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Whether the banks are selling for 20% below FMV or if it in fact is FMV because that is all they can get for it the crux of the issue.
Because of all the oversupply of housing and bad economic conditions as well as affordability issues (talking in general not any specific locale), I do not believe that if the banks priced everything at supposed FMV rather than 20% off of supposed FMV that they would sell all of them or even most of them in a reasonable time. The banks know this and so they price things to sell. That means these prices are the FMV not 20% below FMV. In a market with declining prices, what a house sold for a month or even a week ago is not indicative of FMV.
FMV is what a house can sell for in a reasonable amount of time.
It is highly doubtful that if all the banks held all the REOs and didn't discount them from some imaginary FMV that they would all sell for those prices in a timely manner.
Not a very scientific analysis but I pulled numbers for the last 6 months.
Foreclosures accounted for around 30% of the SFH sales and the average sale price was $105K.
The other 70% of the sales had a average of $168K.
Using median the numbers were slightly closer together but still a significant difference.
All sales together the average was $148.5K so the REO's are selling well below other homes and are not the majority of the market. The REO's also sold in a much shorter time frame.
Not a very scientific analysis but I pulled numbers for the last 6 months.
Foreclosures accounted for around 30% of the SFH sales and the average sale price was $105K.
The other 70% of the sales had a average of $168K.
Using median the numbers were slightly closer together but still a significant difference.
All sales together the average was $148.5K so the REO's are selling well below other homes and are not the majority of the market. The REO's also sold in a much shorter time frame.
Without examining when the houses sold and where and their condition, this in and of itself doesn't tell me much. I know you pulled these numbers quickly and it is not a thorough analysis but it doesn't really indicate that the REOs are priced well below FMV at all.
And Humanoid does make a good point. If indeed the banks are pricing things "well below FMV", then it would mean that investors would or should be buying all of these things up and relisting them at supposed FMV prices and would be able to sell them in a reasonable period of time (maybe not days but weeks) for a quick flip.
Unless this is indeed happening, and vulture investors are scooping them up and flipping them in short order for quick easy profits, I have no reason to believe that the REOs are listed at significant discounts to supposed FMV.
The bottom line is this. Let's take the following bet.
If these house are supposedly listed at far below FMV, as is believed, then simply buy them up and flip them for quick profits. That would be your reward for winning the bet.
But if it is the case that it is not true and the REOs are in fact priced around FMV to begin with, then your cost of losing this bet would be your loss in trying to flip it unprofitably.
my house doubled in value in 10 years and at 13 years (and with the burst bubble) it's still just over double in value. a house can be a good savings account.
Without examining when the houses sold and where and their condition, this in and of itself doesn't tell me much. I know you pulled these numbers quickly and it is not a thorough analysis but it doesn't really indicate that the REOs are priced well below FMV at all.
And Humanoid does make a good point. If indeed the banks are pricing things "well below FMV", then it would mean that investors would or should be buying all of these things up and relisting them at supposed FMV prices and would be able to sell them in a reasonable period of time (maybe not days but weeks) for a quick flip.
Unless this is indeed happening, and vulture investors are scooping them up and flipping them in short order for quick easy profits, I have no reason to believe that the REOs are listed at significant discounts to supposed FMV.
As I had posted earlier in the thread, this is indeed happening.
The REO's that are priced 20-30% below are getting multiple offers in the first 2-3 days.
Many only need some clean up and a new coat of paint, the ones that need rehab are going at more of a discount.
Vacant land is also moving quickly. I had 2 parcels that we made 48% on in 4 months.
There are some that are move in ready and they will not go for as much of a discount but the one I sold to a friend of mine 6-7 months ago is still about 15% below 2 very recent comps (last 6 weeks) in the neighborhood.
The bottom line is this. Let's take the following bet.
If these house are supposedly listed at far below FMV, as is believed, then simply buy them up and flip them for quick profits. That would be your reward for winning the bet.
But if it is the case that it is not true and the REOs are in fact priced around FMV to begin with, then your cost of losing this bet would be your loss in trying to flip it unprofitably.
1. make banks richer
2. a loss can be a writoff if its for biz
3. got too much money and wana throw some away
4. love getting a bad deal.
5. if i am in the red when it collapes in 18 months, my wife wont dare sue for divorce
Firstly, when I posted this I stated right off that it was a very unscientific analysis.
Secondly, you want to go on and on about your national numbers and how they will affect everything, yes I remember that post of yours also, but when I take numbers from ONE county with a population of 180,000 people it seems I am not taking enough variables into account. That is comical.
Did it hurt your feeling that you didn't have a clue about REO's? Is that why you had to resort to personal attacks?
Try calling the foreclosure department at a bank and see if someone will tell you how they come up with the list price.
Hey Mike, don't worry, you got him! This is what he does when he's been called out- that is, starts name calling, insulting, and just overall very ignorant behavior in his defensiveness. It's clear to most who knows what they're talking about and those that don't. Insulting my "english" and the ability of understanding it is just about as low and ignorant as one can get. And I'm sure the word "retarded" will offend many. Don't worry, he obviously can't help it. It's interesting to me that he would even take this direction, so I suspect he's looking to get kicked off this forum since he might not be able to stay away unless forced to. You know what's most funny of all, on topic of REO's? If all houses were priced the same, regardless of whether it's an REO or just a retail, regular sell, then I guess even I don't understand what the point of an REO is? Foreclosures have ALWAYS, ALWAYS, ALWAYS gone well below market value of retail market prices, haven't they? If not, then getting a deal at "foreclosure prices" would not EVER play into the game! I can't believe you are actually having to explaing this to Humanoid or anyone else for that matter. Finding a foreclosure in our area is not easy and not frequent! And when they do exist, they are always well below any other comprable listing in the vicinity. And they think we don't know what we're talking about? I'm now laughing! And one last thing- Humanoid used to have a nickname under his user name, calling himself "THE FART MASTER"! That should spell it out for you. It did me! Good luck and keep up the good work in real estate! Most of us appreciate realtors like you and many others, so don't sweat this guys ignorance!
Interesting how you accuse me of changing the subject, when in fact, it is you who diverts attention elesewhere, always avoiding answering ANYTHING! Oh wait, didn't I ask, in a round a bout way, once again, whether you own, why you are so passionate about RE, and why you're interested in areas you don't live?
Why does it matter? How exactly would me buying, selling, owning real estate or not at some time in the past make any difference at all to whether it was a good time to buy now? You seem to be obsessed with talking about other people rather than actually discussing the issue - in this case, for example, answering my question about how an area can have so many foreclosures that renters should be seriously worried about getting evicted from foreclosures but at the same time not have enough foreclosures to significantly affect the price of houses in the area. Instead, you'd rather worry about my sinister hidden motives for asking such a preposterous question.
Fair Market Value-you said this and made me wonder where you are. What state are you in? Do you mean bank foreclosures and HUD'S?
"Finding a foreclosure in our area is not easy and not frequent! "
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