What's everyone's take on REOs in your area? I don't know if it's because so many newbies have jumped on the REI bandwagon (including myself), but in the past year I've noticed that REOs have gone up significantly in priceâand even then, there are almost ALWAYS multiple offers and they wind up going for way over the asking price, sometimes 10-20k.
Right now, the average price for a 3/1 SF is about 89k (last year, they seemed to be more in the 40-50k range). Mind you, the average ARV in this area is typically no more than 165k. Unless I'm missing something, there doesn't seem to be much of a spread there, if any–-also factoring in repair amounts & financing, of course.
On top of that, the private sellers who call me back from my direct marketing aren't that motivated, either—they always seem to want market rate for fixer-uppers that they don't want to repair & list on the MLS.
That being said, I'm wondering if I need to think about another strategy or REI nicheâalthough I'm not sure exactly what at this point. Have any of you experienced the same dilemma in your areas?
RE investing is not easy. The sellers don't are about yor spreads, they want the most money for their house just like you would. The market is increasing and REOs can be priced higher and still sell. In my experience, 1 out of 50 direct marketing people may be motivated.
True, Mark--I definitely agree that it's a numbers game--knowing that most sellers aren't going to be that motivated, my goal is to keep my marketing going as consistently as possible. I totally understand wanting to get the most for your property--but what's interesting about some sellers is that when they want market value & I suggest listing it with a realtor in that case, they're like "No, but I don't want to do repairs/wait for it to sell on the market," etc. I'm thinking, "you can't have it both ways, lol"--but then again, selling one's home is a very emotional thing. Par for the course! :-)
You need to keep following up with those sellers. Eventually they'll have to choose between having their cake or eating it...
You are correct about the market but I think you should keep your marketing going and put those clients on the list to call back because at some point once they realize they cannot have it both ways they will reach out to you if you have provided them with a good win win situation.
Yep--I agree, guys. Gotta stay on my "follow-up" game! ;-)
Yes, Raymond--I am! Not sure if I'll be able to make this one, but thanks for the reminder. :-)
Yes, prices are up..But you can still find deals...It will take more effort...
Hey, @Vonetta Booker hang in there! The REO market is definitely a lot different than it was a year ago, even 6 months ago. I see it in SECT as well - multiple offers, properties selling for higher than asking price, etc. And then every once in awhile a good one slips through the cracks.
I think you have your answer already, backed up by the responses here: keep marketing and talking to sellers, and the off market approach will start to pan out for you. How long have you been doing the direct mail? From everything I've seen here, you should go into it expecting nothing to happen for at least 6 months - and then the snowball effect kicks in. (So long as you've been consistent and have worked on your skills in talking to this segment of the market.)
Hey, @Karin Dimuro --thanks for your words of encouragement! In all honesty, though--consistency is something I often struggle w/ and have to constantly stay on top of (as seems to be the case w/ a lot of us!) Sometimes it's a challenge to continue putting out letters, spending money on stamps & other marketing and not being sure if/when I'm going to see results. But then again, I won't see results at ALL if I don't, lol! ;-)
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