We Are Better Than Banks

A study by west coast foreclosure research firm, ForeclosureRadar shows that along the west coast, at least, investors beat out lenders by a substantial margin in selling foreclosed property to end buyers.  Buying short sales to flip is a great opportunity for some serious cash flow, and investors are proving to be much more adept at selling these homes than the banks that are foreclosing.

This also applies to homes bought at the foreclosure auction.  When investors buy at auction, they take an average of 95 days to resell properties in Arizona, compared to 150 days for lender organizations.  In California, auction investors offload foreclosures in 134 days compared to 227 days for banks. Investors move foreclosed property in 102 days in Nevada compared to 177 days for lenders.  The comparison in Oregon is 122 days for investors and 208 days for lenders. In Washington investors move foreclosures in 164 days compared to 212 days for banks.

The research firm speculates that investors have become better at making foreclosed homes marketable to consumers than lenders.  They put more time and money into rehabbing these homes before they sell, and doing so efficiently.  In addition, the robo-signing scandal has left fewer desirable foreclosure properties in the lender pipeline.

Here’s one other theory not mentioned in the study: Investors are buying for cash and are able to cherry pick the most affordable properties and the ones in the best condition leaving the less desirable properties to be resold directly by Lenders and their REO Agents. Experienced investors know a good deal when they see one!  There is also the position that buyers are more willing to look at a home for sale by a person rather than having to deal with the bank.  Banks have never been known for making the process easy, while investors have a real interest in getting buyers into homes as quickly as possible.  After all, once the property is acquired there is a great opportunity for some serious cash flow, and investors are proving to be much more adept at selling these homes than the banks that are foreclosing.

Joe Thompson is an experienced business and financial consultant with over 28 years experience. Joe is also a sub group leader for the Atlanta REIA weekly Haves and Wants Meeting, Atlanta’s premier networking meeting for Real Estate Investors having facilitated over $120,000,000 in transactions over its 5 year history.