End Of Year Great Time To Buy Honolulu Distressed Property
November 2nd, 2009 categories: For Buyers
The Wall Street Journal reminded me of a terrific opportunity between now and the end of the year.
“Act before year’s end and you just might be able to make the most of the glut of foreclosed properties currently up for sale. That’s because, while banks traditionally have been unwilling to come down on the list prices of foreclosed properties, a year-end push to clear their books of foreclosure backlogs could be a boon for haggle-happy homebuyers.” CLICK HERE TO READ THE WALL STREET JOURNAL ARTICLE
As I have said in the past there are not many REO’s or foreclosures in core Honolulu, however, there are opportunities in outlying areas. For the purpose of this post, my focus is on why the bank and asset manager may be motivated to sell at year end. Here are a few things to keep in mind.
1. Adding cash to their balance sheets. Year-end financial reports tend to govern the perception of how good or bad a company may be doing. By selling and closing, REO properties banks will add cash to their balance sheets and this will make them look financially stronger.
2. Getting rid of liabilities. REO’s, non-performing loans and properties in foreclosure are liabilities on a banks balance sheet. By selling now, the bank not only adds cash to the positive side of there financial statement, but they eliminate a negative for the liability side of their picture. I believe that the WSJ is right that this is powerful motivation for a bank.
3. Taxes losses. Losses on loans may be able to be used as offsets against income, by closing in 2009 the banks may be able to use these losses to minimize taxes that may be due.
4. Asset manager performance evaluations. Asset managers are employees and, I understand, many of them are evaluated based different metrics. One of the measurements may be the amount of time a property has been on the market. By getting properties sold in 2009, when it comes time for a raise, they position themselves for stronger performance evaluations.
If you would like to discuss buying an REO on Oahu, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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