Posted by John Sterling on September 21, 2003 at 12:36:22:
Reminds me of the used car business:
Everyday across America a Owner/Manager of a Used car lot will start working on a plan to detail all their own cars and save the expense of sending the cars out to a detailer. So they will go and buy all the equipment and supplies, run an ad in the newspaper looking for a guy/gal to work his As$ off for $9.00/hr. at their car lot. They will hire someone and the operation will last maybe 3 to 6 months on average.
Then a new Owner or Manager will come in with a bright new idea! “why don’t we send the cars out to a local detailer and save all the time and hassle of detailing the cars ourselves.” And so the cycle continues just as cycles in the real estate market change the way banks handle their REO’s. The lenders all think they have re-invented the wheel when the market is hot and the REO’s have multiple bids, when the market cools and it takes 90 plus days to sell, well then they change their tune and say,“we are not in the real estate business” and they hire a good Realtor to handle their mess.
Posted by igor(IL) on September 21, 2003 at 08:17:40:
Hi All,
I am finding out more and more banks in my area (Chicagoland) are doing rehabs before putting their homes on the market. Those of you that are rehabbing, do you see this trend in your areas? Does it concern you? Why/why not?
Re: banks doing rehabs now? - Posted by michaela-ATL
Posted by michaela-ATL on September 23, 2003 at 07:59:59:
What I’ve come across is banks rehabbing their REOs to bring them up to HUD standards. I had a conversation with a contractor a couple of months ago, who does a lot of those rehabs for a particular national bank. he says, that the Fannie Mae insured properties won’t be taken back, if they’re not up to a certain standard.
He also told me about an REO , that burned down the day before the guy from HUD or Fannie Mae came out to look at it. He then informed the bank, that the hosue was gone and they could only take it back, if they were to build a house, any house with the same number of BR and baths with the same sqf. They didn’t care about anything else or how cheap or expensive the house would be.
Re: banks doing rehabs now? - Posted by Matt (MPD) IL
Posted by Matt (MPD) IL on September 21, 2003 at 18:41:33:
Igor,
I’ve seen something close as well. What I’ve come across recently (northwest far burbs and Rockford) is that the banks are getting estimates for the rehab from multiple sources. They don’t necessarily go through with the actual rehab but they at least get ideas of what it will cost to bring the prop up to market price. The lenders I’m referring to tend to be large national types rather than locals.
As John has mentioned, there are those that get the idea that it may be in their best interest to “cut out the middle man” and start doing it themselves, but from what I have seen about the only times they actually go through a “rehab” is when it’s nothing more than a cosmetic upgrade. Not something I would make a ton of money on anyway as it probably wouldn’t be bought at a good enough discount.
For real rehab properties the lenders will see estimates that will most certainly make it worthwhile to sell the property at a discount rather than take on the contracting to fix it up.
Keep your eyes open, the deals are still there.