REO / Short Sales Musings
As we move through this crazy real estate market, there are some things that you see happening over and over again that just gets you to shake your head.
The “beat the bank” game – In my local market of the Chicago south suburbs, a huge percentage of listings are either REO’s or foreclosures. Many communities have their market value significantly lower than a few years ago (not just Chicago, I know). With the REO listings, many times the listings are below market value (sometimes significantly). There are so many times that I speak with buyer’ s agents who mention that their clients really really want this house. However, you look at their offer and its 20% below the list price. Then, shock and awe, they lose out on the house they want. Sometimes, its just a few thousand but on a really low price, a few thousand matters.
I have one REO listing. It’s a split level home with some attractive features, good condition and currently priced well below market value after several price reductions. A buyer had submitted an offer in an earlier round and missed out to higher bid. When the home came back on the market, they were the first to make an offer. They offered $2,000 below the list price and triggered a counter from the bank. Now, other offers have come in and there is a multiple offer scenario. If they had offered list, they would have been accepted and the buyer in the house she wanted …. $2,000!
In working with my own buyer clients, I counsel them that the REO market is competitive. If it is an attractive home in a desirable location with a great price, expect competition. If you want the home, make an offer that shows it. Don’t assume that you will have the chance to increase your offer. If there are multiple offers, top price usually wins. Everyone else picks up their marbles and goes home.
To be sure, there are overpriced REO’s just like in any segment of the market. However, the bulk of REO sales (at least in my market), tend to sell close to the listing price. Some that are originally overpriced may go through price reductions but when they sell, its usually close to the existing list price. Make sure you’re comfortable that you’re not over paying and decide what’s your personal ceiling but don’t lose out on a great deal because you’re trying to beat the bank. Making an offer to a bank or other corporation is different than working with a traditional seller.
Millie C Lumpkin, SFR
Cell: (312) 217-5644
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