Is that Warren Buffett or Jimmy Buffett investing in bank of America? A young drunk Jimmy Buffett might invest in Bank of America, the older one would not. So it must be Warren Buffett. Are you serious? He should have spoken with one of the thousands of real estate investors, agents and short sale negotiators, who try to deal with B of A before he threw his good money into one of the most inefficiently run companies in the world.
Many very experienced investors and negotiators will not seriously consider an attempted purchase of a Bank of America distressed property. Part of the reason is their fault and part is beyond their control.
When Bank of America purchased Countrywide they really got a bag of bull sh-t. The Countrywide loans are a poisonous swill and, if you have ever attempted to purchase one of these proprieties via a short sale from Bank of America, than you know that they often cannot be significantly discounted. On top of that Bank of America/s short sale department is woefully inept.
The natural result of these two factors is Bank of America carrying a huge number of distressed properties on its books. Competent real estate investors have little interest in buying these properties, because they either can not be significantly discounted, or, Bank of America is so inflexible and disorganized that you can not get an offer approved in a timely fashion. Too big to fail, is also too big to succeed.
For Bank of America to rise from the ashes like a Phoenix it will need the cooperation of the government in discounting the numerous Countrywide loans to permit real estate investors to buy them and, re position them so they can enter into the market again. It will also require Bank of America to reorganize its mitigation efforts, to become user friendly, instead of difficult to work with. In all fairness to Bank of America Chase and many other of the lenders are just as difficult and inefficient to work with, when trying to short sale their properties.
It is clear that the economic crisis and the great recession (really a depression) will not subside until the housing market is stabilized. The housing market will not be stabilized until the distressed property inventories at the banks are liquidated and the real estate market resets. At the current pace, and with the current management, the end appears no where in sight.
Friday, August 26, 2011
Tuesday, August 16, 2011
THE CAMBRIDGE STORY? ANATOMY OF A SHORT SALE
On a postlet on the side of this blog is a property 2834 Cambridge Street in Philadelphia, Pa. It is a property in Brewerytown, a gentrifying neighborhood near the Philadelphia Art Museum. It is a short sale property that is being rehabilitated by a cooperative effort of Prime Financial Group LLC and Top Tier Holdings LLC. It is also the perfect example of how a short sale works.
The property was purchased by the previous owner for $235,000.00 in 2007. It had been rehabbed by the seller in 2007, but poorly executed. After the real estate bubble burst the owner could no longer afford to pay the mortgage and it fell into delinquency. Bank of America sold the mortgage to IBM LPBS who pushed forward with a foreclosure. Christine Sherbert, founder of the Montgomery County Real Estate Investors Group, a well known, experienced investor, and re-habber, located the property for the short sale team. In April of 2011, Top Tier Holdings LLC made an offer on the property to IBM LPBS for significantly less than the mortgage pay off amount, of course it was rejected and Prime Financial commenced short sale negotiations on the property on Top Tiers behalf.
IBM LBPS had an interior BPO (Brokers price opinion) for twice what Christine,Top Tier and Prime believed the property was worth. Of course the negotiations bogged down. Prime challenged the BPO and submitted a value challenge, with accompanying comparable prices, and analysis, to IBM LBPS, ultimately convincing IBM to sell Top Tier the property for a fraction of the original IBM value.
Settlement on the property was held in July of this year. With in two days the renovations began on the property by the contractor First Development Corp. The complete exterior/interior rehabilitation will take 6-7 weeks. The funding was provided by a private individuals self directed IRA, with modest cost,s and reasonable interest rate.
At the conclusion of the rehabilitation the property will be worth substantially more than Top Tier Holdings paid IBM LBPS. Jennifer Grosskopf of Coldwell Banker an experienced real estate agent has been engaged as the listing agent for the property. The property will be resold before the snow falls on the ground. All of the participants in the process will profit handsomely for their endeavors.
Cambridge is an example of how team work between an investor, short sale negotiator, builder, and Realtor can result in a successful project. Time and time again I hear experienced real estate investors say; "I hate short sales", not my bag baby. But with team work, and creative thinking, they can utilize this product to share in a handsome profit. Before you write off the opportunities in short sales, consider the power that team work can bring to your real estate endeavors!
The property was purchased by the previous owner for $235,000.00 in 2007. It had been rehabbed by the seller in 2007, but poorly executed. After the real estate bubble burst the owner could no longer afford to pay the mortgage and it fell into delinquency. Bank of America sold the mortgage to IBM LPBS who pushed forward with a foreclosure. Christine Sherbert, founder of the Montgomery County Real Estate Investors Group, a well known, experienced investor, and re-habber, located the property for the short sale team. In April of 2011, Top Tier Holdings LLC made an offer on the property to IBM LPBS for significantly less than the mortgage pay off amount, of course it was rejected and Prime Financial commenced short sale negotiations on the property on Top Tiers behalf.
IBM LBPS had an interior BPO (Brokers price opinion) for twice what Christine,Top Tier and Prime believed the property was worth. Of course the negotiations bogged down. Prime challenged the BPO and submitted a value challenge, with accompanying comparable prices, and analysis, to IBM LBPS, ultimately convincing IBM to sell Top Tier the property for a fraction of the original IBM value.
Settlement on the property was held in July of this year. With in two days the renovations began on the property by the contractor First Development Corp. The complete exterior/interior rehabilitation will take 6-7 weeks. The funding was provided by a private individuals self directed IRA, with modest cost,s and reasonable interest rate.
At the conclusion of the rehabilitation the property will be worth substantially more than Top Tier Holdings paid IBM LBPS. Jennifer Grosskopf of Coldwell Banker an experienced real estate agent has been engaged as the listing agent for the property. The property will be resold before the snow falls on the ground. All of the participants in the process will profit handsomely for their endeavors.
Cambridge is an example of how team work between an investor, short sale negotiator, builder, and Realtor can result in a successful project. Time and time again I hear experienced real estate investors say; "I hate short sales", not my bag baby. But with team work, and creative thinking, they can utilize this product to share in a handsome profit. Before you write off the opportunities in short sales, consider the power that team work can bring to your real estate endeavors!
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