Wealthy Buyers Turn to Bank-Owned Homes

Daily Real Estate News | Friday, June 16, 2017 Wealthy home buyers are getting around the pervasive inventory crunch by snapping up bank-owned properties and making high-end renovations. Homes listed as REOs “used to be a huge anchor on the property, but now it propels it,” Danny Hertzberg, an agent with the Jills Group at Coldwell Banker in Miami Beach, Fla., told The Wall Street Journal. Hertzberg says luxury bank-owned properties in his market are discounted about 10 percent, much less than the 20 percent to 30 percent discount that was typical a few years ago. Hertzberg recently sold a 10,383-square-foot waterfront REO property with six bedrooms for $8.7 million, which was 6 percent below the list price. The home had been appraised for about $13 million. But the market for bank-owned homes is also getting tighter. In April, the number of properties nationwide in some stage of foreclosure was 734,996—down 66 percent from a peak of 2.2 million in 2010, according to data from ATTOM Data Solutions. In 2016, million-dollar homes made up 2.06 percent of all REO sales, the largest share in three years, says Daren Blomquist, senior vice president at ATTOM Data Solutions. Research firm Clear Capital analyzed 20 metro areas with the highest number of distressed properties listed for more than $750,000 and found the median sales price to be $932,500. That is 3.4 percent lower than the sales price of non-distressed homes in those markets. The largest discounts for luxury distressed properties were in Dallas, where they sold for a median of 13 percent below asking price. On the flip side, in San Jose, Calif., such properties sold for just 0.5 percent below the list price. Source: “Bank-Owned Homes Get a Fresh Look From Wealthy Buyers,” The Wall Street Journal (June 14, 2017)