BiggerPockets

What is your market area?

What are their thoughts in pricing in reference to current BPO / Appraised values?

The likliehood of success is 100% if the buyer is purchasing at market levels

Most if not all sale opportunities are grounded because of the unfamiliar context of a sale

Start with a 65% of current BPO and if the buyer is on board there's a ton of banks releasing at those levels

You may have some hurdles getting to the actual seller so be smart and call the banks yourself,

Cash is KING.....if the buyer is borrowing money you will be ignored

I think banks are more interested in cutting their losses right now and not lending money, hence the reason we are seeing REOs listed around Fair market value instead of 60-80% of what the current BPO is.

James/Chris, Can you explain what happens to institutions when they have too much REO inventory? This obviously has an effect on their ability to lend more, but to what extent?

It's a matter of balance

When banks sell their debt it's an IMMEDIATE correction and there's nothing left to fudge

It's the primary reason I laugh when i hear that there's an 80B package...and of course it's in " escrow" :roll:

There are NO BANKS that could take an overnight writedown and stay solvent at that level

It would sink them.....Banks are paper tigers

Look at what happened to Bear after their confidence and liquidity went away.......Their building alone was worth 4 or 5 times what JPM offered

REO and NPN's are a weight around a banks neck yet it's also the only lifeline they have, The valuation of the asset is likely tw plus years old so we all know it's junk but it's what was written at the time that creates the value and will again be reconstructed at the time of the " sale"

Every bank has been in turbo mode to acquire capital (liquid) at all costs so the sales can be consumated.

Take a look at the sale of 15B from UBS to Blackrock. Blackrock borrowed a significant portion from UBS to buy the debt. Interesting shuffling of the deck. UBS is now receiving interest from the leverage and Blackrock acquires assets at 68-72........another reason I scoff at the sales I run into is the larger boys are very familiar who scratches backs the best. It doesn't mean that they don't make it down the ladder but the real biggies are handled on a golf course or swanky club :wink:

Just go back one short year and see what was happening

http://www.stlreo.com/more_news.php?news=343

It makes the next year coming pretty intriguing to see who will be left. M&A's are going to be leading the news is my guess. How will Merrill and Morgan fare.....CSFB?

We live in interesting times

:beer:

Paul try this.......I posted this bit of chrade nonsense last month

http://forums.biggerpockets.com/viewtopic.php?t=19066

:beer:

Chris, Can you please clarify what you mean in the first comment here?

I think you might confuse Dave here because you are telling him that there are a ton of banks releasing (I am assuming you mean selling?) at the 65% of current BPO levels, but if you are purchasing at market levels (FMV?), then wouldn't he expect his clients to pay 80-90% of the current BPO?

The gig is going good man, I am set to liquidate $3.5mil this month which is a pretty big deal for an individual to do around here.

I am still confused though, I thought that you were seeing deals at a lot lower than 65%? Are there really a ton of banks selling @ 65%?

At what bulk volumes are you seeing tons of banks liquidate at 65%.
Closed any deals like this in the past couple of months? Please share.

I am still very skeptical of large Bulk REO only trades going on at 65%. I can see NPNs selling at these numbers, but not REOs...the bank has put way too much time and money(fcl/holding costs) during fcl to just liquidate their inventory that low. I feel that most institutions would rather market their REOs individually in hopes of getting 80-90% of the FMV.

I guess I am speaking from my own experience as a servicer. The two largest investors we service for are Deutsche and Lehman. We liquidate REOs on an individual basis for both of these investors. There is no hurry or sense of urgency to get any bulk deals done at 65% from what I have seen from these two. They would rather us list it at FMV and then accept anything between 10-15% less than FMV. To liquidate a property at 65% or less would be a bad business decision IMO. I could only see the bank doing this if the property has been on the market for 1+ years, it is a real junker, or more taxes are owed than what it is potentially worth, but not just to stay liquid. Banks want top dollar, its the only way they are going to stay in business.

I am guessing the mood has changed a little sense the government now recognizes a REO as an asset and not a hold to there line. Does it make sense to liquidate quickly to save servicing costs? What whould you say tha average cost (servicer wide) is per property up to REO and from REO to close of escrow? Lets say it took six months to sell.

Is that something you are allowed to answer or will post?

Market values for servicing are .25 bps