There are great opportunities for investors in the Denver real estate market today. Bank owned homes and short sales are often discounted much lower than well-maintained neighboring homes.
Some Denver homebuyers want to find the elusive “unlisted REO homes”. Should you search for distressed homes that aren’t on the market? And how do you find them?
There are five primary reasons why a Lender owned property in Denver is not in the MLS. Each of these reasons prevents the Lender from proceeding with an MLS listing or a private sale:
1. Lender has not yet obtained Public Trustee Deed to the property. The Deed is issued a few weeks after the Colorado foreclosure auction. In this interim period, a sale cannot take place.
2. Lender is conducting post acquisition inspections, which includes securing the property against prior owners, squatters and vandals. As soon as the lender completes the inspections and obtains a market valuation, it will be assigned to a Realtor®. Asset managers will not deal directly with buyers, and they will not sell a recent acquisition before a market valuation has been performed.
3. Listing has expired and Lender is transferring the listing to another Realtor®. Typically, there is one reason for the property’s failure to sell during the initial listing period: It was overpriced given it’s poor location or distressed condition. It will be in the MLS again shortly.
4. Property is not saleable due to a major problem. These problems include:
· Structural problems (settling foundation due to Bentonite soil in the Denver area)
· Hazmat issues such as evidence of a meth lab
· Clouded title issues
5. Ownership of REO is being transferred in bulk between lenders. Lenders won’t pull one property out of a bulk transfer.
Asset managers list properties with a Realtor® as quickly as possible. Listing in the Denver MLS gives the Lender the broadest possible exposure, enabling the Lender to attract multiple interested parties. Asset managers know open market competition results in the highest possible price given the property’s condition and location.
A knowledgeable Buyer’s Agent will understand the REO process and will be able to guide you towards the best purchase of a bank owned property in Denver. Then again, you might save thousands by buying a traditional owner-occupied home that is in excellent condition. It’s always best to weigh the out-of-pocket cost of repairing a distressed property with the financed cost of purchasing a home in premium condition.