Foreclosure in Los Gatos>Question Details

090273, Both Buyer and Seller in Los Gatos, CA

REO properties really discounted???

Asked by 090273, Los Gatos, CA Fri Apr 3, 2009

I currently own a house and was looking to upgrade to a location closer to downtown Los Gatos. I would like to take advantage of the REO properties popping up. Are the REO properties really discounted from a normal house on the market? If so how much is the average discount?

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There are currently 232 active listings (single family detached, condo, town home) in Los Gatos and only 5 are REOs. The small percentage of REOs in Los Gatos may or may not help in getting a deal. It very much depends on the house itself and the comps for the neighborhood. If Los Gatos is your choice, I would also have an agent look for the homes with owners that have significant equity. They are more likely to be able to "deal" and may be open to helping with closing costs.

CJ
Web Reference: http://www.TalkToCJ.com
1 vote Thank Flag Link Fri Apr 3, 2009
In addition to all the great answers here let's add Fair Market Value and Supply and Demand to the equation.

The seller lists the home to generate the highest and best offer.
Buyers are out shopping for value.
Homes perceived as value will generate offers and when the seller and agent have priced it correctly it may generate multiple offers.
Buyers and/or their agents who are knowledgeable in the market will have an opinion of the value of that home, and offer accordingly.
Value includes location, condition, etc…

This is true of all properties, regardless if they are bank owned, short sale, or just a regular arms length transaction.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Fri Jul 24, 2009
I am a reo broker working with a few lenders and default services.
In Santa Clara county there are some "harder hit" areas when it comes to foreclosed homes. Los Gatos is not one of them... you can expect to run into a competitive situation every time a reo is a bit bellow market ( usually 5-8%) that will get the price right where it should be.

If you want to get a deeper discounts you'll have to work with someone that understands the distressed asset market and can guide you in the right direction.

I'm available Wed's and Thursdays ! :)
0 votes Thank Flag Link Tue Jul 21, 2009
That depends on the lender. A few lenders discount more than others when they determine the price. Conventional trade wisdom says bank owned may discount as much as 15-20%, followed by short sales. The lenders set the price based on how soon they wish to liquidate the homes. 0-30, 30-45, 45-120 days etc....

The conventional sales have most room for negotiation and easiest to deal. You are dealing with sellers and they are more interested to satisfy your needs. These sales also require more disclosures and providing buyers with inspection results.

In neighborhoods that do not often have foreclosed homes, it often attracts more attention and offers often exceed asked price. My experience in handling these sales is only homes needing repair get the most discount. You need a skilled reator who understand construction and can advise you on the defects and restoration cost. Your cost is sum of the total not what you saved with the bank. All bank owned properties are sold as is with minimum amount of disclosures or information
0 votes Thank Flag Link Mon Apr 27, 2009
That depends on the lender. A few lenders discount more than others when they determine the price. The perception is bank owned can discounted as much as 15-20%, followed by short sales. They set the price based on how soon they wish to liquidate the homes. 0-30, 30-45, 45-120 days etc....

The conventional sales have most room for negotiation and easier to deal. They are required more disclosures and providing buyers with inspection results.

In neighborhoods that do not often have foreclosed homes, it attracts bargain hunters generating prices sold more than asked. My experience in handling these sales is only homes needing repair get the most discount. You need a skilled reator who can advise you on the defects and restoration cost.

All bank owned properties are sold as is with minimum amount of disclosures. .
0 votes Thank Flag Link Mon Apr 27, 2009
Hi
My name is Allyson and I have been working mainly as an REO/Short Sale purchasing agent so here is the "scoop" as I see it.
1) All reo's are required by the bank before listing to have what is called a BPO ( Broker Priced Opinion ) this is like an Appraisal. One of the reason's for this is the bank is already taking a loss so they want to recover as MUCH as they can.
2) The reo listing agent usually wants to list it as low as possible for a quick sale. They are graded by the asset manager of the bank on how they perform. The accurate pricing and sales volume are just a few of the areas used in grading the reo agent. The higher the agent scores the more listings he is given by the asset manager.
3) The reo's are usually at the bottom end of the pricing for an area along with Short Sales, but remember the bank wants as much as possible so they will be priced close to what the going market is priced at.
4) there is NO average pricing discount for reo's, and if the reo is priced ridiculously low it is done ONLY to induce multiple offers which usually brings the selling price close to what the other homes are selling at.
5) Most usually when an reo listing agent wants a price reduction he needs to do a new BPO to justify this.
6) So are they discounted? I'd say usually, BUT remember most all of them need at least some work done on them, so there is that to consider, ( usually you can negotiate price/ or once your offer is accepted and you find some significant damage that also can be negotiated )
So to sum it up do I think they are good deals? YES , but as CJ pointed out sometimes regular sales can be just as good given a very motivated seller.
If you have any additional questions or would like to just talk about this feel free to contact me I am always happy to help.
Regards,
Allyson
408-705-6578
allyson@homesbyallyson.com
0 votes Thank Flag Link Fri Apr 3, 2009
REO's are peceived as discounts, key word perceived. For each house you make an offer on do the homework, find out what the comps are selling for. Don't buy it just because it is an REO.
0 votes Thank Flag Link Fri Apr 3, 2009
090273:

This really depends on each particular property; however, to give you an idea, I have been successful in negotiating price reductions in sales price down to a high of 96.5% and to a low of 77.75% of intial list price.

Best, Steve
0 votes Thank Flag Link Fri Apr 3, 2009
Location, school district, size and condition of the property are all factors that influence price whether it's a bank owned, a short sale, or a normal sale. You will certainly be able to buy for less than you could a couple years ago, however, when selling your current residence, you'll most likely sell for less than a couple years ago. It's all relative.
0 votes Thank Flag Link Fri Apr 3, 2009
Depends on the property. You might want to get a realtor who can look at the comps and see if each property is really at a discount or an overpriced piece of a banks inventory.


Sean Dawes
Long and Foster Real Estate Inc.
Web Reference: http://www.SeanDawes.com
0 votes Thank Flag Link Fri Apr 3, 2009
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