so bad if you just dig in and wait it out. This is one way to get the best possible price in purchasing a property.
Have us talk you through the challenges of the short sale purchase. If it sounds like a deal for you, let us add short sales to your property search, and get you the best possible price on the income property you are about to buy.
Real Estate Owned by Banks (REOs)
These are the real deal. If you think about it, there are only two groups who own investment property: investors and banks. All the supposed mysteries of the income real estate market devolve to these two types of owners. There is, of course, really only one type of owner in the end: the investor. The banks do not want to own property and will do what they can to get rid of it. REOs are an anomaly, yet they are the most significant anomaly we have discussed. Why? Because every other “special” situation we have discussed so far is really just a step in the game by which REOs are sold to investors so the banks can breathe a sigh of relief and get back to lending money (or hoarding money, or whatever, just anything but owning property, because they hate owning property).
Note the word “hate” in the ellipsis above. This represents an opportunity to you, the investor. When an owner hates owning the thing that he or she owns, what does this tend to do to the price? It tends to lower it. When an owner wants to get rid of something he or she owns, because he or she didn’t want to own it in the first place, it opens the door to a good negotiator obtaining that asset at a bargain price. That’s where we come in, as your agent. We know how to negotiate with the banks, through short sale, private auction and regular purchase. The bank is going to do all the things it is supposed to do to sell the property, but when it is offered what it believes is a rational purchase offer that fits both its financial model and its limited understanding of the marketplace, it will sell it to you.
What if the bank is unwilling to accept a reasonable offer? Then you wait. And that is also what you would hire us for: to tell you when to count your money, when to walk away, and when to run. We will help you assess the market value of your prospective purchase property. Then we start making offers. The seller has the right to say “No.” Then we just move to the next deal, until we find a bank or a regular seller or a short seller that is ready to sell to us at the best possible price, whether its at private auction, via negotiated sale, or as a regular listed offering. The key is to know what you want—we’ll help you find it. (We’ll help you assess what it is you want, too, based upon your personal goals as an owner of income property.)
Whether the prospect property ends up being an REO or something else, let us help you find the deal that will accomplish your goals as an owner of income property.
© 2006 Sage Property Solutions - Berkeley Investors Group
Kent Mitchell, Broker Associate - Lic #01784628
NAI Northern California / Sage Property Solutions - Lic # 01870488
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