358,471 Foreclosures In August
RealtyTrac, an internet-based real estate data collection agency reported that August 2009 foreclosures reached 358,471, raising the four-year foreclosure total to more than 4 million homes. In 2009, more than 1.9 million U.S. homes have entered some stage of the foreclosure process.
Debra Marsh, the executive director of the Lied Institute for Real Estate Studies at the University of Nevada Las Vegas suggested; “Whether you are an investor looking to purchase a rental property or a homeowner who is ready to retire and move someplace more affordable, the price of foreclosed properties right now is right.”
Experienced investors realize that the current climate for buyers is extremely favorable. The inventory of Real Estate Owned properties has never been as supplied. More than 1,000,000 homes will fall into the REO category by the end of January 2010. Real Estate Owned provides qualified investors with serious profit potential as banks remain anxious to dispose of inventory.
As management fees, maintenance and insurance costs continue to mount, many lenders are approaching qualified investors with aggressive financing alternatives. Qualified investors should convey a written letter of interest along with a pre-qualification letter, a balance sheet and investment history. Better yet, locate bank employees who handle the REOs and arrange a meeting to discuss inventory and purchase procedures.
One of the drawbacks to REO acquisitions is the amount of time these transactions can take. However, investors can use this time to procure competitive bids for improvements, locate prospective tenants or buyers for a quick turnover. By establishing a personal connection with the bank’s Real Estate Owned or foreclosure department, the investor can expect the relationship to expand.
While many investors envision the buy and flip option, the more likely option is buy and hold. Analysts feel there are two to three years worth of shadow inventory that will need to sell before prices begin to climb back to 2006 levels. At today’s prices, the wait should be worthwhile and the closing delay may well work to the buyer’s advantage.