[911Freak]

Originally Posted by Rick Lee

In my own yearlong experience of shopping for distressed properties (we finally closed a month ago), I got the feeling banks were in no hurry at all to turn a paper loss into a real one. We had several short sales go into endless limbo and eventual foreclosure when we were ready to buy immediately for over asking price. It sure felt like they'd rather hold onto a non-performing asset than to let it go for market value, which was often a loss well into the six figures.

Indeed!

I wasn't going to go into that but since you mentioned it

We try to stay away from single asset sfr short-sale and/or foreclosure acquisitions for precisely the reasons you mention

So speaking specifically in regard to multi-family and commercial broken condo projects:
We went through several "seasons" last year experiencing the same, however it differed greatly depending on the bank (regional vs multi-national) and if there was a regime change. We lost a few and closed a few just off of a new CEO coming or going.

A lot had to do with the Barry-O admin allowing institutions to re-classify non performing assets as performing if they'd already been written off etc! That was a huge factor (and a monkey wrench) in demotivating institutions to sell assets at all or at a discount. Reality still set in and several institutions that had either pulled contracts or pulled assets had started the disposition process again, albeit with a different attitude.

We have much more success with the large portfolios for all the above mentioned reasons. Institutions are more likely to sell a 200MM national portfolio at 45/100 then a single asset at 75/100 or 15M portfolio at 65/100....

Now we are just starting to see high end land and large CA portfolios at reasonable prices come available.

Without going all PARF:
Hopefully with the current foreclosures still at all time highs the current administration will quit interfering with the banks so they'll be motivated to sell these distressed assets, staff there REO dept adequately to handle the disposition side so we can get these homes to investors to rehab and eventually back into the ownership of responsible home-buyers!
Imagine that?! Dreaming, I know.....

ymmv