Archive for April, 2011

As the Number of Real Estate Auctions Rises, So Does the Competition

April 27th, 2011 by melissa

While the real estate market remains sluggish and unpredictable, auctions continue to be a viable option for distressed property owners and those looking to sell real estate at auction fast. The rising popularity of real estate auctions is also raising the competition – it’s not just an investor’s domain anymore.

The 2011 Washington D.C. Real Estate GuideMany everyday buyers, such as those looking to purchase their first home, are shopping the auction circuit. With foreclosures still at a record high, scores of houses are being placed on the auction block that can be acquired at significantly lower prices than on the traditional real estate market. This is presenting seasoned real estate investors with unwanted competition. Even in the few states that are actually turning a profit in the housing market, such as Washington D.C., competition at auctions is pretty stiff. “When it comes to auctions for real estate in Washington D.C., I’m seeing more and more that the winning bids are coming from mainstream buyers, which makes the numbers for investment buyers very difficult if not impossible to make work,” says Eldad Moraru of Long and Foster Realtors and author of The 2011 Washington D.C. Real Estate Guide.  “In many cases, the auction as a vehicle for acquiring investment properties in the Washington D.C. real estate market is becoming less feasible.”

Let’s not forget about the competition among investors themselves. Reuters recently reported, “Investors are flocking to home foreclosure sales in California and other states where banks have rescheduled auctions postponed last year to fix loan servicing flaws.” Due to last year’s bungling of the foreclosure process, auctions that were cancelled in 2010 are now back in action this year, bringing real estate investors out in droves. Reuters states, “Investors are lining up as banks restart foreclosures from moratoriums imposed last year to review faulty processes, such as “robo-signing” of court affidavits or other document issues… For those properties priced attractively to investors, competition is fierce.”

Ergo, this competitive environment is making more property owners choose the real estate auction as their mode of sale – the idea being the higher the competition, the higher the sale price can be. As Slyman Real Estate & Auction puts it, “…competition stimulates prices as no other marketing method can. Sellers of real estate are embracing the auction method of marketing as never before… Today, the competitive bidding process is being used to sell everything from homes to farmland as well as industrial plants to apartment complexes.” As it stands now, it looks like the competition as well as the inventory are both only going to grow in the real estate auction market for an indefinite amount of time.

Housing Flippers are Flocking to Foreclosures

April 14th, 2011 by PA - Bloger

Some call it good business, some call it greed. Whichever way you look at it, the fact remains that foreclosures are inundating the housing market and house flippers are seeing it as a hotbed of opportunity.

House flipping – buying low and quickly reselling high – hit a peak during the real estate boom where millions of investors as well as everyday buyers tried to cash in on the real estate wave. When the housing bubble burst back in 2008, house flipping stalled as mortgages became light years harder to acquire. Now, with the up rise of foreclosures and real estate auctions soaring, flipping is back as an investors’ big break to once again cash in on the housing market.

As Huliq.com reports, “RealtyTrac, an investment company that literally tracks foreclosed homes, recently touted 831,574 foreclosures or bank-owned properties sold in 2010. The company also noted that these foreclosures sold at an average discount of nearly 30 percent compared with properties not in foreclosure. At the same time, RealtyTrac noted that many of these same foreclosed homes were then sold within 180 days by the investors known as “house flippers” who target both people and neighborhoods that are facing foreclosure.”


RealtyTrac

Coincidence? Not likely. With a plethora of websites and resources available on how to flip foreclosed homes, seasoned flippers as well as wannabes are able to track foreclosures nationwide. According to Huliq.com, “… the house-flipping wave that’s hitting most depressed communities … across the U.S. was something that people only did when a great deal presented itself. But, that changed when the home prices went south and the bubble burst… Thus, with the bargain basement prices on many foreclosed homes these days, there are many thousands of quality homes that can be flipped in almost any American town these days. It’s a buyer’s market.”

So, is this a good thing or a bad thing for the economy? The answer is mixed. While investors may see foreclosures as a lucrative opportunity and just good ‘business sense’, house flippers may be viewed as greedy by tracking foreclosures and turning someone else’s misfortune into profit. Business is business, but for the homeowner losing his property, it can be a bitter pill to swallow.

Also, flipping is a little more complicated this time around. According to the Wall Street Journal Online, “Unlike the boom-time flippers, the latest generation needs cold cash, lots of local-market knowledge and strong nerves… Investors compete mostly with other full-time professionals who monitor foreclosure auctions at county courthouses across the country. The bidders often haven’t had a chance to inspect the property or determine whether it’s occupied by tenants, who may be hard to evict.” With stiff competition, houses in major distress and a different world of financing from years ago, those wanting to brave the house flipping biz better know what they’re doing. As Bloomberg.com states, “During the U.S. housing boom, even amateur investors could buy and sell a property within a couple of months and turn a profit. Today there’s nothing amateur about house flipping.”

Yet, some view this venture as not only smart business, but as boosting the economy. With property developers and investors fixing up homes in serious disrepair, some see house flippers as helping to restore home values of neighborhoods as well as creating jobs. “In job markets decimated by the housing crash, flipping is also putting carpenters, construction workers and home inspectors back to work and attracting a new generation of real estate professionals,” Bloomberg.com reports.

Whatever side you’re on, the fact remains that flipping is back and most likely here for quite some time. As Bloomberg.com reports, “Investors expect to be busy for years to come as continued weakness in home sales fuels foreclosures.”

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