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
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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.