I love this question!
YES!! (please still read the why and hows 😉 )
It depends on whether you mean current value “as is” or market value but yes you can get deep discounts on real estate. As real estate investors and real estate investing students we talk about this A LOT on our community calls.
First ask yourself why the real estate would be discounted and who would be selling at a discount.
Sellers of real estate who will sell at a deep discount are:
Banks who sell their foreclosures, called REOs, in bulk to get them off the books (see auction sites like http://auction.com or Bid4Assets.com | Online Real Estate Auctions | County Tax Sale Auctions | Government Auctions ) also sell them one by one but the discount isn’t as great. Get to know your local banks where you plan to buy or the realtors that represent those banks in doing their property sales (called listings)
Banks who want to get their delinquent notes/mortgages off the books. When a borrower is not paying the bank has more costs in collecting, and ha to carry reserves to offset the non-performing asset. After a while they want to get it off the books and sell it to another investor(s) mostly in bulk but can be one by one.
Often, they do this through their servicers (the company that collects payments for them if they don’t do it themselves). You can purchase these at 30-50% on the dollar if the borrower is delinquent (as opposed to 70-90% if they are paying on time). I’ve gotten great deals on properties by doing this. The discount is even deeper if it is a 2nd lien position loan.
Government agencies (HUD, VA, IRS, DEA, etc.) who want to get their foreclosed and seized properties off the books. They don’t want to be landlords and they need the cash back in the coffers. To see examples, go to HUD Homes | HUD Homes For Sale | HUDhomes.com
Sellers (regular folks) who have messed up the management of the property of the condition of the property and just can’t take it anymore. Maybe are in trouble with an agency for the condition of the property and were given so many days to resolve it or face penalties.
Estates/heirs who want the money fast and don’t want to fix up the home or don’t have the funds to do it or need the money to satisfy other debts against the estate. Sometimes they are out of state and don’t want to travel to the property or don’t like where it is. Sometimes they don’t like the type of property (like vacant land). Attorneys are the first to know about these, though the obituaries are also a good clue for leads. So get to know probate and estate attorneys in the area you want to buy. It’s all about relationships.
Delinquent property tax bills: this is often a clue that a seller is in financial trouble and might sell fast for cash. You can find these most often on line at the County or tax assessor site of your choice. I would focus on free and clear property because there is then no loan to worry about getting in the way of the deep discount.
These are just a few and some of these are at deeper discounts than others, but as someone who has found “problems” and bought property at 30-50% discount –
I can tell you it exists and yes “even today” .
Hope this helps!
Learn before you Earn!
Athena Paquette
