It is hard to believe that short sales and REO’s were almost non-existent before 2007. The presence of bank owned homes and pre-foreclosure short sales has changed how we price new listings, and negotiate sales contracts.
When a homeowner decides to sell, they have to be competitive with all homes on the market, not just other non-foreclosure homes. When compiling a list of properties from which to base a listing price, a lot of the comparable properties are REO’s and Short Sales that have recently sold.
While there are some good foreclosure deals that come along, they can sometimes be tough to negotiate. The bank rarely pays for repairs or inspections, and can be very rigid in their paperwork deadlines. These homes sometimes sell for more than the listing price, after receiving multiple offers. When dealing with a homeowner, there is often more room to negotiate, especially when it comes to repairs, or allowances for replacing flooring or appliances.
The homeowner also is able to give you a history of the property, such as modifications or significant damages that have been fixed, a previous infestation or mold outbreak, or even if any pets have lived on the property. Banks don’t have any of this information.
If you are worried about paying over market value for a home, work with your Realtor to do some research. Look at recently sold homes, in similar neighborhoods, and that are approximately the same size, age, and condition. Your Realtor has access to all of this information, and should be able to show it to you. Those recent comparable properties are likely going to be part of what the loan appraiser uses to determine the value of the home. Looking at our Market Statistics dashboards can also be extremely helpful when viewing the market trends, because they are highly customizable, and full of recent sold data.