Finding out bank and money owed on REO
Member since 2009 · 3 posts · 0 votes
Good day to all,
I am a regular Joe looking to buy a house. After probing a little on the internet about a prospective home, I found out through RealtyTrac that the property is an REO. County records indicate the REO to be in title to a trustee. My question is. How do I track down the Beneficiary(bank) and how much is owed on the RE? Please explain as simply as possible.
Thank you for all information given!
Gratefully,
Rob
Does it have a "for sale" sign out front? Call the agent on the sign. Or, search for it on a real estate site (e.g., realtor.com). Once its a REO, it will, eventually, be listed with some agent. Then, you would try to buy it through the agent. Knowing the bank or the amount that was owed before the foreclosure aren't very useful pieces of info.
Thank you Jon for your response. The home is for sale with an agent. Here are the details. Price 290,000. Zillow.com estimates at 221,000. The home sold for 100,000 back in 1997. Title in the same name as in "97", till put into Trustees in 2009.
Here was my line of thinking, I was looking to make an offer below market value. I thought if I had a rough or exact amount the bank needed to recuperate, I might be able to get a deal. Is this the wrong approach. Or is there some percentage calculation that an investor would offer based on above information?
I like the Flying Phoenix. Great imagery!
Rob,
Do you have a buyer's agent you are working with?
I hate to say it, but most of the info in your first paragraph is pretty useless, and your strategy in the second paragraph doesn't really make any sense.
Here's what you should be asking:
1) What payment can I afford?
2) How much money can I put down?
3) What will my PITI payment be if I put
down (answer to 2)?
4) If the purchase price results in a payment less than (answer to 3) am I still sure I won't be overextended?
5) What are the active/pending/sold comps?
6) Is the number I'm offering less than a weighted average of (answer to 5)?
There's a lot more nuance than just these but at least you have a start. If you're already working with an agent... have them start working on these things. If you're not, it might not be a bad idea.
Jake's right about the "what can I afford" question. I assume you have a handle on that. What you can afford determines whether or not you can buy the place, but isn't relevant to its value.
I think you're really looking for how to get a great deal on this place, and wondering what would a great deal be and will the bank actually do that. Two separate questions.
Ignore zillow for values. You need to find out what similar houses in the same area have sold for recently. In locations where there are lots of foreclosures, the foreclosure or other "distressed" sales may either dominate the market or they may partition the market into distressed and retail groups. If this area is dominated by distressed sales, just look at those. If there is a mix, look at the two groups separately.
You need close by properties that are the same age, size, beds, bath, and style (i.e., ranch, two story, etc.) You want as many as you can find. Zillow can help here. You may be able to find them in county records. Or, and agent (not the listing agent) can get information from the MLS. None of these sources is complete, so use as many sources as you can.
That will give you an idea of the prices other properties have sold for. If there are other distressed sales, you can compare directly. If there are retail sales, you can discount those by the work you would need to do to fix up the one you're considering.
If an investor looked it as a flip, they would take 70% of the fixed up, retail value (aka the ARV or after repaired value), and would subtract off the cost of the repairs. Many owner occupants won't consider a dumpy REO property if they're looking to move in. So, if this is a dumpy REO, you're really competing with investors. As an OO, you can pay more. An investor has money costs and is looking for a profit while you're just looking for a place to live. If the place is livable (i.e., has working baths and a working kitchen and isn't totally trashed), you can probably get a conventional loan. If its not livable, you have fewer and more expensive financing options.
The price from 1997 is relevant, IMHO. Historical (i.e, not during the great depression, the post WWII boom, or the 2000's bubble), home prices have only appreciated based on inflation. If I adjust $100K for inflation since 1997 the value is $133K. But, there are many local factors which cause that to be an over generalization.
Current listing can also give you a clue. Not as meaningful as solds, unless you're flipping. Many sellers have crazy ideas of what properties are worth, especially if they bought at the height of the bubble or they are hanging onto the bubble value.
So, maybe that gives you some idea of the value.
My experience with buying REOs is that the banks won't come off their listing price very much. Maybe 5%. Over time, though, they will drop the price. About once a month, you'll have a price drop. You can resubmit your offer each time that happens. My experience has also been that when the price drops to be near a "good deal" price, it will sell quickly. Other members here have reported success making lowball offers, especially on properties that have been listed a long time. I've not had that happen, but it doesn't hurt to try.
The amount the bank is on the hook for is really irrelevant at this point. They've already took that hit, and are now just looking to recoup what they can. They price their properties based on market values.
Thank you Jake for your insight and advise. To answer your question of buying agent, I never go to court without a lawyer. Your last two questions will help immensely.
Jon, I am grateful for your time and typing and letting me pick your brain. You hit the nail on the head with the deal reasoning. Your advise is invaluable. You have pointed me in the right direction. Now I will get busy with my search of various sources.
I am that type of student who reads the chapter before the lesson the next day, so I can follow the teacher as to learn more. Jon I can see you have the patience of a professional angler. Which results in trophy catches.
I wish both of you all success in your real estate endeavors.
If I need more advise. I will be back to this source in the future.