“Foreclosure“, “Bank Owned” or “REO” terms immediately activate a perception of discounted value. Sometimes buying excitement. I believe we all have that perception or expectation of getting a great deal by buying foreclosures. That has happened, and perhaps you know of some success stories. In our local market, I’d be careful to temper that enthusiasm with some thorough due diligence with a dedicated Buyers Agent.
In Princeville, the following two residential listings are offered as REO, or bank owned. I was at the open house for Iolani Place the first weekend it came on the market, and due to the “Foreclosure” open house signs – it was flooded with people. Originally brought on the market in the high $700K’s, in less than 90 days it’s dropped $100K.
When Iolani Place come on the market, I previewed it for a client and using my “coconut wireless” I talked to the previous listing agents. One of the reaesons this came to foreclosure was that it was virtually impossible to sell due to the location next to Ka Haku Road – the main road going through Princeville. Sometimes in buying a foreclosure, your taking on the liabilities that put the house in distress in the first place.
Haulani Place is offered by the same lender, same realtor and has the same issues – it backs up to Ka Haku (main Princeville Road). There were several high quality homes on Haulani Place on the market prior to 2008 that did not sell due to the traffic noise. At what price does this present a value? Perhaps it does, but buyers must realize the difficulty in reselling, and lower expectations of future equity gain.
As a dedicated Buyers Agent, my suggestion to my clients is to not only investigate each offering thoroughly, but that we “step outside of the box” and look at true values that perhaps present differently:
- Motivated sellers that are not upside down on their loans
- Quality offerings from developers that are anxious to sell
- Sellers who are in distress personally, but not financially
For instance, one of the values in Princeville that gets overlooked is the last few developer offerings at Nihilani. As your Buyers Agent, I can give you some tips on inside information about how to actualize a “great value”. In this case, we could compare brand new quality townhomes vs. REO residences with road noise. What are your thoughts?