Rental Property Investor · Worcester, MA · Member since 2018 · 131 posts · 135 votes
While looking at some potential flips in the Worcester, MA area, I've noticed a few REO properties that, according to records, the bank took up to, and in some cases more than, 2 years to finally list on the market. Is there any reason a bank would do this? Or is this simply just due to a bank poorly executing the foreclosure process and losing time? Could they be playing the market?
I also noticed in one property that some new plumbing and wiring had been Installed, and seemed more recent than when the previous owner handed it over to the bank. Do banks ever hire contractors to rehab an REO? Or are they always selling the property exactly as they received it?
Curious what anyone who has insight into the banks specific process thinks.
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
4y
One reason can be because the person in the house fights the foreclosure. If you declare bankruptcy, for instance, it puts your foreclosure on hold. I have seen foreclosures stretch out for 2-3 years on a regular basis. Also, Covid 19 also affected things where courts / states stopped all evictions for a period of time. So there are many reasons why it can take awhile. Any good lawyer can keep the foreclosure process at bay by filing various motions with the court.
Banks can do whatever they want as to selling a property. They will usually do whatever it takes to maintain the property. We bought one that they put a roof on before selling it.
While looking at some potential flips in the Worcester, MA area, I've noticed a few REO properties that, according to records, the bank took up to, and in some cases more than, 2 years to finally list on the market. Is there any reason a bank would do this? Or is this simply just due to a bank poorly executing the foreclosure process and losing time? Could they be playing the market?
I also noticed in one property that some new plumbing and wiring had been Installed, and seemed more recent than when the previous owner handed it over to the bank. Do banks ever hire contractors to rehab an REO? Or are they always selling the property exactly as they received it?
Curious what anyone who has insight into the banks specific process thinks.
Thanks!
A lawsuit can hold up an REO for a couple of years as it works it's way through the court system.
Sometimes paperwork doesn't get properly filed and the bank has actually sold the property but just isn't showing up on the county records as such.
It's rare these days but a small lender who understands that it makes sense to do some work on a house before putting it on the market. Most big banks and hedge funds won't take the time or expense. They will just write off the loss.
You can always ask your favorite title company to do a prelim on the property and figure out the status.
Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 632 votes
4y
Well foreclosures and evictions were on moratorium for almost two years, which explains this. Furthermore, lenders routinely hold property to play the market.
Yes lenders will sometimes make repairs to REO property to increase their returns.