Bulk Real Estate Purchases are a hot ticket right now and you should be aware of them. With the flood of foreclosures hitting the market today, there is more “Supply” than there is “Demand”. Lenders have been nervous and are getting more so and they are dumping homes on the market. The excess supply has caused homes to sit longer on the market. Prices are going lower because of it though the rate of descent is moderating.

Larger investment companies or private funds are pooling their resources to purchase homes at a discounted rate, even below the current market…sometimes30-50% lower than the market. Believe it or, those bulk purchases still may not be a good deal because some homes are inflated to 3-4 times their value so even a 50% discount is no bargain.

I spoke with a pool investor yesterday who was given an opportunity by a lender to buy 85 homes for a seemingly low $3.5 million, or about $41,200 per home. He sent to pool to www.homesmartreports.com for review and found that in many cases the risks in the area we so considerable, the whole value of the REO pool of homes was laid open to question. The party passed on the purchase because the homes couldn’t be separated, they were spread across 20 sates and the management aspects would have been too challenging for this investor.

There are a few elements to consider here;

1) There are some very good real estate prices to be had if you have sufficient buying power.
2) Lenders are willing to deal on a larger scale if the can move many properties at once.
3) Even if you make an offer on an REP home and it is rejected, keep your eye on it as prices tend to get lowered by lenders as the feel more pressure to dispose of assets.
4) Even though it sounds like a good deal, invest a small amount to money on research to understand market strength or risk. HomeSmart is a company who can help you with that issue.
5) Have an “out” strategy. If you buy, either plan to hold property for a while, or if you intend to flip it, buy at a deep enough discount that you can take a smaller margin and still get out with a profit. Having a lender lined up who will help you with financing can give you the vehicle you need to make the transaction happen on both ends of the deal.

Know the value of a house by understanding Price, Risks and Trends in the local are by doing a little added research, especially in this market.