I know we get a good bit of people reading on foreclosures and they also use the links provided so I wanted to give a quick update since the official name switch has taken place. So far the only changes are in the letterhead and title, all links to the REO page (http://www.countrywide.com/purchase/f_reo.asp ) and (https://va.reotrans.com ) have remained and do not show a redirect. All the regular REO and VA processes have remained the same and I haven’t seen any emails about changes other than the vendee financing coming back on line. I will try to keep everyone updated on any more changes to the real estate section.

One big misconception that I have to explain to clients allot is how companies determine the list of foreclosed properties. Most people guess that they can buy a foreclosure for what is left owed on the original loan that was foreclosed on, or that the price it sold for on the court house steps is what you can get it for. Both of those are good guesses, but they are wrong.

The list price is determined by a number of things that happen right as, or after a property is foreclosed upon. When an agent that works with and list foreclosures gets an assignment they give the companies a Market analysis on the property along with adjustments for repairs. The companies then get an appraisal on the property or get a back up opinion of value. They compare all the information to determine where they will initially list at.

If all the homes in a neighborhood are selling at 100k, and a foreclosure becomes available be sold as-is with no repairs being made needing 5k worth of repairs and all homes selling in under 30 days on the market more than likely it would come out at 96-98k because of low days on the market shows a high demand. The same home in area with the same prices but the homes stay on the market 90 or more days on average would be listed at 92-96k. They will lower the price to try to get it sold quicker because of the cost of maintaining the home.

The Companies with the foreclosures want to sell the property but they will not give it away if they can recoverer some of their expenses because they understand just as well as the investors buying them what they properties can be worth. Check back tomorrow where I will go over some offer strategies.

Reading this post about investor exit strategies brought a few thoughts to mind that I have on the issue. This is classic of what is happening because of all the people jumping on the investor band wagon with little or no experience or a good agent to guide them, also don’t forget the hyped up tv shows that make it look easy. Most received poor advice on their market and rental history. It shows me the investor didn’t do their homework and neither did the agent, if they worked with one. Research is everything in investment real-estate. I believe most used investor loans that were out there with interest only, 100% and 80/20 loans to purchase (which in most cases puts you in a negative cash flow), they were probably also using no doc loans too. Sorry to drag on but it makes me mad because an investor in this situation will not recover for a long time.