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Changed Foreclosure Picture Still Presents Opportunities

By
Real Estate Agent with F.C.TuckerEmge Realtors, LLC

The foreclosure situation is a good deal different from what we were discussing a few years ago when the tidal wave of 7.3 million foreclosures and short sales swept the nation. When The New York Times “Dealbook” recently pronounced that the supply of cheap foreclosed homes in America is dwindling, it came as news to…well, no one.

Let’s face it: investors wouldn’t need to look up the latest statistics to guess that number of offerings would be down. The continuing rebound in home values, slow but steady improvement in the overall economic picture, and even just the passage of time has to mean that the glut of subprime-crisis-era foreclosures would have worked their way through the system. 

But there are always new foreclosures, and for anyone hoping to make a bargain buy in today’s foreclosure market, the same qualities that brought post-crisis success still apply today:

  • Knowledge of (or willingness to research) comparable neighborhood values
  • Realistic appreciation of rehabilitation costs
  • Decisiveness (willingness to act swiftly)
  • Ready access to investment capital

The principal difference in today’s foreclosure milieu is that far fewer are available, and the difference between market value and listing price has narrowed. There may be fewer competitors to worry about, but some are still out there, as always. Today sees fewer institutional investors—in fact, some are leaving the market altogether, taking their profits and selling out to groups more committed to long-term property management.  

Aside from the qualities described, there is still no blanket formula for landing the best foreclosure deal. But among other observations, there are two that are worth considering.

First, despite the lessening of the impact institutional investors previously had on the market, it may still be necessary to prepare to offer more than the listed price. The dwindling number of foreclosed homes tends to create an imbalance between supply and demand. If other buyers are offering higher amounts than the asking price, it can easily result in a bidding war situation. As always, by researching underlying values, the best investors avoid foreclosure buys that wind up being little more than break-even propositions.

Another wrinkle to be aware of is the possibility of future cost increases. For instance, it can transpire that an investor succeeds in purchasing a property significantly below its true value, only to find that a reassessment by taxing authorities raises its property tax bill through the roof! Canny investors prevent this surprise by finding out how the local Assessor’s office sets rates and schedules appraisals.

The foreclosure picture changes constantly. If you are interested in the investment possibilities—or are looking for a buy on your next home—don’t hesitate to give me a call to discuss the latest offerings! You can reach me on my cell phone: 812-499-9234 or email Rolando@RolandoTrentini.com

Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

In our area the market to off unexpectedly and it was straight up.  Almost every RE investment went up.

Feb 17, 2015 12:44 AM
Karen Mathers - REALTOR®
Keller Williams Vero Beach - Vero Beach, FL
When it Matters, Choose Mathers! 772-532-3221

Let us hope the buyers will invest in the community and not just the property.  We may find a flood of "flippers" not knowing how well the commerce and schools are being without the benefit of tax payers for so long.  It is good to see interest in the area which needs so much help.

Feb 17, 2015 01:07 AM
Richard L. Sanderson
Richard L. Sanderson Consulting - Kalama, WA
helping improve local property tax systems

Buyers considering the purchase of a foreclosure-related listing, which includes short-sales and bank-owned-property sales, should investigate how the local assessor views such tranactions. Unless foreclosure-related sales make up the prevailing market, local assessors may not consider such sales as indications of market value. In this case the assessed value for a property going through foreclosure proceedings may not be reduced to an amount that relfects the asking price.  It's not so much the taxing authority raising the property tax bill as the potential purchaser failing to recognize how the local assessor is viewing foreclosure-related sales and erroring on the assumption that the property taxes will take into account how was paid to acquire the property.

Feb 19, 2015 05:07 PM