Foreclosure in Sacramento>Question Details

Jake Worley, Real Estate Pro in Sacramento, CA

I am a Realtor in the Sacramento area and I am wondering what potential home buyers are thinking of the

Asked by Jake Worley, Sacramento, CA Sun Jan 6, 2008

foreclosures and bank owned property inventory? What effect does this have on your decisions and pricing strategies? I would love some insight from potential home buyers.

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Having a FICO score of just under 800 and 25% down, one would think the banks would want to work with a buyer like me, but....nooooo. I made reasonable offers on three short sales and never heard back from the seller or the lender AND my realtors never heard back from the seller's agents. Now I see that one of the houses is listed as a foreclosure for just above what I offered. Still no phone call. The house is not in move-in condition so I don't imagine there's a lot of competition. I don't get it.

After three times it's getting old. It's like walking into a jewelry store with cash and no sales clerks will wait on me.
3 votes Thank Flag Link Sun Mar 2, 2008
I have now gone through two rounds of making offers and getting in bidding wars on low-priced bank owned property, and I am disgusted with the tactics being used to sell these homes. I don't have all year to play games with listing agents, wait for the bank to make up its mind, look at places that are priced 25% above or below market value, and waste my and my agent's time getting in bidding wars on one house, then waiting for a week or more to hear back from the bank, when there are so many other houses out there. Just list the house for the market value, and let it sell (or not) on its own merits. If it's priced right it will sell fast anyways.

Between the bidding war games, the foreclosures, the short sales, the not-quite short sales, prices all over the map, and the half-finished flips, shopping for a house right now is very frustrating. If I had a choice, I would wait a year or 18 months, till the market stabilizes.

At this point I have changed my strategy. I'm not looking at any more new listings. I don't have the time to get in another bidding war and waste another week! I am only looking at places that have been on the market at least 30 days, and am preparing to make low-ball offers on a few places. I'm not looking at any short sales. Just bank-owned and probate sales. I am so fed up with this process!
2 votes Thank Flag Link Sat Jan 12, 2008
I feel that people should buy the home they like and can afford.. If it comes up buy it. Many people worry it won't be worth what they paid in 6 months, but if it's your home and you will be there the 20 - 30+ years like people used to it will be paid off and it won't matter what it's worth on the market.. It isn't an ATM machine...just live in it!
1 vote Thank Flag Link Thu Mar 6, 2008
Stella, I have had the same thing happen to me. I learned a little bit more about short sales in the process. We found out that it's the *seller* who has to qualify with the bank, in order to be allowed to sell the house short. So if the seller hasn't done all of their paperwork and gotten approved by the bank, your offer is going to go nowhere. And really, what motivation does a seller have to quickly qualify for a short sale? They are not getting a dollar out of the sale of the home, and they will get a ding on their credit when the house sells. Maybe they are not even intending to sell, just offering the house as a short sale to keep themselves in there for a little longer before foreclosure. Too much hassle for me... That's why we decided not to bother looking at short sales anymore.
We have gotten in EIGHT bidding wars over foreclosures now. We keep losing out because I'm not willing to pay 2006 prices for a house in 2008... yet apparently some people are. We did finally get a house, by making a low offer on a probate sale that had been on the market a long time at a price that was too high. I just hope that the probate process does not hang up the closing for too long. We've already moved to Sac and are jumping from sofa to sofa while waiting to move in... Can't believe it took us four months and some fifteen offers to finally get a house.
1 vote Thank Flag Link Sun Mar 2, 2008
We are looking at buying an REO (have an offer in) in a high end neighborhood - an upgrade home for us. The home is in great shape, considering.
We are trying to go along the lines of buying the worst home on the best street - even though the home really isn't bad.
We are in the new home for the long haul and we will rent out our existing home. It's our step up home. We love it. I think we are the exception though.
1 vote Thank Flag Link Sun Mar 2, 2008
I would never buy a foreclosed or bank owned home as a primary residence - as most of these are as is and it would be taking a big risk plus like someone else mentioned if it is in an area of more foreclosed homes, fear of anti-social activities etc. Also, I would feel bad to live in a home where another family has left unhappily and have a lot memories there. I have seen some real bad damage in some of these homes - kitchen counter-tops ripped off, plumbing clogged etc!

If I were an investor or had lots of money to play around with, perhaps I would get one of these homes cheap (even if they are fixer-uppers), hold onto them till the market improved and sell or fix them and rent them out.

