THE REO MYTH !!!
This message is for investors in CA, NV or AZ. I am a licensed broker and certified appraiser. How many of you are profiting form investing in REO properties? I can honestly tell you that the myth the gurus are spreading around that you can purchase REO properties at 50-75% of after repairs value is just as much a myth and as rare as hitting the lottery in California specially. I am not talking about states like Kansas, Arkansas or other areas where I see investors posting that they picked up a foreclosure or short sale for $15,000 that was worth $40,000 and after rehab and closing costs they make $5,000-$10,000 after three months of time. Those numbers do not fly in most states.
In my experience and after submitting approximate 50 offers in March alone on REO inventory, the lenders after they acquire the property are not willing to sell at a great discount even after 100-200 days on market. They just gradually follow the market decline until the property sells to a owner occupant at 90-95% discount which for us investors is nothing. I mean think about it, once a lender acquires the property they have it listed with an agent, which most of the time lists the property at or close to market and reduces every 30 days a little to sell. If you were the bank, wouldn't you want the maximum price attainable in the current market give or take 5-10%. I think you would have a better chance of purchasing below market if you concentrated on regular sellers since there is some desperation or emotion involved. Does anyone from Ca. agree or have a different experience?