02-27-2009 10:44 AM
02-27-2009 11:06 AM
Not sure how to interpret this one:
I don't think I would ever offer a bank what they are asking for on a foreclosure, or current market value especially in this market. My question was what % of listing prices are foreclosures actually going for.
02-27-2009 11:30 AM
02-27-2009 01:45 PM
Its incredibly variable. I don't think a percentage is even a useful measurement. A foreclosed house in good condition that's not been empty for long will go for only slightly less than a regular sale in the same area, if the bank has any sense. The only reason its less is that banks are harder to deal with than (most) normal sellers. One thats been stripped by the former occupants and been empty for a year may only fetch the price of the lot.
You need to do some research, or get a good realtor who specialises in REOs. The relevant factors are: What are comparable "normal" sales fetching? If the house was on the market before it was foreclosed, what offers did it attract? Has it been damaged or abandoned and what will the damage cost to repair? This is the upper limit on what you should consider offering, just as with any other home. On the other side, the bank wants to recover the outstanding principle they foreclosed for (propertyshark.com will tell you). If the latter is less than the former, you're set, although you may well find the bank gets multiple offers that bid the price up closer to market price for a regular sale. If not, offer what you think the market price is and wait (and wait, and wait) for the bank to resond.
02-27-2009 05:03 PM - edited 02-27-2009 05:50 PM
I cannot provide much insight into the East Bay areas as you specified, but I will certainly comment on the peninsula in hopes that perhaps other buyers are looking for this information in those areas. As Simon stated, just looking at sales to list price percentages are not a very good way to determine an offer price or how to negotiate. Whether somebody lists a house at $400,000 or $600,000, it still has the same end value and is not determined where it was listed. Certainly, there are strategies for listing agents to draw more interest with a lower price to result in multiple offers and potentially a higher end price. That being said, the buyer is ultimately going to set it's value. However, stats are certainly appealing to look at and to use as a part of your considerations when pricing an offer.
In the peninsula, there has been a trend in the last few months of banks beginning to price houses more aggresively. This is resulting in quite a few multiple offer situations with bank owned properties; thus, some sales prices are going above list price. I had a client write an offer on a property a little while ago in San Jose that had over 80 offers! This is not the normal amount of offers, but I see 10-20 offers on a regular basis with well-priced REOs. Though, there are certainly ones out there that will sit for awhile if not priced correctly. When considering list to sales price comparisons, you not only want to consider the sales price compared to the most recent list price but also consider the sales price vs the original list price (before any price reductions that may have happened). I pulled this data for San Mateo county, which included all single family bank owned properties that sold in the past month. The sales price was 98.33% of the list price. However, the sales price was 92.41% of the original list price before any price reductions were done. The numbers were 99.99% and 91.88%, respectively, in Santa Clara County. As opposed to looking at just how the list prices and sales prices compare, what I actually extrapolate from this data is how banks generally handle their pricing and what types of offers they will consider. Certainly, for those that have been sitting for very long periods of time, the banks may be willing to negotiate greatly. In general though, my experience has been, and as supported by the data, that most banks are not willing to sell for much less than 5% of list price. They would rather let it sit a few weeks, reduce it a little, see if any new interest generates at that price, and if not then the cycle starts again. This continues until the price is the right list price that a buyer offers near list (definitely not saying you can't negotiate some though because you certainly can!).
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