Thursday, November 29, 2007
Foreclosure and Bank Owned (REO) Properties in Chicago: Buying the Hype?
Any real estate genius can tell you that the foreclosure market and "bank owned" property markets have been hot Hot HOT! Or not.
I have limited time today and little time to write the details of buying an actual foreclosure in the actual world, but it ain't what you think it is. Recently, a big time money manager type friend of mine told me over drinks that clients are pushing the "F" word on him. "What about foreclosures?".
His response is if it were easy to buy a discounted property in foreclosure, fix it up and sell (or hold) for big bucks, he'd be doing it already for himself (and his wife is a big time Realtor type after all).
Teresa Boardman at St. Paul Real Estate Blog describes another annoyance in this fiasco of vouchers picking up the pieces. REO properties are hell to buy.She suggests all the mortgage folks getting out of the game in St. Paul switch over to the REO side and sell off some inventory. That's why she is brilliant and we are not.
The banks make terrible sellers and are infamous for taking too long, as in never, to negotiate and accept a deal (remember the movie Three Amigos where Martin Short convinces his compadres that the IN-famous El Guapo actually meant he was "more than famous"?).
My clients and I came across an REO last weekend that we call the Mold Palace. See, the home was left vacant and was allowed to flood. It's a total shame because it's in a top flight neighborhood of North Center (almost Lincoln Square).
Anywho, it could be a go for these experienced buyers if we could get some communication going. The bank wants folks to pay good dollar with ZERO information. A joke. I know, I know... if you can't stand the heat, don't buy the mold farm.
My point here is, they are still priced at a pretty high market rate. Is it worth preparing an offer and sending off to the abyss without knowing who or what we are dealing with? Is the bank price negotiable? Many times it is not. So, a week later you get a "no" response... that's it.
The bank should hold an auction with a much lower minimum bid and let this thing sell in the open market place.