4 to 8 years ago we would see patterns like this with properties that HUD had for sale. When looking at prior owners we would see where same property was sold with an FHA loan and then would come back usually within a few years as a HUD repo for sale again. Bought by investor(flipper) and re-sold with an FHA loan.
It was great for investors. Then with creative loan products, many mortgage brokers stopped doing FHA loans because said it was too much work. Today this kind of property is available as an REO but have numerous different REO departments to deal with. At least when was mostly FHA had anice system to find the new HUD foreclosures. Of course most of this was low end property.
Posted by Kristine-CA on July 16, 2008 at 13:30:00:
So, here’s the history of a deal that I did in 2004:
3/2 house, needed repairs
8/2004 My Purchase Price $75K (with seller carry back, 6 mo note)
11/2004 Re-Sale Price $115K (no repairs, as-is to investor)
1/2005 Re-Sale Price $190K (clean-up, paint and flooring, investor re-sells, using his mtg company)
3/2006 Re-Sale Price $205K
12/2006 Re-Sale Price $260K
1/2008 Lender takes back property via trustee’s sale, $260K plus costs
Slow to get to listed, starts out too high, has been at 100K a few months with
no offers. I put my offer in today for $80K.
Bought a different house 6/2005 for $130K. Resold 11/2005 for $179K.
Buyers did major rehab and put it on the market. Didn’t sell, they put renters
in. Now it’s listed at $105K as a short-sale.
Friends were here for dinner on Sunday. Without knowing anything about any
of my deals or my farm market, they tell me that the house the used to live in
is for sale again. They bought 12/2003 for $425K. They refinanced it quite a
bit over the next two years, taking out over 100K in equity. As they were
only a few years post BK when they first bought, they had pretty bad loans
and they couldn’t sustain the monthly payments. They resold 12/2005 for
$600K. They now think they can get it again for about the same price as in
2005. They have way better credit and a dp. And they want that house
again.
Is anyone else seeing the same in their market? It’s like a giant re-set
button…Kristine
I see this type thing as well…although our values did not go up near as much as yours during the past few years. Am working a short sale now on a property I bought and resold about 4 years ago. My purchase number will have to be about the same as I paid before. The seller, who remembered us after he called on our ad and we went out to see him, laughed and said “Y’all are gonna make money coming and going on this house!”
I myself think its something you’ll see anytime you’re dealing in distressed property.
I have bought a few properties and flipped them to investors, they then sell to a retail buyer. That retail buyer may default a few years later. I may work a short sale with that buyer, or buy and flip again as an REO. Sometimes the REO price is lower than what I originally bought it for just a few years ago.
Anyone else read David Butlers article talking about the “correction” to reality Great piece… His writing is so much better than mine. But I think he is in my head sometimes Not Eddie Murphy style but I think his reasoning is sound. even if it has an essence of banality to it!
That is interesting… what you are experiencing. This concludes one thing; you have been around the business a while now… kind of an “Old Timer”.
I have certainly seen props that I have bought at foreclosure sale, then rehabbed and sold, that have again cycled back through the sheriff sale. I have never bought one of them on the down slide again… but I would never say never.
Certainly interesting what you say… abou the giant reset buttom. That is a great description, because that is in effect what the market needs, is a do-over or a flushing of the overpriced inventory and get back to reasonable fundamentals… Pretty much what is taking place but the “Giant Reset Button”.