Don’t you have an imagination?

by keithwatts on June 22, 2011

in Banked Owned Homes, Buyers, Latest News

I currently have, and have had a few Bank Owned Homes in Aliso Viejo.  All of my listings in Aliso Viejo seem to generate a lot of interest from buyers online however my Bank Owned Listings in Aliso Viejo always seem to disappoint the buyers due to their condition.  Most buyers in today’s marketplace are very interested in homes which Realtors call “Turn Key”.  A “Turn Key” home is one which is ready to go without any updates or upgraded work.   Buyers don’t want to hassle with the headache of repairs or probably don’t want to deplete their savings paying for the work which needs to be done.

If I’m talking about you I certainly understand but hopefully I can change your mind.  Here are some reasons why you should consider buying a bank owned fixer.

1)      The bank is overwhelmed- The bank knows that they could probably get back $1.25 for every $1 spent on repairs but repairs take time, and because the bank has thousands of properties nationwide they don’t have the man power to coordinate or manage the timing of the repair process.   In addition their workload also creates an advantage to the buyer because they are eager to get properties sold quickly.  An eager seller is eager to strike a deal.

2)      Less competition- Because most buyers would prefer an updated, clean, home many avoid properties which need work.  A buyer’s lack of imagination about a home’s potential gets in their way of getting the most for their money.  Less buyer interest means less competition when writing an offer.  When a bank gets an offer (despite how low that offer is written) they are compelled to work with the buyer to consummate a deal.  Supply and demand will work in your favor leaving more money for repairs.

3)      You don’t have to spend your cash on repairs-FHA has a loan called a 203K  in which all upgrades and repairs can be financed into your loan balance.  This means you can write an offer on a worn out home for $450,000, and then spend $75,000 on upgrades in which the lender includes into the home loan. 

Here’s an example of a buyer which maxes out their loan affordability at $606,000

1)      Home listed for $619,000-Buyer negotiates the home at $550,000 because of its condition.

2)      Buyer puts 3.5% down and gets a loan for $530,750

3)      The house needs new flooring, new paint on exterior and interior, Granite in the kitchen         with new appliances, and new bathrooms.  Grand total of repairs $75,000

4)      The bank adds these two amounts to create a 203K loan for $605,750. 

5)      After the repairs the home is worth $650,000

How’s that for having an imagination?  This buyer couldn’t afford a house at $650,000 but they could afford a house at $605,750. 


Just have an imagination!

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Post by Keith Watts

Keith has written 98 articles.

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