Real estate investors have been renovating properties for years in order to sell them more quickly and at a higher price point. Banks, on the other hand, have tended to let their REO properties remain largely “as-is” when they market them whenever possible. Now, however, with so much competition for buyers, lenders like Wells Fargo are “sprucing up” their REO properties and foreclosures in an attempt to attract qualified buyers who currently have their pick of a vast inventory of homes[1].
However, not just any house will qualify for a lender fix-up. “There is no sense in putting in a furnace…if it’s just going to walk away the next day,” explains one real estate agent. Neighborhoods that have a high risk factor for vandalism are not likely to see many bank rehabs since the lenders tend to see this as “throwing good money after bad” and fear that a restored home will still not appeal to buyers because of the area.
It seems like this new policy certainly can’t hurt REO sales, but it also seems to leave a lot of already blighted areas of the country “out in the cold.” What do you think about lenders fixing up properties before selling, and has the new practice impacted your ability to market your own real estate investment properties?
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[1] http://seattletimes.nwsource.com/html/realestate/2014704391_realspruceup10.html
