If I'm unfamiliar with something I want someone to give me a hand.
Or at least a few rules of thumb.
Such tips can be helpful as a guideline until one acquires enough familiarity to draw larger conclusions.
Right now Arizona has quite a few bank owned properties on the market.
These are homes that have been through foreclosure. Now the bank owns them.
They have their own peculiarities... they are sold "as is"; What you see is what you get.
They will most likely be priced lower than the other homes in the neighborhood.
People may tell you that these are the bargain homes and that you can make low-ball offers and the bank is very willing to unload them at rock-bottom prices.
I'm an agent. I'll make the offer you want to make... but there are a few trends, at least with regard to Arizona, that can serve as a guide to making offers on bank owned properties.
Here is what I've been seeing in the past few months.
- If the home is a fresh listing the bank will want to see a full price offer. So... if the home has been on the market for fewer than ten days, and is in reasonably good condition... the bank will be unlikely to jump on your low price offer. If you offer full price, you have a very good chance of having your offer accepted- unless someone else offers slightly over full price. I know... sounds crazy... but it's happening quite a bit right now. It's my opinion that the banks have begun to offer better pricing suggestions to their listing agents. These prices are based on appraisals and other due-diligence items. Of course- this is not a hard and fast rule... it's just one that I've seen a lot these days.
- Every 30 days the banks tend to be a little bit less choosy on price. After a home has been on the market for 30 days you can most likely offer less. Not a great deal less... it depends on the property. If the home has been listed for 120 or 150 days you can become more aggressive- offering perhaps 70 cents on the dollar. This is not a solid rule... it's just a trend I've been noticing.
- Every bank is different. Some banks will request that you give them an opportunity to finance through them. The rationale is this: they've lost the loan from the previous owner. They'd like to recoup this loss by making a loan with you. Banks may also require you to sign additional addendums... in some cases, their addendums are lengthier than your purchase contract.
- Some bank owned homes are being listed by people who have many listings. It's not uncommon for certain listing agents to know very little about the property they are listing. So... we can't always expect to know much more about the property than what we can see and glean from the listing information. I like to verify the tax records to see if there are any discrepancies between the listing information and the public record. Sometimes each contain errors.
- Purchasing a bank owned property is not for everyone... especially those that are risk averse. You'll want to pay for an inspection. This way you'll have a better understanding of potenital problems with the property. Some properties are diamonds in the rough and others are money pits. You'll want to do all you can to avoid the latter.
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Chuck Willman performs real estate in the Phoenix metro area- www.azVest.com
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Photo Credit: "Hand Count Ten" by Gary McCord
Chuck: Interesting observations. I will feature it at the top of the Optimist Board and encourage everyone to post any observed such "rules of thumb" evident in their areas.
We have a deluge of Bank Owned properties and they seem to linger on the market right along the rest of the listings. So far, I have sold every REO and short sale garnered, but I do a lot of work on the back end, networking with area agents and making them aware of these great buys. I also blog about it.
I have found very little rhyme or reason when it comes to REO's. I have been able to discern no patterns, only a myriad of bank MO's spanning the gamut from savvy to asinine.
Oops, sorry! I forgot: I did not sell one Short Sale Listing and it was the one I wanted to transact the most, for it belonged to an agent that used to work with me. That event (losing it to foreclosure) is probably what enticed me to delve in deeply and learn everything I could about these types of transactions.
Mirela- That's a very good idea... if anyone would like to add their own observations, feel free to do so in the comment section. Also... I've turned on the re-blog feature if anyone would like to pose their own rules of thumb to this post.
Great post with a lot of great information, REO's is a much different game than the "normal" re transaction
Very enjoyable reading---education the FUN way! Thanks for valuable info....
Just wanted to pop by and say hi! We haven't chatted in ages and I miss it........but I know you love TExas............so glad i could rekindle the 'itch'?;-)
P.s. Like the new Pic........or did I already say that? Like the new pic..:p-)
Chuck number 4 is the one that I hear the most complaints about. Agents that have more listing than they can handle. I enjoyed reading these words of wisdom.
Chuck - I also take issue with more listings than they can handle - calls left unanswered, messages never returned and just a lack of concern make us all look bad.
Those are good tips that probably hold true in most markets. Good luck selling and buying some!
Chuck, this post is now in our Optimist Week in review, which was just awarded the featured star. Your Grandmother blog is also there (I couln't resist it; that is such a touching post).
The 10 Day Rule is good information to relay to my buyers, especially now that most buyers are eager to submit low offers on REOs and everything else on the market today. Thanks!
Chuck - Thanks for Rule of Thumb review of REOs. I appreciate the effor it took to state it in simple terms.
Very good information for buyers to hear! I've had quite a few buyers that don't understand why the bank doesn't want to accept their 30% less offer on a list price that is already a steal! Great Post!
Chuck,
Good points. We're seeing that about 30% of our listings are REO's or short sales. Sounds like Arizona is similar. We're seeing the banks do the same thing...they list at close to market then systematically lower the price every 2 or 3 weeks until the price is so low they get a bidding war. I've seen homes go for an amount that the bank had rejected 2 months prior, when someone had low-balled during the first weeks the home was listed.