1650 E. River Road
Great Bank-owned Homes at Bargain Prices in Tucson
Bank-owned homes (also called REO or foreclosure homes) are becoming really good deals now compared with just 6 months ago when banks were reluctant to price home cheaply to get rid of them. In the past three weeks I have been seeing bank-owned properties at lower prices than ever. The reason I think this is happening, to put it simply, is that the banks are receiving record numbers of homes back. While they have previously been able to hold out for higher selling prices, they are now trying to keep their inventory levels from rising further by making fast sales. The result is much lower listing prices that are often 5-10% below comps for a neighborhood. I have witnessed several bidding wars break out on bank properties recently, meaning two things:
1) The market is getting better and more buyers are willing to pay full price or beyond if they think the home is worth the listing price. Six months ago, a home could be priced 50k under market prices and usually would not attract a full price offer due to the market being overly weak. Buyers were asking for a better deal no matter how good the one on the table was.
2) The banks have realized that getting rid of their inventory is job #1. They can’t get money from a non-performing loan unless they sell the home. Once they get their money back (or whatever they can get), they can then loan the money out again and start recouping some of what they lost on the bad loan. This turnover of capital is more profitable than getting an extra 5% for every home they resell.
The net result benefits both buyers and the banks, but “Buyer Beware!” Dealing with banks is a tough racket. They try to, and mostly succeed, limit timeframes homes are under contract and impose stiff penalties for not closing on time. Many people ask, “Why is the bank acting like this?” Well, the reason is a simple one. Every day they have to sit on a bad loan is another day they can’t get the money back to loan out again and charge their loan fees, interest, late payments, etc., which is where banking institutions make their normally large profits. During the last 12 months, most institutional banks have been losing billions and billions due to this hard real estate downturn.
Areas where there seem to be an overload of bank-owned properties are generally in the outlying areas of the Tucson metro region. Rancho Sahuarita in Sahuarita is a great example of where to look for deals. In Marana, take a look at Gladden Farms. I just recently saw an 1800 square foot, 2-year-old Pulte that was loaded with a ton of options for $149k!!! The same house sold in 2005 for around $250k. The southwest side of town also is ripe with an overabundance of REO/bank-owned homes. Many homes can be purchased for under $175k. These same homes were selling for over the $250k’s in 2004-2005. If you are in search of a home outside of these 3 areas, do not be discouraged. There are bank owned homes for sale in all areas and price ranges. Even in the 1 million dollar plus range, there are dozens of homes just waiting for a buyer.