When I search number of properties that are sold to 3rd, there are very few that are in this category. I didn’t put a time limit in my search result. Does this mean only a few properties are sold to 3rd in the last few years?
Thanks,
Charles
Hi Charles,
ForeclosureRadar shows the last 120 days by default. (You can move your cursor over any work or term in the app to see a tool tip explanation and definition of that term.) If you want to see the properties that sold to a third party beyond the last 120 days you would set your date range under Sale Date-CURRENT and check the box to include historical records.
My observation is that of the ones that go to sale, 1% to 3% go to outside bidders. The rest go back to the beneficiary (lender). This is because virtually all loans going to sale have a loan balance of 50 to 250% more than the value of the property. Most of the time the bank/lender has decided they are better off taking back the property themselves. In rare instances, they’ll allow the property to go to sale with a starting bid less than that balance - a bid low enuf to entice an outside (3rd party) bidder.
To follow up. I guess someone to make use of FR’s data, here, and see the number that go lack to the benef. vs. 3rd party. That would obviously be more scientific than my perceptions.
REOs – My "observation is that if a property needs lots of work, you are more likely to get a “deal”. You would need to offer cash, in most cases, because a bank wouldn’t loan on these. The houses in good shape will go for full “retail”, whatever that is.
Pre-foreclosures — I guess you could make a short sale offer thru the owner. This would require cooperation of the owner and the bank. Again, condition of the property comes into play. There are brokers who have the patience to deal w. listing short sales AND the perseverance to take the months it takes to get them thru.
Thank you Mike for your valuable input
This particular post is right on target. I think Lenders appear to have ALL the power. They can postpone auctions, they can bid above the market to take the property out of the auction, they can cancel the auction, or they can set a minimum bid that leaves a profit potential for a 3rd party. The idea that fortunes are made at the auction is getting tarnished as I see this high percentage of bank circumventions of the auction process (i.e. the topic of this post, that a small percentage end up going to third parties). After looking over the auctions for about a week, attending a day of them, I’m beginning to understand that it is most likely, the lender will hang that low opening bid out there ONLY when the property is unmarketable. I think the “professionals” who participate at the auctions, have carpet, drywall & paint, and landscaping crews they can expect to deploy to the poorly maintained properties that banks let slide by at auction. The only possible exception to this, I believe is when the Lender’s REO inventory grows too large. Then some nice ones might be allowed to slip at auction for a good price. But generally, it is safer for the Lender to List their REOs and simply lower the price fractionally until they sell. If this is true about auctions, then can fortunes be made in this manner? It’s probably not bad money, but it’s spread over a staff of renovation people. Also the investor must only bid on properties with properly situated liens, no other substantial encumbrances, and clear title. As an investor myself, I believe reaching out to REO managers with highly liquid bids, is possibly the only way to get a decent property at a good price. Sadly, no way to do this without the engagement of a realtor. I think although the idea of an auction, is exciting and glamorous, I think (please correct me if I’m wrong) it’s reserved largely to a renovation oriented business.
Thank you Michael for a thoughtful response