True Confessions of a Real Estate Investor
Actually, the investors are my clients – but I wanted to share some of this year’s stories.
Who’s buying: People who already have homes, and have more than one reason to buy (it’s not just a place to park their money).
What’s the price: Prices so far this year have ranged from $67,000 to $150,000.
What are the terms: All of the purchases have been made with cash.
Contingencies: Inspections, Condo resale certificates and reserves studies, neighborhood reviews, Form 17 seller disclosures…these things are more important than ever when it looks like you’re getting a bargain. Knowing the property very very well is your best defense.
Where are the places located: Seattle outskirts
Why so cheap? They’re short sales – or bank owned – or in proximity to short sales and bank-owned properties, and the seller is ready to let it go.
What are the frustrations? Short sales take TIME! Even with all the Federal efforts to encourage banks to speed the process up, it still can easily take 2 to 6 months to close on a purchase. Bank-owned properties where the underlying loan is owned by Freddie Mac or Fannie Mae now usually reserve the first two weeks on the market for OWNER OCCUPANT BUYERS only. By the time you, as an investor, can make an offer the property is usually sold. And banks are now trying to set up listings for auction-style bidding…it’s the same old multiple offer situation, only at cheaper prices with homes that often are not in very good condition.
Bankruptcy hang ups? Sometimes the sellers have tried to do a short-sale, with no success, and as the home starts to go to foreclosure the seller files bankruptcy. Sounds simple…but it creates an additional payee! You, as a buyer, will likely have to pay $20,000 or more to the bankruptcy trustee, in addition to the purchase price. And this is not financeable as part of a purchase loan; it has to be cash.
Firms that specialize: There are now several local real estate firms that specialize in bankruptcy/short sales. Contact me for more information!
