Wednesday, September 3, 2008

Bank Owned Properties in the Sacramento Core Neighborhoods - 95811, 95814, 95816, 95817, 95818, 95819, 95820

I have been showing bank-owned REO properties in the central city areas a lot lately...mainly to investors, but also to buyers looking to owner-occupy. I am often asked what it takes to be able to purchase one of these listings.

Let me start by saying that of Sacramento Core neighborhoods - 95811, 95814, 95816, 95817, 95818, 95819, 95820 - there are two zips that have been adversly affected by a glut of REO properties. A small sliver of 95817 is considered East Sacramento (Elmhurst, Med Center), while the rest of it is mainly Oak Park. 95820 has some nice areas as well (Tahoe Park, Tallac Village), however it also covers Oak Park.

Oak Park has suffered steep declines in value, and there are many REO's listed there. Most of these listings are uninhabitable as-is, sporting issues like severe vandalism, leaky roofs, structural problems, electrical and plumbing issues. There are MANY listings under $100k.

The rest of the zip codes above (95811, 95814, 95816, 95818, 95819) represent some of the most desirable places to live in all of Sacramento between the Downtown / Midtown areas, Land Park, Curtis Park, and East Sacramento.

So back to what it takes to purchase one of these listings...there are three things.

(1) CASH! Most of these properties are being sold to buyers that have all cash --OR-- at least 20% down. Many of the homes that appear to be the most attractively priced will not qualify for FHA or VA lending programs. The FHA Streamline(K) rehabilitation loan can be a good fit for borrowers without a large downpaument - but beware many banks will not entertain that sort of financing because of the longer timeframes, and numerous inspections.

(2) SPEED! The cherries are picked quickly, with multiple offers, and there is very little standing inventory to choose from. If you see a home priced in a range that looks too good to be true - it probably is. Banks are pricing properties artificially low in order to attract the most attention. If you are enticed by a certain property, keep in mind that your competition (other buyers) are also seeing the same information you are. Be prepared to view and write an offer on the right home quickly.

(3) REALISTIC GAME PLAN! Be on top of your game. Sign up for an automated listings portal and get these listings emailed to you as they come on the market in real time. Have your financing in order or cash accessible and ready to go. Be prepared to jump through certain lender hoops, like pre-qualifying with their lender (if you are financing) or make certain you can verify your funds are available. Be prepared to offer more than the asking price in certain cases.

There is a very limited REO inventory in these areas...the graphs above and below illustrate the REO inventory and non-REO inventory. The top graph represents REO inventory in these zips, and the bottom graph represents Non-REO inventory (including short sales). To view REO listings in these areas, click here.

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