MinnesotaREOBuyers.com offers insight to REO properties
I have created a new website in the helps of helping buyers understand REO properties in Minnesota. Check out the website www.minnesotareobuyers.com
REO Properties in Apple Valley, Eagan and Rosemount
REO properties have remained somewhat under control in these popular suburbs. Recently there have been more bank owned REO listings and foreclosures coming onto the market. Some of the listings are short sales as well.
Current Eagan REO Inventory
- 10 Condos
- 15 Townhouses
- 23 Single Family Homes
Current Apple Valley REO inventory
- 2 Condos
- 25 Townhouses
- 22 Single Family Homes
Current Rosemount REO inventory
- 6 Townhouses
- 6 Single Family Homes
Looking at inventory in Apple Valley, there have been a lot of homes that have come on the market lately $300,000 and higher. Most of the REO properties in Eagan are condos and townhouses. Rosemount has yet to feel the effect, but also didn’t have the overbuilding that the other cities have had.
As far as closed REO home sales, there have been 19 closed sales compared to 48 closed sales that are not bank owned homes since July 1st.
Fed says second ring suburbs next for foreclosures
A recent article in the Twin Cities Business Journal touches on the subject of the next wave of foreclosures coming to the second ring suburbs like Apple Valley, Woodbury and Minnetonka. Over 30 zip codes have been classified as potential problem areas with resetting sub-prime adjustable rate mortgages (ARM’s).
The Federal Reserve of New York has some dynamic maps of nonprime mortgage conditions that you can view for statistics. These maps give you a broader overview of zip codes and areas that are heavy with sub-prime loans.
This of course is nothing new with foreclosures in the inner city and outer ring suburbs with straw buyers but these are cities that have so far relatively weathered the foreclosure crisis.
I would have pulled some data but the MLS FINALLY came up with a way to better track REO/Foreclosures and therefore it is hard to compare accurate data from previous years.
Cash is King in REO Properties, Unless…
With lending starting to tighten up because of recent legislation passing and the shake ups at major banks, some home buyers are starting to find it difficult to find lending on certain properties. Those properties are none other than REO properties that are flooding the market right now.
Why can’t buyers get funding?
Since most REO properties are in distress, in order to obtain funding most appraisals are not passing so banks are unwilling to lend the money unless it is a 203K or rehab loan to fix the property. Very few banks are going to put the money in for the required repairs and are thus asking for buyers to obtain a 203K.
Recently working with a couple of different clients, this type of loan has been the only thing that they will accept. But trying to find a lender that actually has this type of product has proven difficult.
Should have gotten a Hazmat suit…
Should have gotten one of these, but this is all I could afford or find (depends on how you spin it) for a walk thru of this home in need of desperate repairs or gut down to the studs.
After weeks and months of the bank trying to figure out what the hell to do or who the hell is going to pay for this attitude, they finally got the ball rollin. This property is finally destined for clean up.
With a quick in and out fearing for my health (not really) but still not something you don’t want to come in contact with. Job done quickly with 30 pics to submit to the bank to show them how much time and expensive this one project will be for taking so much time. When I first entered the house back in April, there was no mold on the walls yet. Stuff grows fast and quick.
Oh yeah, that’s mold everywhere. The spores are flying around the house.
Stay tuned for the after photos…
Watchout for wicked provisions when dealing with Bank Owned homes
With all the offers going around on bank owned homes these days and only projected to be more. It is important to understand what exactly you are getting into. Banks usually have their own addendum’s or contracts that take precedent over local or state contracts.
Most banks also would like to see a home close within 30 days of final agreement and don’t like to allow for any contingencies except for maybe an inspection. When walking in to write an offer on a bank owned home, you better be free and clear along with being ready to follow through.
Don’t get cold feet when motoring along on a bank owned purchase, they are not so nice in releasing that earnest money deposit. Banks want the properties off the books and little hiccups along the way.
Here is a recent excerpt
In the event that Buyer does not serve notice to Seller of Buyer’s failure to procure the mortgage loan commitment within the time period set forth herein, then the contract shall continue in full force and effect, without any financing contingency, and Buyer shall have waived all right to terminate this contract pursuant to this provision
Sounds fun, but in the end it is the buyer that out loses out.
Make sure you read things carefully. If you don’t understand it, read it over and over again. Ask your agent plenty of questions.
Finally, Foreclosure/REO input into NorthstarMLS
Finding Foreclosures and REO properties just got a whole lot easier for everybody interested in buying in real estate in the Twin Cities. Now there is an input that directly categorizes whether or not a property is in foreclosure or lender owned. Before, agents had to rely heavily on agent remark search terms to pull the properties which might have meant missing out on some key properties.
When consumers or buyers search for homes on the Internet, most of the time the property doesn’t say if it is a REO or foreclosure. The release to the broker reciprocity will be available shortly and will be a huge benefit to you, the home buyer or investor!
I have to clean this up?
Well to answer the question Yes and No. Here is a house I walked into almost two months ago (literally, house unlocked for who knows how long). The current status of the house is REO (Real Estate Owned) and is still sitting there in this current condition.
The house was left abandoned and was not properly winterized. I can’t exactly say what happened but pretty sure I can make a spot on guess. The pipes froze leaving water running all over the house for an undetermined amount of time. The sheetrock was so wet it feel off the ceilings and walls, the sub-flooring is warped and mold is growing by the hour.
So, what exactly happens in a situation like this? Well, typically what happens is the agent working for lender has to go in and right the situation. They have to act as the ‘general contractor’ on behalf of the lender to get the house ready for sale.
First things first, the house has to be secured. The locks are drilled out or picked, then changed out with new ones. Then the property is cleaned out or what the REO biz calls a ‘Trash Out’ is performed. A winterization is only done during the winter months so pipes don’t freeze and break.
Depending on the what has to be accomplished for the property to be ready for sale it can take a couple of days or in the case of this property 2 months and counting. When a lender gets a property with excessive damage, it will take forever and unfortunately nobody wants to deal with it. In the meantime the property just sits and rots, I can’t even begin to explain what the property smelled like when I first set foot in it.
Foreclosures on Parade
A new way to look at foreclosures or REO (Real Estate Owned) properties has been bus tours. Some companies around the metro have set up tours leaving their office and visiting local foreclosures with potential clients. How do I know this? One company has called me to visit a few of my properties that I have listed with banks.
Another company has gone all out, Foreclosure Parade has now popped up. By viewing their website, not sure if it is just the name or if they really get a caravan of people out looking at properties. As for now the website looks like it just launched and all they offer is an online property search, call and go see the property with an agent.
Not a bad way to see homes and I hope it evolves.
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