Buyers need to understand that; bank owned homes (REO) are listed on the mls at a discounted price. They are priced to sale and spend far less time on the market than a standard homeowner’s property will. Bank owned homes are valued by an appraiser or real estate broker prior to pricing and listing. Their list price is already discounted based on the condition of the home and real estate market for the area. Currently the sales price of foreclosure home averages about $61.00 per sqft compared to a standard homeowner sale price, at $98.00 a sqft. On a 1500 sqft home that’s a whooping deal at a $55,400 savings. Most importantly, bank owned properties sell at about 95% of their list price, because they are already discounted. This percentage is what a buyer needs to know, not only for successful negotiations, but to estimate potential return on investment properties when selecting what to purchase.
Uneducated buyers, hunting for that “deal”, will often submit an offer far below the list price, referred to as a “low ball”. What happens when a bank receives a low ball offer? Most often, they simply won’t respond or counter low ball offers, and if the home is getting lots of buyer attention, it is going to be the educated buyer that wins. Discounts on bank owned properties vary from area to area. So before you put it on paper, check with your local real estate broker, and find out what “percentage of list price”, bank owned properties are typically selling for. It’s the educated buyer that gets the “deal”.
Data based from Lewis County sales over the past 180 days.