REO Properties Sell Strong While Other Homes Languish on Market
"The real estate market is like a fat man that can't get up." Those are the words of Glenn Kelman, CEO of the online real estate brokerage firm, Redfin. Kelman went on to say, "The U.S. government has modified loans, extended tax credits, lowered interest rates; we've fired a lot of our guns, and at this point the market is just going to have a long slow period of decline."
That decline, however, points to real growth for REO agents and brokers. Almost 1/3 of all residential sales in the first quarter of 2010 were in some stage of foreclosure. That percentage is a lot higher in some of the more hard-hit states - 64% in Nevada, 51% in California and 50% in Arizona.
And James Saccacio, CEO of RealtyTrac, says first-time home buyers and investors are still buying REO properties in large numbers and at big discounts as high as 39% off normal property values in states like Ohio and Kentucky.
To put it all in some perspective, there were 1.2 million foreclosure sales in 2009 - more than 25 times the amount in 2005. And this year has already seen a record-setting number of REO homes come on the market that will end up eclipsing the 2009 statistics. As banks and REO sellers struggle with the already-huge backlog of foreclosures, there are signs that there will still be a lot more to come - out of which will come a lot more REO listings.
In May of this year, the national mortgage delinquency rate rose to 9.2%, up 2.3% from a month earlier and 7.9% from a year earlier, according to mortgage performance data and analytics provider Lender Processing Services (LPS). The foreclosure inventory for the month also saw an increase, according to LPS. Overall, LPS says that over 7.3 million mortgages are in some stage of delinquency or REO.
The REO listings boom cuts across all economic levels as well. Two REO properties handled by Grand Estates, based in Charlotte, North Carolina, recently sold for nearly $6 million apiece. Amenities from the properties included a guest cottage, a nine-car garage, staff quarters, a climate-controlled greenhouse, rooftop terraces on condos and sweeping views of the Atlantic Ocean.
Today's REO marketplace offers a wide variety of homes, increasing volume and amazing discounts off conventional residential sales. It's why more and more home buyers are seeking out REO properties - it's seen as the smart buy in a difficult real estate climate.
Frank Patrick is the founder of ASREOS (the American Society of REO Specialists), the first professional association for REO Agents created by REO professionals and contains numerous resources and tools to maximize REO opportunities and find REO listings - as well as the ability to interface with other REO Agents across the country in an exclusive forum. Find out more at http://www.asreos.com
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