Many agents, especially those in the short sale, foreclosure and bank-owned markets, are pricing the homes 30% below market comps (e.g. the price many bargain hunters want to start offering at anyway. It brings a bigger pool of buyers, multiple offers and a competitive situation, often resulting in otherwise rare no-contingency offers.
Yes you heard me right I told the truth and lost a client. The client was looking at a Michigan lake front foreclosure. It was priced below market value. I had not been in the home yet, but the home was on an bigger all sports lake. The prospective client asked me what I thought the house would go for and this is what I replied.
" I believe the home will go over list. I haven't seen the West Bloomfield home and I don't know the condition. From the pictures and the description it sounds very nice. BUT.... It is a steal at this price, so it will boil down to how many people are willing to bid it realistically and how bad they want it. It is about $150,000 below what it should go for in this market.
I have seen cases where Michigan Lake front foreclosures have gone 75K over list price. If a house is worth $400,000 and you had to pay $325,000 to get it (And it was listed at $265,000). It is still a deal. It is hard for some buyers to wrap their head around that concept. Unfortunately I have had some lake front home buyers that think they should bid below the list price because it is bank owned. It usually takes those buyers about 3 bids on different homes before they get it and bid aggressively on a undervalued home.
If you want to go look at it we can. But I think it will go relatively quickly at that list price. If the bank gets multiple offers they will ask for "highest and best". That gives everybody one shot to give their highest offer. No re dos after that."
I based my response on my experience of what goes on in the local lake front market. Well I never heard back from the client after that email. I'm sure they went and put a lower offer in on the home and lost it. It is sometimes very hard as Realtors to break the news to Metro Detroit Home buyers that people do pay over list price for foreclosures. They sometimes look at you as if you are crazy. Some home buyers just don't realize that list price sometimes won't get you the lake front home.
My quote of the day:
Brief is life but love is long.
Alfred Lord Tennyson
I am walking in the Tampa 3 day cancer walk in October. Support cancer research by going to www.the3day.org/goto/marianneravary and donate as much as you can. My wife got to live 20 years after finding out she had breast cancer due to advances in cancer treatment. Be part of the team and help me. I would like to be able to give some other "special lady" (like my wife Marianne) more days on this earth. If we can give another lady another night to enjoy with friends, an extra week to laugh & hug her kids, an extra month to love her spouse, or an extra year then our money will be going to a good cause. The grants from the Susan G Komen 3 day walk have been instrumental in cancer research. Help me give more time to somebody else please donate to the 3day walk. Thanks
Russ Ravary your Metro Detroit realtor