The Obama Administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, are very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors.
There are currently about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) and millions more are coming. Late stage delinquencies still in the pipeline number close to 2 million, according to a new report from Lender Processing Services. It gets more amazing… foreclosure starts outnumber foreclosure sales by two to one!
Under the plan, investors will be able to get in the range of 25, 50, 100, or even 500 properties per deal.
One day soon, inspectors may get calls that sound something like this: “Hi, can you inspect 100 properties for me?”
Personally I know several groups and they sometimes use me but never even open the reports.
They simply gut the entire thing and care less about my reports since an average home rehab around here has an average cost of $70,000 or so however it is the people buying these upgrades that need to be wary as many of the upgrades have issues.
The flips that will result are good for business I agree ,but feel for the reason I stated more than a windfall from these groups.
Hard to say for sure, but would seem that Investors that are buying in bulk are spreading risk in #'s. Buyers of commercial and residential property that are purchasing home’s and buildings one at a time for personal or investment use are taking risks and analyzing them one at a time. They would want and would benefit from a real estate inspection.
Where an investor that purchases 50 homes in bulk, may want to sample a few… they probably are purchasing the homes w/out inspection and contingency periods anyway…I mean, what would be the point…??? “I’ll buy 50”, “But not those three” :roll:
Homes that get foreclosed/short-sale’d that are bought, flipped and sold get inspected… probably more than 1/2 the time. That’s good for our industry, and as I’ve stated previously, and more importantly, probably a good service for the buyer.
Having an industrial type buyer buy a whole bunch 'o houses is bad for a whole bunch 'o reasons. For one… turning entire neighborhoods into rentals is bad.
I think there are soooo many homes still waiting to be foreclosed on, they are trying to prop up/hold up what ever “stabilizing” they feel they have accomplished. It’s REAL simple, when the Job market stabilizes, housing will follow, then appreciate again!
Wouldn’t you, if you were up for re-election this year?
I work with several investors and some send me more work than any other source. With the number of Metro Detroit foreclosed - bank owned homes there’s no shortage of investment opportunities. It’s been my experience that some investors will skip on an inspection because they plan on gutting the place anyway but others, less handy, want an inspection so they know how much work is needed.
If this program is put into place I expect to see a significant increase in investor inspections. Part of the problem though, at least in my service area, is finding people to rent/purchase homes in areas where people are trying to get away from. You can drive around neighborhoods in Detroit and every house is boarded up and in several cases the houses are actually in decent condition. If the neighborhood isn’t what people want there’s no reason to buy vacant homes in the area.
You are rite… Nick! “I just got that phone call today” from an Agent whose BIG office will be buying homes in bulk? My question is how do i go in and make a deal on this good opportunity such as:
pricing per bulk?
turn around time?
limitations on reports? etc…
what should i prepare for going in to such an Apt… and what is the inspection process? What if they want me to sign a contract with them and what should i look for as far as terms and conditions on their side and making sure it is with-inn our S.O.P.
I have two this week, 6- unit buildings, exterior, roof, plumbing in basement, main electric panel, no units. $600.00 each. you just have to get to the right investors. the same investors have used me for years, and I have saved them large $$$ on roofing, electrical and plumbing work.
(Mike Auger, CMI - RI 32856, RMC-142, RMB-096)
I have ahd a couple property investors use me, but in my experience (in Rhode Island where there are no HI laws at all) investors typically just have the contractor they use inspect the home for them, as they typically are doing a remodel anyway.