I received a call from a buyer who was interested in having me submit a bid for her on a HUD foreclosure.
It was listed at $37,000 and she wanted to offer $25,000.
If you aren't involved daily in real estate right now, I can see how you might think that it's still a buyer's market. If you look at a price chart for this area, Clayton County, you can see how far prices have fallen and they seem to have been pretty flat for the past three years.
But my direct experience with helping buyers get homes tells me that one needs to make offers that might seem higher than what the comps. suggest in order to get a home. It's a crazy world of multiple offers and buyers bidding more than full list price. There also isn't much special anymore about having cash. It seems that it's almost a necessity for the lower priced homes.
Just to verify my anecdotal experiences, I thought I would do a quick analysis of what it takes to get a HUD foreclosure in today's market.
At the www.HudHomeStore.com site you can see what the accepted bids were for properties over the past 14 days. So I searched for homes in Clayton County and came up with 32 results. They only post the "net to HUD" so one has to assume that there was a 6% commission and add that back to come up with the projected offer price. One also has to take the time to look up what price it was listed for in the MLS.
Doing that, I came up with the following spreadsheet that shows that the average bid/list price was 114%. They ranged from 97% to 160%.
In this particular market, if you aren't offering at least full price, you don't have much of a chance at getting the home. That's just the way it is. This makes me believe that we have already seen the bottom in prices and if you want a home you are going to have to get in front of the market or you'll keep chasing it up and up until you are totally frustrated.
I'm seeing this not just in the low priced homes, but even in the million dollar homes. Inventory is very low right now and there seems to be a lot of buyers. Be aware of this and make your offers accordingly.