Did you know there are hard properties to buy? In other words, some properties are especially difficult to negotiate and buy? There are four properties that are hard to buy.
1. Foreclosures at a Trustee’s Sale
When a property is foreclosed, the last step in the process is the Trustee’s Sale at the courthouse in Port Angeles. Here’s the first challenge. You don’t get to inspect the property in detail. You can go look at it, but you do not get to do a home inspection. I know an investor who bought a home at a Trustee’s Sale, and later found out the beams beneath the home were rotting and needed to be replaced. He lost a lot of money on that investment. The second challenge is that you have to do your own title search or hire a title company in advance of the sale. I know a gentleman who thought he bought a foreclosure with all his savings from the past 10 years, but later he found out he bought a second, and he assumed the obligation on the first mortgage. The third challenge is that if you are the winning bidder at the Trustee’s Sale, you must produce a cashier’s check right away. It’s an all cash sale only.
2. REO Foreclosure Properties
Once properties are foreclosed, if no one is awarded the bid, the bank becomes the owner. The property then goes on the market as an REO. An REO is a bank owned property that was foreclosed, but is no longer a foreclosure. It is simply owned by the bank and known as an REO. These are a challenge to buy because of the bureaucracy you must deal with throughout the process. You have to deal with a listing agent who must deal with an asset manager, a third party contractor with the bank, who then deals with the point of contact at the bank’s mitigation department, and most of these people are on the east coast or far away from Sequim. They don’t even know how to pronounce Sequim. They don’t know how to negotiate, the don’t know the Sequim and Port Angeles real estate market, and they rarely have any real estate experience prior to their current position.
3. REO Foreclosures via Homepath
I wrote about this challenge in an earlier article, “Making an offer and negotiating on a Fannie Mae foreclosure is not going to feel like any other real estate transaction you’ve ever experienced. When you submit an offer with the standard paperwork as required by their Homepath site, you eventually find out that they throw out almost all the important language in your offer.” That’s just the tip of the iceberg. You can read more about Homepath purchases at Buying Foreclosures.
4. Auction Properties
Buying auction properties are also high risk investments. You do not get to inspect the property, and you bid against other online bidders. You must pay in cash, and you go through the dysfunctional auction.com system. Again, no one seems to have any solid real estate experience, believe it or not, and even the listing agent is remotely involved and not apparently making any of the decisions. Many buyers find this system very frustrating.
I’ve said it before: the best properties to buy are properties owned by individuals who have listed their properties in the MLS and have the authority to negotiate and sell their properties as normal real estate transaction. You can look at these other four properties online, and you might decide to make an offer on one of these four properties, but you should be aware they are especially difficult to negotiate and buy.
Last Updated on September 21, 2019 by Chuck Marunde
