Bulk home buying anyone? Say, $1,500 a house?

OK, get your checkbooks out. These do sound like fire sale prices. Too bad everyone will take a cut along the way and ramp the prices back up. Pete from Mar Vista calls our attention to Tuesday's Wall Street Journal story, "Lenders Tiptoe Into Bulk Sales":

As the glut of foreclosed homes swells, banks and other lenders are starting to warm to the idea of selling some of the homes in bulk to investors, a departure from the practice of selling homes one at a time.

For the past year, investors have been eager to buy large numbers of homes from lenders at knockdown prices. Lenders have generally resisted that idea, but now some are trying it out on a small scale.

So far there seem to be only a few main players selling homes in marginal areas in bulk.

James Odell Barnes, an investor in South Carolina, says he and a group of investor partners recently paid about $1.2 million for a bulk purchase of about 800 homes from Fannie Mae. That works out to about $1,500 apiece on average. A large share of the homes were in Detroit and other depressed Michigan cities; others were in cities including Indianapolis, Pittsburgh, Memphis, Tenn., and Toledo, Ohio. Mr. Barnes says he quickly resold for about $50,000 one of the Detroit homes purchased from Fannie for $1,800.

A Fannie Mae spokesman declined to comment, but the company has acknowledged an openness to considering bulk sales.

Seems like just yesterday a house in Detroit sold for only a dollar. Maybe home buyers should hold out a bit longer.

-- Lauren Beale

Thoughts? Comments?

Photo: A Detroit house that sold for $1. Credit: Bearing Real Estate Group via the Detroit News.

Comments

[Brian]

It seems the 30-day "break" in foreclosures due to the recent law has only delayed the problem. This article just came out on Reuters (http://www.reuters.com/article/ousiv/idUSTRE4B273P20081203)

There are almost 2000 current trustee sales in Los Angeles at this moment. Look at the current list...

http://www.propertyshark.com/mason/Foreclosures/index.html?lcl=california®ion=Los%20Angeles&product=Trustee's_Sales

There are over 2500 Notices of Default in the pipeline too.

[LA Land Fan]

Nightline also did a piece on this on this guy:

http://abcnews.go.com/Business/Story?id=6249208&page=1

[Laker]

Fannie mae is the government aka tax payers. So the government is unloading these homes to investors so that they can make money on it to the tunes of 2600 %. Yes, that's right. A profit of 26 times courtesy of tax payers to take the loss. The guy that bought it might have instead paid $10,000 directly to fannie mae and thus saved $40,000. Instead we just enriched some investors. Again at the cost to the tax payers....
Why don't they auction these houses online? That has zero overhead, easy to do, and would allow market to adjust normally while minimizing losses to tax payers and reward true future home owners no investors.
Any help from tax payers should NOT go to investors by regular owner occupied owners.

[E]

Agree with Laker.

F&F and all the other banks should set up Ebay accounts to sell houses.

[David Reynolds]

Just another example of how the rich keep getting richer. For double that price you could have quickly unloaded those homes to renting families. But then those wealthy investors couldnt have made all that money.

[BottomFisher]

I got a wood pile that looks better than that house.......hmmmmm......maybe I can rent it out.

[JS]

Better questions is "who got greased?". F&F spend $1 million a year on toilet paper, so it wasn't a cash issue. These are the same people who ran these firms into the ground, less the symbolic head guy.

Who among us actually believes the same crew of morons will make different, and better decisions going forward?

Any time the government takes control, market sense disappears. The vultures circle to stupid, knowing their actions will inevitably produce a feast.

Shame on us for letting it happen.

[Uncle Billy's Glazed Eyeballs]

Pete from Mar Vista? Is that like the girl from ipanema?

Whocoodanode. Bulk sales. Never would have guessed. Not in a million fears.

[Drew]

Well, this is the sort of thing that was done in the wake of the S&L crisis/scandal in the 1980s.

Properties were heavily discounted and then packaged up in lots priced at $1 million minuimum -- those with that much in liquid assets lying around were able to make a killing.

The rest of us, not so much.

[Ann Aconda]

In response to Laker, E, and David Reyonds:

Now James Barnes has more houses in Detroit. I don't begrudge him the deal he got from Fannie Mae (ie us, the taxpayers). Who wants these houses? Who is going to live in them with the Big Three on the ropes and Michigan's economy tanking?

Hopefully, he will do a better job at managing these assets(????) than the banks did. What ever he does with them, good luck to him.