[quote=urbanrealtor]
DIY 1:
This cat bought an SFR repo in the greater Rancho Bernardo area. He used the bank’s listing agent and closed in mid 2009. Relevant Caveat: this unit was sold with tenants still in it and state explicitly that the listing agent will only entertain cash offers. The offer that closed was one with a 80% loan. In my estimation, this property closed at about 5% below comparable properties. As expected, the buyer corrected me and said it was at least 10%. The problem with that argument is that much of the value was POTENTIAL value, not actual. While I would not shy away from it, the market for a property with foreclosed-upon tenants is typically much softer than for vacant units (investors and buyer-occupiers just don’t like to run the risk of psycho angry tenants). However, DIY1 did well, dealt with his tenants well and made out well. Truly well played sir.[/quote]

UR, if your DIY 1 example paid only 5% – 10% less than a property which was NOT foreclosed and NOT tenant occupied in 2009, IMO, he/she did NOT get a good deal. Even cosmetic fixers need time and $$ to clean up/repair before moving in. (S)he was just lucky that the tenants cooperated and moved out. It very well could have turned into a 9 month-long expensive UD battle with the tenants completely trashing the property in the interim. A cosmetic fixer (read: long-time tenant occupied) SFR needs to be 12% less and a tenant-occupied cosmetic fixer needs to be 25% less to break even after repairs. Too many unknown variables there. If lenders won’t reduce this far after already foreclosing, WALK. If lenders can’t manage (with their fleet of attorneys on standby) to deliver the property vacant, WALK. My .02.

You stated it was a “repo” so I am assuming it was an REO.