Got Foreclosure! - Blog

Shocking reports of a rapidly declining real estate market are hitting the wires every day now. And not only the main stream media have turned their flag with the wind.

“The information that this house is worth somewhere around $280,000 is still unknown to Zillow’s computers. It is still unknown to DataQuick. It is a shoe waiting to drop on this street, where people — making the same calculations Zillow’s computer makes — might still believe their homes are still worth in the low $400s, or the high $300s. This is a meltdown happening before our eyes.” (From: Peter Viles’s laland blog)

There are two big questions here:

1. Is the claim in this blog article correct, that this house is “worth somewhere around $280,000″ (down by over 45% from a peak value of $425,000)?
2. Who should still be “shocked” by this kind of news after at least a year of the same already going on? In other words: Why is this kind of “bad news” still selling today?

Here is a hint: Don’t miss a buying opportunity at low interest rates, just because the news media tell you to speculate and wait for the “bottom”. Get your FREE Treasure Map about Short Sale and REO Strategies now!

Regarding the first question: A bank-owned listing is not (and can never be) “comparable” with a non-distressed home that is well-kept and put on the market by a “normal” seller. Banks are operating under a different set of rules regarding disclosures and warranties about the condition of the property.

Buying a property from a bank always implies a higher risk of hidden faults that cannot be reclaimed by the buyer after the sale has been completed. Because of that, and because of the poor or questionable condition of bank owned homes, conventional lenders will be hesitant at best to underwrite loans on such purchases.

This is the main reason why INVESTORS usually buy bank-owned homes using cash or hard-money loans to fund the deal and avoid the red tape of a new conventional loan. This brings what investors refer to as “the 70% rule” into the picture.

Simply put, the 70%-rule states that you can make money on a property as an investor if you buy it for 70% of its After-Repair-Value (”ARV”), minus repair costs and loan points.

Guess what: Banks know that. Even the banks that now own thousands of homes as non-performing assets know that.

Conclusion? Why don’t you leave a comment to this blog post to let me know yours? Investors: What would you offer for this home? And what would you do with it?

Now, to the 2nd big question:

Most bloggers who are “reporting” on foreclosures and the market crash have been fairly late to the party, and the “news” hasn’t changed all that much for at least the last 12 months. Case in point: Compare this article on the same blog with the one quoted above. It’s just about exactly a year old. Ask yourself what’s the difference between then and now?

Not that much, right? So what’s the fuss? Investors make money and create wealth in THIS MARKET! Don’t sit on the sidelines and be left out.

P.S.: REO Negotiating strategies are a very successful “secret” chapter in my “Short Sale & REO Secrets” course. Get your FREE Treasure Map now!