Property Q&A in Morgan Hill>Question Details

Sam Shueh, Real Estate Pro in Cupertino, CA

Does one get a better deal with distressed properties so far as sold/asked price and cost per square feet are concerned?

Asked by Sam Shueh, Cupertino, CA Mon Mar 19, 2012

Help the community by answering this question:


Historically yes. But the market sets the price and the market has changed since the beginning of this month. See
1 vote Thank Flag Link Mon Mar 19, 2012
It depend on location and numbers of offers. We don't have enough inventory in some area and most listings are getting a lot of offers.
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0 votes Thank Flag Link Mon Mar 19, 2012
If you don't, you did not buy right. The bottom line is that when you purchased a distressed property, you should be paying less to factor in repairs, your time and your desired return on investment.

Hope that helps,
0 votes Thank Flag Link Mon Mar 19, 2012
It really depends on house by house and the price point. Our market has changed to multiple offers due to low inventory. One would have to look at the neighborhood for the price and condition and then determine the value. Price per square foot isn't a realistic way to compare one home to the other because there are too many varying factors, such as condition, improvements, location, repairs. The what is considered a deal to one person vs another.

I'm sorry to not be able to be more specific but every home is unique and the answer would need to be more specific to a specific home.

Have an Amazing day!
Web Reference:
0 votes Thank Flag Link Mon Mar 19, 2012
Thanks for the helpful ans. I found the ans more quantitatively:

SFH (morgan hill area)
Control group=regular sales
n=136 homes, $275.76/ sf gla median=$784K sold/asked $ ratio: 97.8%

n=83 homes, $229.78/sf gla median=$435K sold/asked $ ratio= 98.4%

Short Sale
n=140 homes, $239.31/sf gla median=$498k sold/priced $ ratio=98.5%

The answer based on last twelve months (Mar 2011- Feb 2012) is expected.

Sam Shueh ,mba, cdpe, pe
0 votes Thank Flag Link Mon Mar 19, 2012
Hi and thanks for posting.

Regular sales and clean REOs can still command a premium for dollars per square feet, 5-10% at most, because the demand for them is higher which drives up their price. Patient buyers can often find deals if they are willing to wait out a short-sale. However, now that prices are rebounding, while waiting for your short-sale to get approved the market (and rates) may move up and if your offer isn't approved you are left shopping in a higher priced market.

Regarding the differential between asking and sold price, in my own experience short-sales and REOs often sell for more than original asking because REOs are usually priced very competitively to get them sold fast. Short-sales are often priced too low to get a quick offer then the lender asks for more. In contrast many "equity" sellers think there house is worth more than it is and insist on listing too high.

I hope this answers your question.

John Wunderlich
Broker-owner / Realtor
Wunderlich Realty
(408) 201-4007
Vice President - South County Realtors Alliance
0 votes Thank Flag Link Mon Mar 19, 2012
Now it all depends upon number of offers, if you are all cash. The market has changed. You have to base your offer price on how many others are making offers.
0 votes Thank Flag Link Mon Mar 19, 2012
Generally yes, however, with the market picking up - few listings and lots of buyers, the difference between distressed pproperties and regular sales is narrowing. One of the reasons for the distressed price being lower on Short Sales is the wait required, the unknown aspect if the lender will accept the short sale purchase price and the fact they are sold as is.

Hope this helps

Pat Chadwell, broker
Certified Distress Property Expert.
Realty World - Residential Specialists
408-927-6565 x 11

0 votes Thank Flag Link Mon Mar 19, 2012
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