Real Estate Investing

Sometimes the best place to look for an REO (real estate owned) property is straight from the source. The REO divisions of banks are useful resources in this quest. They are generally listed on a web site, and for thousands less than market value. These properties accumulate when homeowners default on the loan and go into foreclosure, something that has been happening in epidemic proportions lately. So, one man’s mistakes are another man’s treasure. It takes some digging, but these finds pay off big time, and lenders’ web sites can be the greatest gold mine of all.

The biggest lenders’ sites are:

-Countrywide Home Loans

-Coldwell Banker

-Bank of America

-HSBC

-Wells Fargo

-Regions Financial Corporation

-CitiMortgage

-Chase

-BB&T

As pointed out on the O.C. Register’s “Mortgage Insider” blog, the process of buying an REO property is not all roses and cheesecake. The prices that different lenders charge for similar properties in the same neighborhood can vary greatly. There is also a disproportionate amount of not-so-nice homes in not-so-great neighborhoods, but nice REOs are certainly out there to be found — especially now! The not-so-nice homes could be viewed as a great rental property investment. As the O.C. Register blog commenters pointed out, lenders currently have such a glut of foreclosures that the closing process on REOs can be disorganized, confusing and complicated. But for those with the patience and persistence to persevere, these can still offer a great value that is light on your wallet.

The negotiation of a sale or a fee or a counter-offer can be very intimidating, especially to the uninitiated. But by remembering a few simple tips and getting some practice, virtually anyone and everyone can learn to stand their ground and negotiate like the pros.

Don’t assume. It can be easy to automatically assume that your offer is so outrageous or presumptive that it will never get a second look from the other party. Do not make these types of assumptions, but project confidence instead.

Identify your strong points. How can you justify your offer? Maybe the property is overpriced or underpriced, has been on the market a short time or a long while, or HOA or parking fees are exorbitant or non-existent. These arguments could be spun either way to get buyers to pay more, or sellers to simply pay closing costs or even decrease the asking price. When negotiating realtor’s fees, it could be small details like if the realtor is only helping with the open house and closing, but not with marketing. Less work equals less pay.

Don’t sweat the small stuff Who gets to keep the chandelier? Who pays for new appliances in the kitchen? These details are small - don’t let them make you take your eyes off the prize. You want the house first, and the details can be taken care of in other ways.

The Salt Lake City Home Buyer blog offers a tremendous list of the best ways to approach specific situations. This can be an invaluable tool for FSBO sellers or buyers with no agent representation. In all successful negotiations, it’s important to be fair to both sides, but at the end of the day, confidence is the key.

While the real estate market in all parts of America isn’t necessarily as grim as many would have us believe, it is certainly a buyer’s market. However, there are many homeowners looking to sell their property who refuse to acknowledge this. If you do not price your property fairly (in accordance with the housing market, the area’s crime and poverty level, and the property values of surrounding homes), you can be in for grave disappointment.

You will get fewer looks. You will find that responses to your advertising will be fewer and farther between. This means your property could stay on the market longer, and property that has stalled on the market is a definite deterrent to buyers.

You will attract the wrong buyers. For a sale to proceed, the buyer’s wishes and the home’s features must agree. An overpriced home will entice buyers shopping in a certain price bracket, but with far higher expectations than your property can meet.

It’s not good starting ground for negotiations. Prospective buyers will be less enthused to negotiate because, by talking the buyer down on the price, they are not necessarily getting a deal. They are probably just getting a home at full market value. They expect a deal, especially with the current buyer’s market.

It could mess up your closing If your house is priced above the appraiser’s estimate, it could prevent the buyers from successfully getting the mortgage loan they need.

The comparison factor An overpriced home makes a great comparison for less expensive homes with more features. There’s plenty of great deals out there, so do your research before determining your price. It’s better for you, not your buyers, to be first to identify the great deals offered by the competition.