Has anyone had much success flipping forclosures?

21 Replies

Seeing it both ways. A bank doesn’t want to hold on to a house. At the same time are they gonna be willing to sell it to you at a price that makes it worth while for you as the investor.

Originally posted by @Kimberley Keller :

Seeing it both ways. A bank doesn’t want to hold on to a house. At the same time are they gonna be willing to sell it to you at a price that makes it worth while for you as the investor.

If the bank already owns the house it's called an REO. (Real Estate Owned). Banks don't like owning real estate. They have a real estate agent give them a BPO (Broker Price Opinion) and the agent puts it on the MLS. You can always offer less than the MLS requested price on any property in the MLS. If your offer price is less than what the bank thinks they can get it just takes longer for the bank to say yes.

Originally posted by @Jordan Archer :

@J Scott

Are you mainly flipping auction properties or REO's listed on the MLS?

I'm not flipping foreclosures any longer, but when I was, they were REOs off the MLS.

The short answer is no, not really. There isn't much value in foreclosures anymore. Not for a house flipper anyway. Usually they are priced much closer to retail than anything investable. If the price is investable the property will have dozens of offers within days.  

There is waaay more competition on much fewer properties than a few years ago. Maybe the iBuyers and hedge funds can figure out how to make money buying hundreds or thousands of properties at a time. Trying to find an MLS REO to flip isn't a good use of time anymore.

Originally posted by @Jordan Archer :

@J Scott

Was this back in the early days of the recession? Just curious why you aren't doing foreclosures any longer?

This was mostly back between 2008-2013.  


I'm a big fan of going after the low-hanging future, and while it's still possible to flip foreclosures (I've done a couple of them in the past two years), in my markets, there are easier ways to find deals these days.

@J Scott

How????

I’m dying down here!

I agree with the earlier comment from the investor in Tampa. ESPECIALLY if it's on the MLS - forget it. Wholesalers in my area (SW Florida) are marketing properties for 15% below ARV!? My cash buyers would laugh if I brought that to them.

Originally posted by @Kelly Hotzler :

@J Scott

How????

I’m dying down here!

I agree with the earlier comment from the investor in Tampa. ESPECIALLY if it's on the MLS - forget it. Wholesalers in my area (SW Florida) are marketing properties for 15% below ARV!? My cash buyers would laugh if I brought that to them.

Most wholesalers are horrendously bad at their jobs.  Most of the deals I've purchased from wholesalers over the years have been the same handful of folks that know how to market for deals, know how to negotiate and know how to leave enough meat on the bone for investors to make the deals worthwhile.

Keep your eye out for FSBO's who are trying to hurry and sell before they get foreclosed on. Pre-foreclosures can be great. And it comes down to equity because what they owe is what you can pick it up for. We just flipped one where the owner was advertising on a local ads site. We picked it up for what she owed which was $142k and we offered to help her move and get into a new place. We put about $50k into it and sold it for $265k!

I’m in a small market and have been tracking some foreclosures. Like mentioned above, finding ones with a lot of equity is best. I usually search them on register of deeds site to see when and how much their loan was to gauge what’s owed. Getting it before it’s an reo seems to be simpler. We have a lot of homes damaged from Hurricane Florence that are foreclosing so those should offer some room for great profit. Also I look for estates in foreclosure hearings. They likely want to get rid of it quickly. In my state this usually closes the estate and keeps other debtors from harassing them for payment.

@J Scott how open are banks to accepting lower offers for REO properties? I've heard they're willing to budge on their initial price a little bit, however it's not likely that they'll accept and offer with a decent percentage price decrease.

Originally posted by @Stephanie Abitia :

@J Scott how open are banks to accepting lower offers for REO properties? I've heard they're willing to budge on their initial price a little bit, however it's not likely that they'll accept and offer with a decent percentage price decrease.

I'm not buying REOs off the MLS anymore, but I know others who are. And it depends on the market. Banks are certainly not willing to negotiate as much as they were a few years ago, but I hear there are some markets that are a little softer where you can get the bank to come off off list a decent amount. The bigger question is how close to market value the banks are listing...not how much they'll come off their initial price.

Kimberley , YES, I've had great success flipping REOs. We are scheduled to close escrow on the resell this month. We purchased from a bank at $314,500, rehab $70K, Sold $514,000. Total hold time was about 5 months. 

REOs , are a great buy! 

Yes, though you might have to think more outside the box to get good deals.

I'm still in the process of  a note purchase/foreclosure/rehab. It was a weird, nutty bit of crazy just on the title/paperwork side.  There were two notes (one at 10% one at 0%...but due on sale or transfer), dual un-probated estates,  one heir, (but no actual "owner"), a tax lien and pending tax auction, and 18 months of back mortgage payments. There was NO actual equity due to the derelict condition. It takes a LOT of neglect to be underwater on a home purchased almost 20 years ago, but it can be done. 

I purchased the note at a significant discount, did a significant amount of work (cost of which can be added to the note), & it goes to foreclosure auction in about 3 weeks. The total amount owed is almost FMV, so I doubt anyone will buy it "as-is", uninspected, at auction, for cash.

It all depends on your area and what banks own the debt. Certain banks have more realistic upset prices.

But for me, in my areas, of course foreclosures are still being flipped. Have 3 right now. The only issue that is starting to happen is that foreclosure inventory has been going down. 

Originally posted by @Stephanie Abitia :

@J Scott how open are banks to accepting lower offers for REO properties? I've heard they're willing to budge on their initial price a little bit, however it's not likely that they'll accept and offer with a decent percentage price decrease.

They have a very systematic way of going about it. They simply follow their formula. When they get the property, they do an appraisal and then tell their REO broker what to list it at. Of course they generally have a bit of wiggle room but not much. Then they generally have a set schedule to reduce the price the longer it goes unsold.

It is only when their inventory gets uncomfortably high or hold times too long that they start to deviate from the formula and think about dumping. That stopped in 1012-13 depending on the area and I don't see anywhere that is close to happening again.

The longer the DOM, the more chance of getting a lower offer accepted but still, don't count on a great deal in this market.

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