Gone are the days when your home would sell over the weekend. Gone are the days when everyone would be looking for investment property in Las Vegas, Arizona and Idaho because that was the next best thing. Gone are the days when you had to pull your hair out as a buyer because no matter how much you paid or were willing to put up with for that Pleasanton home, your offer was just not the best one. Fast forward two years. Here are the days that nothing seems like a value…except bank owned homes, right?If you are a buyer in the Trivalley, and have spoken to me in the past 12 months, at one point you have said to me, “I would like to look at foreclosures.” (You know who you are!) The reality is that you do not want foreclosures–where you go to the court steps and buy the home in cash without getting to perform inspection or even see the interior at times. What you want is a home which has already gone through the foreclosure process, didn’t sell, and is now banked owned. Bank owned homes, more commonly known as REOs (Real Estate Owned) are now the buzz word for buyers as they are believed to be the real value out in the market.
This shift of the buyer’s attention from the entire market to just REO listings has created an interesting phenomenon in my view. As buyers zoom in only on REO listings, it has created an artificial higher demand thus defeating the primary reason why people are looking into buying REO homes. Not enough people take advantage of supply and demand. I want what you want, and you want what he wants. We as consumers don’t take advantage of going against the grain and seizing the opportunity. We all want REOs, and I am warning you to look outside of the box, as there are some great deals out there from the traditional seller.
Don’t believe what I have to say? Here are some real stats comparing bank owned homes in Pleasanton, Dublin, San Ramon and Livermore which closed from 03/01/08 to 03/20/08 compared to the rest of the market.
I have performed my research based on the four major cities in the Trivalley (Pleasanton, Dublin, San Ramon and Livermore). From the beginning of the month 03/20/08 we have had 76 total units close in these four cities. Out of the 76 units, 11 of them were banked own homes and 65 were sold by regular home owners. Interestingly enough, the average List Price/Sales Price for the bank owned homes were 96.1%, where the ratio was 95.1% for regular home sellers. (No typo here, the REO homes closed for a full percent higher this month). And at an average sales price of $771K, a 1% difference is nearly $8K in savings.
The argument against this theory would be that the REO homes are already priced lower or more competitively than the other homes on the market and thus would have less room for negotiations. While that argument could be viable, you must also consider that many REO homes are in distress and need additional funds to bring it back to a nice, livable condition.
Nothing seemed more interesting to me than the 3 REO homes which sold in San Ramon. The average list price for these 3 homes was $761K and the sold prices for these San Ramon homes were $770K. That is 101% of the asking price!
The long and the short of it is that you should consider the entire market when searching for your new home. My past two clients have purchased from regular sellers who had healthy equity and we were able to purchase their homes for 93% of the asking price. Based on these stats, this can only mean that you should widen your horizon on your home search and that you should work with an agent who can get you better than average results.
Chris Kamali is a TriValley Real Estate Agent, helping clients buy and sell homes in Dublin, Pleasanton, San Ramon and Livermore.
