In today's challenging El Dorado, Placer and Sacramento real estate markets, and in many markets around the country, there is a "market within the market" and that market is bank-owned, or foreclosure, properties. These are properties that have been foreclosed upon and taken back by the banks.
Despite what many people think, the banks and lenders do NOT like taking back properties. They are in the business of "loaning" not "owning." Of course, when borrowers don't pay their mortgages, banks have no choice but to foreclose and take back the properties. However, it is not good for banks and other lenders to have real estate assets on their books. Banking regulators and government agencies frown upon this and banks want to get these real estate assets off their books as soon as possible.
So, what do the banks do with these pieces of real estate, mostly single-family homes? They do the same thing anyone who wants to sell real estate does: they list them with Realtors.
Of course, to get this real estate sold as soon as possible, banks often price these homes at low prices to attract buyers and get the homes sold fast. Many buyers think they can "steal" these homes and often make ridiculously-low offers and in the hopes that maybe they'll get lucky. While this happens occasionally, most of the time this is a waste of time. Banks aren't stupid. They won't sell a home that's worth $200,000, for example, for $100,000 when they can get $150,000. In today's market, in fact, many of the nicer foreclosures, and the ones priced low to begin with, are selling at or above asking price.
And so we refer back to the title of this article. Many foreclosures, those in good shape, and those priced well at the start, are actually receiving multiple offers and sometimes selling above the asking price. This market within a market (the foreclosure market within today's buyer's market) appears in many ways similar to the seller's market we saw from 2002 to 2005.
With interest rates back down at near-historic lows, lots of homes to choose from, and great prices, buyers are finally coming back into the market and buying homes - both to live in and to invest in. See 3 Reasons It's a Great Time to Buy a Home.
Buyers who think they can make low-ball offers are getting a rude-awakening when they get blown out of the process right away. Even though many real estate agents are counseling their buyers not to low-ball the well-priced and "in good shape" foreclosures, many buyers trying to buck the trend end up with a rejected offer.
To effectively compete in today's foreclosure market, seek advice from a competent, experienced Realtor and make offers appropriate for the situation in which you're in. If it's a recently-listed foreclosure that is well-priced, then a stronger, smarter offer is more likely going to get you the property than will a low-ball, ridiculous offer. Even paying full asking price for a foreclosure can still be a phenomenal bargain. Buyers often miss a GREAT deal, because they wanted a better deal.
There are, however, situations where it may be appropriate to make low-ball offers, especially when a home may need a lot of work and it has been on the market for a while. The banks may be more motivated to sell these homes at a lower price. Again, seek counsel from a Realtor experienced in foreclosure properties.
By the way, if you'd like to discuss how you can take advantage of the amazing opportunities in this market within a market, give us a call at (916) 241-8000 or click here and let's talk.
Also, see:
A few months ago, I wrote an article about homes being "on sale." In other words, prices are so low and inventories are so high, it's an excellent time to buy. And... homes are still "ON SALE".
