REO Urban Legends

By
Real Estate Agent with RE/MAX Big Bear Village

Bloody Mary

It seems like everybody has a story about a cousin or brother in law or long lost Uncle who offered half of the asking price on a foreclosure and got it. It has almost reached urban legend status in this market. I have bad news for people that believe this story. There are no giant alligators in the sewer. If you say Bloody Mary three times in front of a mirror, she will not appear. Even more terrifying, there are no bank owned properties in Big Bear that you can buy for half of the list price.

As a matter of fact, writing lowball offers is a sure way of losing out on a property you might really like. When an asset manager sees an offer that is over 10-15% low, they automatically put that offer into the crank file. Usually, they don't even bother countering an offer that low. When they do counter, it is usually for $100.00 off of the listing price. The only thing that happens when you write a really low offer is you lose all your credibility. Instead of coming off as a serious, viable buyer who is looking for a good deal, you come off as a shyster trying pick the bones of an unfortunate soul.

When a bank prices an REO property, they don't just pick a random number. They don't price it off of what the remaining loan is. They actually have Realtors give them price opinions on current market value. Then, they price the home at a fair market price. Usually, this a very good deal. Just because there is only $50,000 owed on $200,000 property, does not mean the bank will take $100,000 for it. They will sell you the property for a good, fair price. If you come in at $125,000, they will not even acknowledge you. If you come in at $150,000, they will counter at $199,000. If you come in at $175,000, they will probably give you a real counter to work with.

I am not saying that it is impossible to get a great deal. It is highly possible. You just have to reevaluate what a great deal is. If a home last sold for $350,000, and you buy it for $250,000, you are getting a great deal. You just need to be realistic. Plus, while you are dickering around with lowball offers, the odds are very good that someone who understands what is going on will come in with a respectable offer, and you will lose out. If you think it is a good deal, it is certain that somebody else will too. I feel the best strategy is too give the bank the opportunity to say " Yes."

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Re-Bloggged 4 times:

Re-Blogged By Re-Blogged At
  1. Mark Hall 11/14/2009 09:31 AM
  2. William James Walton Sr. 11/14/2009 10:57 AM
  3. Steve Hirschler 11/14/2009 06:14 PM
  4. Pam Simpson 12/07/2009 01:45 PM
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Topic:
ActiveRain Community
Location:
California San Bernardino County
Groups:
Almost Anything Goes
Big Bear Real Estate Group
Coldwell Banker Group
REALTOR LIFE
Silent Majority
Tags:
big bear bank owned
big bear reos
reo information
reos
bank owned advice

Comments 26 New Comment

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Anonymous #23
Anonymous
Anonymous

We work in the asset manager position for some smaller banks.  I can tell you honestly that when an offer comes in at 50% of asking price, we don't even respond.  Please don't waste my time because I don't have any extra time.

November 14, 2009 08:50 PM
Ambassador
1,516,895
Christine Donovan
Broker/Attorney 800-610-7253 DRE01267479 - Costa M
Donovan Blatt Realty

Many of our REOs are selling over listing price with multiple offers.

You offer good advice.  The only time I could see making a very low offer is when the property has been on the market for a while and/or it is not in lendable condition, and the buyer can pay cash.

However, often if it's not in lendable condition, the bank will have already set the price with that as part of the consideration.

November 14, 2009 11:27 PM
Ambassador
1,516,895
Christine Donovan
Broker/Attorney 800-610-7253 DRE01267479 - Costa M
Donovan Blatt Realty

By the way, that picture is going to leave me with nightmares.  There's a reason I don't watch horror movies : )

November 14, 2009 11:28 PM
Rainmaker
207,916
Terrylynn Fisher
HAFA Certified, EcoBroker, CRS, CEP Realtor, Etc.
Dudum Real Estate Group - BuyStageSell.com

Oh, isnt' it frustrating that the myths take on more life than the truths, because we want to believe...so just click your heels and say three times...

November 15, 2009 01:41 AM
Rainmaker
1,236,788
Charles Stallions
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.
Charles Stallions Real Estate Services

Seems like everyone has someone that knows someone also. But I question the facts each time. Bunch of bunk usually.

November 18, 2009 06:53 PM
Anonymous
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Rainmaker
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Israel Barden

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Anything and everything to do with Big Bear real estate.