Home Buying in Hugo>Question Details

leanclip1945, Other/Just Looking in Roseville, MN

If a house down the block is in foreclosure and the same townhouse is for sale should you expect seller to come down also?

Asked by leanclip1945, Roseville, MN Thu Sep 22, 2011

The units are basically the same except end or center unit. They were asking about the same then the bank dropped the price on the foreclosure, so we were wondering if the other should also drop the price?

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Hi, leanclip1945!
Yeah, this is such a tough market! I'm sure you've already figured this out by now, but I thought I'd chime in. Statistically, we have seen some "traditional" sale properties that sell for a more robust price than those that are "lender mediated" in some way. But, as the market continues to decline (even if slightly) sellers know they have to stay competitive, so they are having to buckle under to what the lenders/banks are doing in pricing!

Makes me sad for these folks who purchased with the idea that they wouldn't have to have their stomach's churning about it this way, but it's what's really happening right now.

Let me know how this worked out for you!!!
Good luck~
0 votes Thank Flag Link Wed Dec 21, 2011
There are many reasons a traditional sale with a real seller will sell for more. First is the acceptance of the property as-is and in many cases the outright non-disclosure of state required material facts, then you have the limited title that when you go to resell may create a liability for you. Then the final kicker is the horribly one sided purchase agreement they will make you sign that may leave you out of money without the home. This is not to say this will happen, but there is a definite risk to the whole thing and the price needs to be discounted for the acceptance of these risks.
0 votes Thank Flag Link Wed Oct 26, 2011
All REO properties that are listed will eventually sell. Banks are not in the business of owning homes and will continue to reduce the price until it is sold.

This isn't necessarily true of traditional sales. If they don't have to move, they won't reduce the price to match a REO listing. Plus REO listings are often in poorer condition and will often have more hurdles for buyers to jump before acceptance and closing. And remember that some folks can't reduce the price due to what they may owe on their mortgage.
0 votes Thank Flag Link Thu Sep 22, 2011
When considering a traditional sale property vs a financially distressed property you should think "appraisal." What will the bank appraiser take into consideration when appraising this property. As a BPOR I have been taught to use "like" properties. This means that you would not use a non-distressed property in a CMA with a REO/Bank or Short Sale. So create a CMA based on other traditional non-distressed properties even if you have to go a little further away from the subject property. This is the recommended way for BPOR and CMAs. If the buyer comes in lower than your results I would explain to the listing agent that this property has been continuously lived in, there are no unknowns as to the condition and if the overall condition is better point that out at well. Generally a short sale or bank owned are in need of more TLC because they have been abandoned, vacant or ignored for a good period of time prior to the sale.
0 votes Thank Flag Link Thu Sep 22, 2011
Just becuase the bank owned property dropped the price I would not expect everyone else to follow. Bank owned properties typically sell for less so I would say without knowing many details that the bank owned property is trying to price itself where it should be. End units can be much more desirable as well.
Web Reference: http://www.lennyfrolov.com
0 votes Thank Flag Link Thu Sep 22, 2011
take it into account, but also consider the condition, upgrades, appliances, etc and how much easier it is to deal with a "regular" seller than a bank.
0 votes Thank Flag Link Thu Sep 22, 2011
There are a lot of factors that go into that but it is a factor that would push a price reduction. Typically owner occupied properties or a "Traditional Sale" will sell for more than a property that is a short sale or bank owned. Also, an end unit is usually more valuable than an interior unit. Motivation of the seller and the condition also play key roles in the valuation as well. If I were making an offer on a property that had similar units listed below their price I would definitely mention it to the seller and take it into account when making the offer.
Web Reference: http://WWW.MSPagents.com
0 votes Thank Flag Link Thu Sep 22, 2011
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