Short sales ofcourse are a different story. I wonder if the banks just keep these homes on the market long enough to disgust potential buyers by the delay and then they go on and sell it cheap to their own pals! I know of a beautiful short sale home listed for 600K and the bank did not respond to a 575K offer for weeks! What are they thinking - the banks? what kind of offer do they want? Full price on short sales? but that is a totally different topic!
1 vote Thank Flag Link Wed Feb 27, 2008
I like Jane Dough's strategy. I think I will apply the same. There are too many choices and the prices are all over the map. I think everyone is playing a game. I made a couple of offers to the same list agent and even before he submitted my offer to the bank told my agent that my offer is low and he has other offers. I cancelled my offers and those houses still hasn't sold. Come on. It is not your freaking business that my offer is low. I make my offer. The bank either takes it or rejects it. If every buyer out there low bids the banks will get the message and price the properties based on the market.
1 vote Thank Flag Link Tue Jan 15, 2008
The point of view of the real estate market from Jon Astley's 1987 song hit: " she's looking at me, as if I'm something she owns. Oh, Jane's getting serious (Jane) Jane's getting serious."

The tactics that are being used to sell the homes are dictated by the BANKS. It is not the agents.

Listing agents would prefer to price homes at their market value.

It is not the agents. It is not the agents. It is not the agents.It is not the agents.

The agents don't choose to play the stupid games. The BANKS are the ones who choose to play the stupid games.

It is the BANKS. !!!!
1 vote Thank Flag Link Sun Jan 13, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
I understand the fact that buyers don't want to buy just anywhere. Their situation could change which they might need to refinance to pull some money. Its good to be a skeptical buyer but not a pain. If you work with a buyer you should want your buyer to feel confident about their new home.
0 votes Thank Flag Link Sun Apr 26, 2009
Jane's and Stella's experience is mirrored a thousand times over throughout the Sacramento valley. The few foreclosed listings that are correctly priced attract enough bidders to sell for full market value. So if you want to lowball, it is actually more productive to find listings that are incorrectly overpriced. Over priced listings attract fewer offers therefore increasing the chance that your low offer will be accepted.

All of you consumers will forget this piece of advice (if you don't immediately reject it now.) in a few years when you go to sell your houses. At that time you will reject your agents advice to price low and aggressive from the start of your listing. You will price it above market value (to have room to negotiate, har har ) then receive less for it than you would if you priced it a market value (or slightly below in a buyers market )

Short sales in the valley had a 15% success rate last year. That meant five frustrated would-be buyers for every happy ending. I predict that success rate will double this year. Worth the hassle only if that short sale is the one and only for you, and there are no comparable foreclosures, probates, or regular listings.
At todays inventory levels, that would be unusual.
0 votes Thank Flag Link Sun Mar 2, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
I agree with the previous posts that the list prices are all over the place. It's hard to figure out an accurate market value. The decline in price seems to be slowing down over the past few monhts and the Banks have somewhat learned to move their REO's quicker. I have been looking for about 24 months and last spring was seriously ready. I put some low offers (at the time) on foreclosures in Roseville in the $370 range. The list prices were $400 to $415 range. The banks were really unwilling to negotiate much. I kept following up and found out that they didn't sell until November and sold in the $310-$330 range. None of us have a crystal ball, but a lot of the foreclosures are based on the 5 yr ARM resets. The homes I was looking at were built in 2002. We'll see what happens as the next waves start coming through. I'm looking cautiously as we speak.
0 votes Thank Flag Link Mon Feb 25, 2008
I'm concerned most about a further price drop caused by the excess inventory, or by neighborhood decline due to foreclosures. I'm planning to buy in July '08, and I've been watching the market since December of '06, and it's shocking how far things have fallen in some neighborhoods. I believe prices will go down further, and I don't want to buy something and have it be worth less 6 months later. Given how fast things are falling, I expect I will be offering less than the list price (unless I feel it's already priced fairly) and given how much inventory is out there, I will be ready to walk away from the deal with no regrets.
0 votes Thank Flag Link Wed Jan 16, 2008
Seriously? I did not know that.

So, I will reserve my vitriol for the BANKS!

How do they choose their listing price? I know it is not by the amount owed. One of the houses we bid on was listed for $50K less than the amount owed. One was listed for the exact amount. And one was listed for $20K more. All three listed by different banks.
0 votes Thank Flag Link Sun Jan 13, 2008
Here is my thinking as home buyer for rental.
1. Does it go down more? 10% or 20% more.
2. Does it generate positive cash flow?
3. Does the cash on cash is 10% or more?
0 votes Thank Flag Link Tue Jan 8, 2008
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