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How Much Should I Offer On A Foreclosure Listing

One of the most common questions that I hear in the business of selling Chico foreclosures is, “How much should I offer?”

Buyers often think that if the property is a foreclosure (aka REO or bank-owned property) that the offer should automatically come in low. What they are really asking is, “How low of an offer can I get away with?”

It’s important to understand that the banks that own the foreclosures are like any “normal seller.” Some sellers price their property really high in the beginning “just to see” if they can make a killing. Other sellers price it low in order to create some competitive excitement and facilitate a quick sale. Still others aim to price it very close to market value to ensure that it sells within a reasonable time period at the highest price possible.

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Posted by Chico CA Real Estate by Sandi Bauman, Chico CA Realtor on 05/02/2009 10:07 PM

Comments (10)

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chico foreclosures, reo property, bank owned property

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10 Comments on How Much Should I Offer On A Foreclosure Listing

MAY

Sandi - if your area is anything like ours you are seeing many offers on most short sale and REO properties (double digits). Any buyer who hopes to get one of these with a low offer is bound to be disappointed. It really is a seller's amrket for these types of properties...in most cases. It is not unusual for there to be 15-20 offers and usually multiple offers are above asking.

Jeff

MAY

Good morning Sandi! I think the days of the low ball offer are behind us. People should have bought when things were a bit iffy last fall and the first of the year. We don't see much of a discount here in Central Kentucky.

In my area at this time we are back to bidding wars like 2005, the list price is a start not something to go down from, i have one house with 15 offers.

MAY

Sandi,

Like Andrew said, we're back to bidding wars on some properties. I'm closing an REO this week where the Realtor and buyer decided not to ask for seller contribution toward closing costs, and it was a successful strategy.

Mike in Tucson

Almost every single one of our foreclosures files has been a mulitple bid. Phoenix is red hot and buyers figure it out pretty quickly what game they need to play in order to be the succesful bidder. We think a lot of this is coming from 2 areas 1. 8000 tax credit 2 lenders have been holding back releasing home to market. It's a little strange to be back to the future, isn't it!

Hi Jeff- We are really only seeing 10 or more offers on homes that are priced too low to begin with. However, most properties priced near market value will receive multiple offers within the first couple of days. Surprisingly, I still find buyers offering crazy low bids-- easily $50,000 or more below asking! Most of the time I end up looking at the other agent and wondering why they would bother wasting their time, as well as mine and the sellers!

Hi Lizette- Considering how few foreclosure properties we actually have on the market in Chico right now, it's surprising to see the low offers come in. Oftentimes the listings sell really close to asking price or better, so it's hard to understand the logic. Buyers need to be educated prior to writing, or their effort will always be fruitless.

Hi Andrew-- We have seen a few crazy bidding wars here, but only on homes priced too low. As a listing agent, I work hard to avoid pricing it that low.

Mike-- I've seen that strategy work a number of times on competitive REO properties. Truly, it's an attractive way to give your offer an edge!

Anna-- Chico is not quite red hot just yet... but we don't necessarily see the extreme ups and downs that other markets do. We held our value a bit better while some of the neighboring areas had huge plummets. STILL, it's hard to imagine buyer's train of thought! I think the doom and gloom from the media has mislead them to think the Chico market has fallen apart as well.

MAY

Sandi, I ran across an MLS listing in Orange County, CA that was "Active". In the comments the listing agent put "we currently have 45 offers above asking price". My first thought was, then why is this listing still active and not on HOLD?

As a listing agent, I would rather shoot myself than process 45 offers! It makes absolutely no sense to me... what a huge waste of time for all parties. I can understand the want/need to price it well enough to create some competitive competition, but does it really help the seller that much in the end when it's priced so low?

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