June 21, 2008 - Across the country, 25% of homes sold in the first quarter of the year resulted from a distress sale. In those regions where prices had risen most dramatically at the tail end of the boom, sales of distressed properties have reached the 50% mark, accounting for half of all sales reported. Huge discounts on bank owned properties, also known as real estate owned (or REOs), may present a tremendous opportunity for patient buyers. The oversupply of properties for sale, resulting from markets where overbuilding occurred, has left a surplus of foreclosures behind pushing prices down ever further. The notorious states of Arizona, California, Florida and Nevada, where speculation and overbuilding were the most rampant, are now seeing home prices fall as quickly as they rose in some cases. Lenders now faced with a previously unthinkable number of properties on their hands are willing to deal and discount prices dramatically in order to rid themselves of the numerous foreclosed properties they have on their books.
The number of properties which have returned to lender ownership has more than doubled in the past year. Yet some areas, which have been particularly hard hit, are seeing multiple offers on bank owned properties. Acquiring a property in foreclosure can be a complex process and in many cases the deal can fall through and the property will fall back on the market. Ironically, the high number of foreclosures available has sparked much interest in the real estate market. It is not unheard of to see multiple offers in the double digits on some of the more attractive properties and for the sales price in some instances to exceed the anticipated market price. In some cases the bank may even be selective in choosing a buyer under preferred terms and conditions. Apparently speculating on real estate may not be a thing of the past as many of the buyers of bank-owned distressed properties appear to be investors who are hoping to snatch up bargains unheard of a few years ago in the hopes of turning a quick profit when the market turns around.
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