REOS ARE ALWAYS A GREAT DEAL-Fact or Fiction? (Part 2 of a Series)
In 2008, I told you that while they "should" be a great deal, the only properties that were selling were the "great deals" and the result is that foreclosures were the norm. No one was buying properties for retail price, and so most of the sales in 2008 were REO purchases. Were they a great deal? I don't know, if a "great deal" is getting a better price then most people, no, they weren't a great deal. If getting a great deal meant buying at or near the bottom of the market, then yes, maybe they were a great deal then.
Now, buyers are no longer blood hungry, they are again paying "retail" for homes (although retail today is much less than it was in 2006), as the marketplace has again redefined "value". Value is not always the lowest price. As a result, traditional sales and new home sales are again setting the market value in most sub-markets.
Banks are now avoiding foreclosures if they can, and approving short sales. So we simply don't see too many REOs in most submarkets. When we do, they are available at a slightly discounted price compared to similar properties being sold as a traditional resale; but as I will talk about later, their condition is generally better than those we saw in 2008, so again, the value is comparable to a traditional sale.
BANKS DON'T WANT THE PROPERTIES, SO THEY'LL GIVE THEM AWAY-Fact or Fiction?
It's true... banks don't want to own actual real estate. That is why they have finally figured out that it is in their best interest to approve a short sale before they foreclose on a property. However, when they do foreclose, they now have a system and staff with a couple of years worth of experience under their belt. The staff members are equipped with tools and procedures to help them sell the property for the highest possible price. Again, like I said earlier, there may be a slight discount, but it depends on the submarket.
Helping to determining Fair Market Value for any property you're considering buying, REO or not, is an important part of the role your buyer's agent will play in your purchase. Don't be penny wise and pound foolish. Pay for a good agent if you must. They will save you far more than they cost you.
