Anatomy Of A Foreclosure – Part 1 – How to Evaluate a Home Prior to Auction

Jason — Mon, 09 Dec 2019 00:22:01 +0000

The Business of Foreclosure - A Starter Guide

The analysis and brokerage of distressed properties and homes in foreclosure has become a regular and significant part of our business. We are regularly asked to describe the process of identifying and acquiring luxury real estate via foreclosure auction and from bank and non-bank financial institution portfolios.

As discussed in our previous post, Foreclosed Homes and Luxury Real Estate, the availability of distressed assets (homes, condos, multi-family, vacant land, commercial property) exists in the luxury real estate category across virtually all high income neighborhoods in Los Angeles, including Beverly Hills, Bel Air, West Hollywood, and Malibu.

Distressed Opportunities in Luxury Real Estate

Home buyers and investors alike are often surprised that high-end and specialty homes frequently fall into the distressed category. Yet, upon reflection, it makes sense. The high-end category includes speculators, investors and traditional home owners.

With speculation and investment, there are wins and loses; with homeownership, families are subject to the business cycle. Thus, some percentage of overall inventory will inevitably fall into the distressed category.

With proper preparation and the assistance of a skilled agent, value can be realized through the purchase of these luxury properties at foreclosure auction or from financial institutions and lenders as ‘REO’s or Real Estate Owned”.

How is this accomplished and the preparatory work required is the subject of the balance of this article. We welcome your questions and confidential inquiries.

Pre-Auction Foreclosure Preparation - Hire A Realtor?

A rather significant amount of time is necessary to locate, analyze, bid, and hopefully acquire a distressed property. With sufficient time allocated to investigation, a focused and diligent individual can acquire the knowledge base and complete the work themselves. Yet, one should not underestimate the time commitment required nor ignore the existence of unknown unknowns.

It is our hope that upon reading this article and after reviewing the scope of work involved, you will choose to engage your consulting services to help you identify, analyze, and purchase distressed and foreclosed real estate assets.

In fact, even industry professionals with significant category experience and resources choose to hire us. They have found it a better use of their time to rely on our focused work to supplement their already substantial knowledge base. There is a lot of leg work involved and they are willing to pay for it. We hope you will too.

In the next section, we will briefly outline our method of foreclosure analysis:

Foreclosure Work Flow Checklist

Foreclosure and Bank Owned Advice and Guidance - Work With Us

Tom Levine, Realtor and real estate agent, is Managing Partner at Native Angelino Real Estate. He provides analytics, advice and referrals to legal and tax professionals. He utilizes publicly available information, as well as, private data sources to evaluate distressed real estate assets. If you would like to discuss purchase of an encumbered asset for primary residence or investment purposes, please do not hesitate to phone or email. For further information, please contact us here.

Tom Levine has earned the Short Sales and Foreclosure Resource Certification From the National Association of Realtors. He has an MBA-Finance from USC Marshall School of Business and decades of experience in capital markets.

The post Anatomy Of A Foreclosure – Part 1 – How to Evaluate a Home Prior to Auction appeared first on Tom Levine.

Foreclosed Homes | Real Estate In Los Angeles, Beverly Hills, West Hollywood

Jason — Tue, 26 Nov 2019 22:18:44 +0000

Foreclosed Homes in High Income Neighborhoods

At the time of this writing, there are more than 190 homes scheduled for sale under foreclosure rules by year end 2019 in the high-income communities of Los Angeles. The neighborhoods of Bel Air, Beverly Hills, Malibu, Hancock Park, West Hollywood, and the Hollywood Hills each have multiple, luxury homes in various stages of distress.

In every market cycle – boom or bust – there exists a small percentage of assets that fall into the ‘troubled’ or ‘distressed real estate’ category. While we are nowhere near the levels of the financial crisis of the late 2000’s, where roughly one-third of home sales nationwide were deemed foreclosed home sales, we are seeing a modest increase in the number or troubled assets in the early stages of foreclosure.

Tom Levine, Realtor and Managing Partner of Native Angelino Real Estate, notes that he is seeing “early signs of broadening weakness in middle to upper-middle income communities, and definite dislocation at the high-end and speculative asset classes”. Further, “there appears to be an uptick in the number of properties in ‘pre-foreclosure’ status or offered under short-sale conditions”.

Distressed Real Estate - Foreclosures and Short Sales Defined

To review, the three primary categories of distressed properties are short-sale, foreclosure sale, and real estate owned (REO).

In a short sale, the final transaction price is less than the total amount owed the lender (bank, mortgage company, investor). This type of sale is completed before the lender forcloses. Thus, negotiation is between the buyer, the owner, and the lender.

A foreclosure sale is an asset that has been repossessed by the lender for failure to pay. Foreclosed homes are typically sold at auction. The downside to purchasing at auction is that the buyer is often precluded from entering and inspecting the property prior to bidding.

Real-estate-owned, or REO‘s, are foreclosed properties that were not successfully sold at auction and are now part of the financial institutions portfolio. With an REO, the home may very well be listing with an agent and available for walk through, and likely sold ‘as is’ and without concessions.

Is The Return Worth The Risk?

In each of the above cases, exists an opportunity to purchase an asset at below market value. Yet, there is no guarantee that the acquisition price is indeed a bargain. Substantial analysis and the input of industry professionals is recommended.

Inability to enter a foreclosed home or REO property is only one of the many risks. Decision making is based on imperfect information, not limited to current value estimates of comparable properties, and the budget for damage repair and upgrades.

Further, the owner or lender will not warranty the property and price concessions for damage and highly unlikely. Federal and State tax liens, eviction complications, legal costs and a series of other factors must be estimated and included in the analysis of valuation.

Seek The Input Of Professionals

Tom Levine, Realtor, Managing Partner at Native Angelino Real Estate, provides analytics, advice, referrals to legal and tax professionals, and access to necessary resources to evaluate distressed real estate assets. If you would like to discuss purchase of an encumbered asset for primary residence or investment purposes, please do not hesitate to phone or email.

The post Foreclosed Homes | Real Estate In Los Angeles, Beverly Hills, West Hollywood appeared first on Tom Levine.

Distressed Real Estate – Tom Levine