Are Bank REO’s the Right Way to Go?
BerksLuxury.com takes a look at bank owned foreclosures and if they are the right way to go when purchasing a home or investment property.
At this point many of us are familiar with the housing crisis from the end of the last decade and the consequences that have affected the real estate market. One of the opportunities that the financial crisis has afforded savvy buyers and investors in the opportunity to purchase bank owned properties also known as REO’s.
These properties are the result of returned properties to the lender and foreclosures. They are often present opportunities to purchase properties at a substantial discount but often are not in optimal condition at the time of purchase.
We are going to take a look at a couple different bank owned properties to discuss the opportunities and financials involved.
Before we dive into the different available properties that are available I got some feedback from our resident Bank Owned Properties or REO expert Jen Dinatally who is one of the Owners at United Real Estate Strive 212. Jen has spent 15 years as a Realtor in PA and an additional six years prior working in the foreclosure and lost mitigation department on the banking side. Realtor.com shows she has been involved with the sale of 170 properties in the last year.
Jen’s tips are:
“REO properties are sold “as is”. “When looking at properties it is important to understand what that means. It is also important to realize that the bank nor myself as the listing agent have any idea of what works or doesn’t work with the property since no seller disclosure was generated by the previous owner. That being said bank owned properties can be a great deal if you understand that. You can get a sizable discount and closing can be completed as soon as title is done on the property.”
Jen also revealed that you have to make sure the utilities are on for the appraiser and that prospective buyers shouldn’t rush to make a lowball offer. “Don’t come to me with a half priced offer if the property has been on the market for 24 hours” as the banks are likely not to accept the offer.
She also suggests the purchasers of REO properties should invest in a home warranty to protect themselves. “You can get a home warranty on any property so make sure you get one on a property where you know you might have some unforeseen problems”.
Lets dive into some property analysis!
14 Windsor Ct, Reading, PA 19606 – $114,900
This lovely townhome has been on the market for just over 60 days. The community Wingspread, is a thriving one located in Exeter School District. The offered price of $114,900 is very reasonable and equates to a lovely price per sq. ft. of $75.29. The property is sold “as is” but looks to be in good shape for a bank owned property. With a good school district, a thriving community, good commuter highways and a decent price this property is primed for someone to take advantage of. Perfect for a first time home buyer or a savvy investor.
412 Greenwood Ave, Pottsville, PA 17901 – $11,000
This is your basic cheap acquisition. The property will likely need some work but doesn’t look to be in too bad of shape. The price is extremely reasonable at $11,000, making it the perfect starter investment property. Fix this property up and rent it out! A smart investor should recoup his costs within the first 3-5 years! Technically this property is cheating since it isn’t in Berks County but at $11,000 I couldn’t resist!
39 Estates Dr, Reading, PA 19606 – $214,900
This property will either be a dream home for someone or represent a sizable profit for someone looking to flip the property. This property is over 3,700 sq. ft and has a finished basement with a half bath. The price per sq foot is a very reasonable $57.22. The property is assessed at more than the sale price and has been on the market for over 250 days as well. The taxes are high at over $10k per year but the property and it’s location are very desirable. Given the sale price you could likely even petition the local tax board for a reduction in property taxes. This one looks like a steal for someone with the proper financing!
182 Dogwood Dr, Bernville, PA 19506 – $190,000
This is certainly a property to keep an eye out for. This property just came on the market and is your standard four bedroom two and a half bath development home. The price per sq foot is a reasonable $80.37 and the property taxes are very reasonable at $5,245 per year. The property does need some work but the discount compared to neighborhood property sales will give the incoming buyer a chance to make the home their own. It has only been on the market for a couple days so they aren’t likely to negotiate much yet but there is definitely some value is this single family home.
281 Schoffers Rd, Reading, PA 19606
Something about this property seems like it should be given a closer look. The property is listed for $124,900 which equates to a very reasonable $67.95 per sq foot. The property sits on 2.86 acres which might be the real value in this single family home. The home has lots of windows, two fireplaces and ranch style homes are always slightly more desirable when you are looking to sell. It has been on the market for over 50 days as well.
Regardless of wether you are a first time home buyer or a savvy investor you should always do your homework before purchasing any property. Bank owned properties really do present a significant opportunity for those who are willing to put the work in!
About the Author –
Joe DiRosa is the Founder, Publisher & Editor of BerksLuxury.com. I am an Entrepreneur, own several web properties, and am a Licensed Real Estate Agent with RealtyTopia in Wyomissing PA. I have experience as a Mortgage Loan Officer and have been previously licensed as a Real Estate Agent in the State of New York as well.
If you have any questions or are looking for a property you can call me at 610-390-1331 or email me atJoe@BerksLuxury.com.