REOs are priced where a bank is comfortable with negotiation from the buyer. They price it real aggressively so it will sell once its on put on the market. They have the intention of selling them within the first few days. Prices will go up when there are multiple offers. None of our REO listings have gone up on price unless it was bid up by buyers.

Short sales, on the other hand, are a pain. They almost always come back at a higher price. Do you have a Realtor? If so, ask him/her to only show APPROVED short sales. Most contain the phase "short sale subject to lender approval" and that means you and we have no idea if it will even be approved. When it states approved at a given price, it means that's the price to offer if you want to actually get in the home within a reasonable amount of time. If you do not have a Realtor yet, I have some awesome agents I could refer you to. One especially is my brother's agent who is a personal friend. I've been coaching my brother (Dr. Leif Nordstrom if you know him) on what the steps are for buying an REO, and the agent is great. Hope this helps!

Robin, that is a great question. One thing to remember is that some of the time, a price a short sale is listed for has not come from the bank - in fact, the bank may not have had any input on price. I have seen short sales where the agent was clearly just trying to stimulate activity, and the price could not be supported by a BPO (broker price opinion), which is what a bank will require as part of their approval process. Recently, there was one that started out at about $450k, and once the bank got involved, it was re-listed at over $600k - more in line with the market in that area.

My anecdotal experience is that much of the time, an REO is marketed at a lower price than the home has been listed for as a short sale. That may have as much to do with time on the market and declining values as anything. There also appear to be some write-offs that the banks can take once it's theirs that improve their ability to take a lower price.

A bank-owned property has many advantages for the buyer, not the least of which is that the bank is more motivated and more willing to negotiate meaningful concessions at that point than when it is a short sale. They also become interested in getting the deal done, which is not always the case with short sales. After about 10-14 days on the market, banks usually pursue price reductions until the offers come rolling in.

Hope my input is helpful!

GOOD QUESTION !... each property is treated individual file difficult determine till the bank reviews documents
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