Home Buying in Newton>Question Details

Don Rose, Real Estate Pro in Danvers, MA

this is a bank own property so why is the price listed as market value rather than foreclosure pricing

Asked by Don Rose, Danvers, MA Thu Jul 8, 2010

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Foreclosed properties usually sell at "percieved" discounts. They tend to sell cheap, because most owners have already TRIED to sell the home at a price that they felt was what they could get out with. Many times, in my experience, they are homes that have a big flaw, or a couple of big flaws, but at some point in time the owners went out and managed to do a "Cash-out refi" where the bank appraiser simply over valued the property. Now if the sellers need to sell, they can't - they owe too much - and it gets foreclosed on. But the flaws are still there, and so the home reverts to its normal market value minus the (well deserved) stigma of being bank owned. But there are always exceptions, and there are some - very few but some - nice homes that happen to be bank owned. They tend to sell quickly, and for good prices, maybe %5 under market.
0 votes Thank Flag Link Fri Jul 9, 2010
It may be that the bank is owed that much or they feel they can get what market value is. It all depends on the location of the home and the desireability of how long homes are on the market for there.
0 votes Thank Flag Link Thu Jul 8, 2010

“Foreclosure” does not mean “discount”. “Market value” does not mean “overpriced”.

If you are interested in the property, get your Realtor to advise you on it value. While banks are motivated to get rid of their foreclosure inventory, they want to get the most they can. After all, they are taking huge losses on foreclosures. Having said that, maybe an offer for less, justified by suitable comps and proper research, will ultimately get you the property.
0 votes Thank Flag Link Thu Jul 8, 2010
Many people hear the word foreclosure, and think of it as buying something for less then it is worth. The lender on the subject has probably had quite a loss. They will, most likely get a Agents opinion as to value, a appraisal and then another BPO (broker price opinion). These will state the value "as is" or repaired. The lender will want to recoup as much money as he can, and price the property at market value. I have had may of my subject's sell far over list price and for cash. I have had many sell below list also. It just depends. Hope this helps you understand it more clearly. Also, we use the term market value, as that is what the market will bear. Most lenders do not care to use harsh terms like "foreclosure pricing" because many people will think it is a giveaway.
0 votes Thank Flag Link Thu Jul 8, 2010
Foreclosure pricing usually reflects condition. Many times the homes need work and the bank just wants to get rid of them so they price them to sell quickly due to condition. The buyer has to pay for the repairs and to bring the house up to current market value.

If the house is in good condition then the bank should list it at current market value. Just because it's bank owned doesn't mean they have to sell it for less.
0 votes Thank Flag Link Thu Jul 8, 2010
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