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Do Baltimore banks prefer foreclosure?
Pillar Property Group has been asked numerous times by distressed homeowner whether banks prefer foreclosure as a means of recouping the loss of money on a lender financed property.
Yet, some banks proceed with foreclosures without examining short sales creating an influx of real estate owned (REO) properties in the market. In the current real estate market, it is about the price. It is about the consumer paying for what they want and the property they want. Potential investors or first time home buyers are looking for the best deals that will not constrain their wallets.
The Baltimore buyer is currently looking at short sales and REO properties because of their implied value. The normal listings have two fundamental problems with them for buyers in this current market.
The first is the implied value of the property and the other is the unrealistic expectations of pricing by the seller in this down market. This is what makes short sale properties and REO properties attractive to potential buyers. Foreclosed properties by banks have been bled out and there are no more future losses that can be incurred on that property.
“The bank will contract a REO agent to put their own money into fixing the property to place on the market for potential buyers,” said Eric Skeeter, Pillar Property Group.
The bank invests no money into these properties so the burden is placed upon the agent. Banks will have this properties listed high by the agent and slowly start bringing the prices down at or below the fair market value, according to Skeeter
REOs are potentially great investment opportunities for those investors who wish to diversify their portfolio. Typically, investors buy these properties when they are first listed because they are under the impression they are getting good deals. Well, the truth of the matter is that many investors have overpaid for these properties. This is what makes short sales appealing to some investors.
Banks should consider short sales more often than not. As an example, homeowner maybe 3 payments behind their mortgage, which is bleeding the bank and creating depreciation on the value of the home, the short sale would be a viable solution. The main reason for banks to consider short sales is because they will not own that property for another year.
Properties that are sold through short sales are the greatest value for banks. The reason is the deeper discount within it. The formula for the short sale is the faster loss with less cost equaling a higher net for the bank. The reality is banks should consider short sale based on future depreciation associated with the cost of taking the property back and to pay the REO agent. So, it is cheaper for banks to make deals on distressed properties as soon as possible.
The media has perpetuated the great deals with short sales while some opinion leaders about the real estate market have been opposed to short sales because of their depreciation in value. Well, the fair market value property, the REO property, and now the short sale property now equal in depreciation.
For more information about short sale properties, please contact http//www.pillarpropertygroup.com