Echoing the sentiments of those below me, it makes no sense to take a national article and apply it to a local market. If there were pat multipliers like this then everyone would be buying for 7% off, which is definitely not the case.
And stats can be very misleading. For example, the Case-Shiller Index recently reported that "San Francisco" was down 40% off its highs of 2006. What they don't tell you is that "San Francisco" is actually the San Francisco metropolitan service area, which includes far away cities from other counties that have lost as as much as 75% in value .
Real Estate is a local market. If you don't trust your agent for other reasons that's one thing, but if it's only because he/she says that basing buying strategy on a national article doesn't make sense, his/her comments are right on the mark.
Lance King/Owner-Managing Broker
I have to agree with a lot of the answers you received here. One of the dangers of reading a National Paper is that it is basing their opinion and possible information on a national level and not specific to an area. In Riverside County we have a very low amount of inventory right now so you may find yourself in a bidding war of which you would lose. Your Agent probably know this. Please understand that most, not all, but most of us don't base any price on how much commission we would receive. Our commission is the End result of a good job, not the beginning. If you under bid on homes in an area that doesn't work your Agent gets nothing. I honestly do Not believe your Agent is basing anything on his commission he/she is probably just trying to do their job by finding you a great home, in an area you love, at a great price and with the terms and conditions of your loan. Good Luck on your home search.
If you did your due diligence in choosing the right Agent for the job then you shouldn't be paying attention to all the garbage in the media.
Sammer Mudawar, Broker
I have sold over 60 bank owned homes in the Riverside area thru banks including Bank of America, Wells Fargo, and Chase to name a few. In my experience, there is no magic formula to get the bank to accept and offer. They will look at the offer and compare it with the Listing Agent's Broker Price Opinion (BPO) as well as the appraisal that was obtained prior to listing.
They will take into account the days on the market and if there have been any other offers on the property. They will also consider any concessions you may be asking for including asking the bank to pay for your closing costs. The bank looks at the net amount they will receive after taking out any concessions from your purchase price. If that meets their needs, they will accept your offer. If it is less than they need, they will counter back to try to get their net amount.
I hope this is helpful. Please feel free to send any additional questions and I will be happy to assist you!
Jason Shawn McIntyre, Broker
Unfortunately, today we live in a media controlling world which misguides most.
Think about this..... would you go to see a dentist if you had a spinal injury? I bet not. Trust the professional who lives, breathes and eats the business he is in previewing inventory, doing comparative market analysis, etc on a daily basis.
All the best,
You do want to make sure that your agent is experienced with these types of sales though.
As a whole, much of the IE reo market is correctly priced. There is a HUGE exception. HomePath REO's. These follow a predictable pattern of being listed overpriced, generally sit for a month or so, then Fannie Mae allows the listing agent to drop the price to a reasonable level and they eventually sell. The reason for this is that HomePath financing doesn't require an appraisal, so they do seem to fish for "suckers" in the beginning.
Aside from this anomaly, I just don't see the 14%/7% strategy working out. If you offered me $258k on my $300k listing, it probably wouldn't even make it to the seller.
Sometimes that strategy might work, and other times it might not work the way you'd like. What if the appraisal were 20% less than the comps (perhaps because the house had some foundation issues)?
Key Solutions Real Estate Group
With no transaction thre can be no commission. Your agent is giving you accurate information. To take a "one size fits all" approach may not be the best approach and could be the reason you fall short on getting the home of your dreams.
The local real estate professional will have a feel for the best approach to take. The reality is that in some markets the successful bidder in a foreclosure is nearly always above the bank's asking price while others can be slightly below what the bank is asking. Something to keep in mind is that generally for homes that are "recent" to the market, banks are less receptive to negotiations and those that have been on the market for a longer period may find the bank more receptive.
The issue of short sales is a completely different ball game because you are actually negotiating with two owners.....the present owner and their lender. Thus, there can be two distinct levels of negotiation. Remember, the price you see listed as a short sale may not be your final price....unless you have the good fortune of identifying a "bank approved" short sale price.
Distressed market buyers would be well advised to avoid a "formulated" approach and work with local market trends that can be used o defend your offer amount.