Bank-owned homes have become increasingly attractive to wealthy buyers.
The rewards can be high, but so are the risks. Declining inventory of these real estate owned properties across the country in tight luxury markets makes them more appealing, according to the Wall Street Journal.
The inventory of distressed properties was down about 66 percent to nearly 735,000 homes in April compared to the peak of 2.2 million in 2010, Attom Data Solutions Daren Blomquist told the newspaper. Luxury homes, defined as $1 million and up, made up the largest share in three years of all REO sales last year at 2.06 percent.
Luxury homebuyers are now looking at discounts of 10 percent on bank-owned houses, compared to 20 percent to 30 percent discounts seen a few years ago, Danny Hertzberg of Coldwell Banker’s The Jills team said.
Hertzberg brokered the sale of Villa Katerina, a 10,400-square-foot mansion in Miami Beach, for $8.7 million in March, which was a 6 percent discount off the asking price. Asset management firm BridgeInvest was the seller. The company said the property was appraised for about $13 million in 2016.
“Having those three letters [REO], it used to be a huge anchor on the property, but now it propels it,” Hertzberg told the Journal.
Buyers of bank-owned homes can also face issues like dealing with squatters, the newspaper reported. [WSJ] – Katherine Kallergis