William's Places: REO Urban Legends

REO Urban Legends

This article very neatly summarizes the major misconceptions that many buyers have when it comes to the availability of foreclosed homes at what many buyers would consider "a steal". The truth of the matter is here for all to see.

Bloody Mary

It seems like everybody has a story about a cousin or brother in law or long lost Uncle who offered half of the asking price on a foreclosure and got it. It has almost reached urban legend status in this market. I have bad news for people that believe this story. There are no giant alligators in the sewer. If you say Bloody Mary three times in front of a mirror, she will not appear. Even more terrifying, there are no bank owned properties in Big Bear that you can buy for half of the list price.

As a matter of fact, writing lowball offers is a sure way of losing out on a property you might really like. When an asset manager sees an offer that is over 10-15% low, they automatically put that offer into the crank file. Usually, they don't even bother countering an offer that low. When they do counter, it is usually for $100.00 off of the listing price. The only thing that happens when you write a really low offer is you lose all your credibility. Instead of coming off as a serious, viable buyer who is looking for a good deal, you come off as a shyster trying pick the bones of an unfortunate soul.

When a bank prices an REO property, they don't just pick a random number. They don't price it off of what the remaining loan is. They actually have Realtors give them price opinions on current market value. Then, they price the home at a fair market price. Usually, this a very good deal. Just because there is only $50,000 owed on $200,000 property, does not mean the bank will take $100,000 for it. They will sell you the property for a good, fair price. If you come in at $125,000, they will not even acknowledge you. If you come in at $150,000, they will counter at $199,000. If you come in at $175,000, they will probably give you a real counter to work with.

I am not saying that it is impossible to get a great deal. It is highly possible. You just have to reevaluate what a great deal is. If a home last sold for $350,000, and you buy it for $250,000, you are getting a great deal. You just need to be realistic. Plus, while you are dickering around with lowball offers, the odds are very good that someone who understands what is going on will come in with a respectable offer, and you will lose out. If you think it is a good deal, it is certain that somebody else will too. I feel the best strategy is too give the bank the opportunity to say " Yes."

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Courtesy of William James Walton, Sr. , Realtor, WEICHERT, REALTORS® - Briotti Group

Serving northern New Haven and southeastern Litchfield Counties (Waterbury, Wolcott, Prospect, Naugatuck, Middlebury, Southbury, Watertown, Thomaston and Plymouth)

 

Call William James Walton, Sr. Real Estate Agent with WEICHERT, REALTORS® - Briotti Group (203) 558-7463 for help with your real estate needs -buying or selling -  in Waterbury, Watertown, Wolcott, Middlebury, Southbury, Prospect, Naugatuck, Plymouth and Thomaston

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Comment balloon 1 commentWilliam James Walton Sr. • November 14 2009 10:57AM

Comments

So many times I have received phones calls asking what kind of good deals are "out there."  I explain what our market is like (we don't have a lot of foreclosures right now) and that we don't have houses for sale for $1000.  So many people don't realize that what is happening in one city or state is not what is going on in their local area. The last person I spoke with said that he thought it was a good time to buy because people were desperate and would sell at a "bargain basement" price.  Unfortunately for him, that is only from what he has heard on the news and not how it really is here. 

What sellers are looking for (here) are qualified buyers to purchase a home at fair market value.  Low ball offers are rarely countered.  Usually the agents are returning a rejection and offering the buyer another chance to submit a new offer.  Many buyers are surprised when this happens because they really think that people will sell for 20 or 30 thousand dollars less than the list price.  Sometimes they try another low ball offer on another home, but usually they realize that what they thought the market was like because of what they heard on the news isn't reality.

Posted by Carolyn Shipp, Mineral Wells Texas Real Estate (Source 1 Real Estate) over 10 years ago

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