Home Buying in 92833>Question Details

A.L., Home Buyer in Orange County, CA

What are banks accepting as a reasonable offer for foreclusures or REO properties now (e.g. 75% of asking or

Asked by A.L., Orange County, CA Sun Mar 1, 2009

default amount...)?

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Mission Viejo Real Estate by Valorie Stover’s answer
REOs are doing a good job of pricing properties at or below market. They like to go below the market to get several offers and have a bidding war. Don't get caught up in this! Make sure you know the value and when it goes higher than you will pay, walk away. KNow everything you can about the property before hand. Pick an area you like.
0 votes Thank Flag Link Sun Mar 1, 2009
Hi A. L.,
There really is no rule, but here is what I do for my clients to determine the best offer price. We carefully check out the comparables in the neighborhood and decide what the home's value really is. I have found that when REO's come out and if they are well-priced they receive accepted offers right away because of their pricing. Typically, at least in the beach areas, it is better to offer more than asking, if the home is worth it in order to win the bid. Ask yourself, is this the home I really want? Then, over the course of a few years that extra $10,000 you offered in order to win the bid is worth it. There are other savvy buyers out there, looking at REO properties just like you are, so you do have to be willing to offer a little more. Let me know if I can answer any other questions for you. I have successfully completed these transactions. It does take patience working with the banks, because of their heavy load...but in the end you usually get a good deal on a home you like.
Best Wishes,
Ellen Bosworth
0 votes Thank Flag Link Sun Mar 1, 2009
Hello A. L.,

James' answer is pretty accurate, especially for his location. In Orange County, CA., there are probably 4 different price ranges - Condos under $350k, which are frequently a little negotiable, Houses under $450k, which are not flexible at all, Houses between $450k and $750k, which are a little more flexible, and Houses over $750k, which become more flexible, the higher their price range.

That being said, there is no set rule of thumb, as all lenders are different, as are all listing agents. Just like with non-REO type listings, there are listing agents out there who try to tell the lenders they can get more money for their properties than another agent can - they typically price their listings a little higher, which usually means more flexibility as they have to start reducing the price after a month or two, if it isn't selling.

I will say that if you're looking for an average single family detached house, under $450k in the O.C., you should consider yourself fortunate if you get it for 5-10% less than list price. A good percentage of them are selling for more than list price.
Web Reference: http://BobPhillips.net
0 votes Thank Flag Link Sun Mar 1, 2009
AL a blanket statement that 75% of asking price is a reasonable closing price on all REO listings will not work. It depends on the property, I have seen properties close at 30% of list that are REO (very rare) and I have also seen properties close at 130% to list price. It all depends on the property.
Web Reference: http://www.Find1Home.com
0 votes Thank Flag Link Sun Mar 1, 2009
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