Appraisals are conservative by nature now, we need to know that the marketplace is going to correct a lot more with SHORT SALES and PRE-FORECLOSURE because many skilled agents can negotiate with banks. The bottom line is that your house if in a GREAT location at a great price in the BEST condition possible for sale has a shot. NOT EVERYONE WANTS TO WAIT 6-8 MONTHS TO "MAYBE" BUY A HOUSE!! A short sale is very much that way!
WATCH trends and listen carefully to educated people in the real estate industry. I am optimistic that we will see a healthy market within the next couple years. WILL WE SEE 2005 again soon?? Doubtful!
Price: You may not be able to price yourself lower than a foreclosure, but--on the other hand--I've seen foreclosures come on the market that were no bargains...even leaving aside their condition. So don't automatically assume that the price point for the foreclosure will be so much lower than yours. I've seen situations in which a property bought at the peak of the market for, say, $600,000, comes back on the market for $500,000. Ugh. However, a neighbor may have bought 6-7 years ago for $250,000. Meanwhile, prices have fallen in the neighborhood from the peak of $600,000 to around $525,000. Ugh, again. The neighbor may wince at putting his property on the market for $525,000--or slightly lower to compete with the foreclosure. But he's still coming out ahead and he's generally competitive with the foreclosure. I'm amused at all the postings on Trulia of people who are looking for foreclosures, presumably because those are "bargains." Not all of them are.
So, getting past price, consider condition. That's already been raised, but it's valid to mention it again. Some foreclosures are in poor shape because the former owners trashed the place. Even when that's not the case, I've seen many foreclosures that ended up that way because people bought fixer-uppers near the top of the market, began gutting the place, started rehabbing, then ran out of money. Meanwhile, the market tanked. So the foreclosure has no kitchen or baths. Now, not all foreclosures are like that. Some are in pretty good shape. Still, they're vacant, they've been winterized, they have that vacant, empty feel. You go in and they smell slightly stale. With the heat off, or turned down, they're chilly. You compete with that by making your home comfortable and inviting. Consider having it staged. Take care of the outside, too. Many buyers, even those who claim to be interested in foreclosures, have little imagination about how a place can look. That's the value of stagers. Make sure your place looks great.
Then, make it easy for someone to buy. When a lender is involved--either with a short sale or a REO, it can get long and complicated. Promote your property--have your Realtor promote it--as easy to buy, quick decision, no complicated decision process. Remember: That's not competing on price; that's competing on ease of purchase. That's appealing to everyone, but especially to people who might have been advised (correctly) to sell their old house before buying a new one. They're operating under time pressure. And that works in your favor, both because you can close quickly and because they may be willing to pay more for the assurance of a successful close. That will definitely give you an advantage over your competition.
And make sure your Realtor is aggressively marketing your property. Just a personal observation, but most foreclosures aren't marketed that well; they rely on the "magic" word "foreclosure." A lot of people aren't looking for foreclosures. Sell the strengths of your house. Bring in buyers who aren't looking for foreclosures. Maybe (depending on the strengths of your property) they're looking for a large lot...or a new kitchen...or lots of storage space.
The one thing a foreclosure may have going for it is price. You've got a lot of other cards in your deck.
Hope that helps.
Just because the property is foreclosed does not automatically mean that it is in poor condition.
I can't tell you how many attempted flips that are beautifully rehabbed or even new construction we have in Chicago that are in preforeclosure or bank-owned. There are several high rises where unit owners not in foreclosure are feeling that downward pressure on pricing because of the foreclosed units in the very same building. In these cases, it's not apples to oranges -- it's just plain unfortunate.
Eric, in answer to your question - you can't compete. Unless the home that has been foreclosed is in sad shape and there is a reason why your home should be priced much higher, buyers, as Anna astutely pointed out, are focusing on numbers big-time. This is when you will have to acknowledge rather than try to throw a blanket over the "bargain" next door. Use the negatives to your advantage: "It was a bank-owned sale, in really bad shape, tons of work needed, was sold as-is, with no disclosures. But mine? Well... "
The reality is that the foreclosure and short sale markets are creating the "New Market" and will be shaping the face o future real estate activity.
We feel the key to contending with the current market trends is to accept what is and deal with what you have to. You do not need to beat or match their asking price but you MUST remain competitive with them and seek every opportunty to make your property stand out "head and shoulders" above theirs.
Better curb appeal, superior marketing plan, staged interior, a warranty etc. may be factors the will swing the buyer in your direction.
It is important to "keep it real" by understanding your price doesn't need to match theirs but it needs to be in the same ballpark.
If you have to move i may suggest renting for the next few years.
Windermere West Valley
Focus on the value, not the price.
As far as condition of foreclosures go, some are beautiful, some are crack houses.
You really are not competing with a single foreclosure. Right now there are 463 single family homes for sale in Laveen. That is not even taking into consideration the spec/new builds.
Those short sales are wreaking havoc also.
The bottom line is that foreclosure is going to set a price point in your neighborhood.
Either you beat their deal price wise now, or your future buyer will have a tough time with the loan, because of the appraisal from the selling price of that and all the other Foreclosures.
It is indeed a tough situation when one has to compete with a foreclosure and probably even more when it reverts back to the bank and becomes a lender owned property for sale. On a positive note, I have had calls from appraissers that have mentioned they will look into the sale, and give consideration if property was sold under duress. So, if you can market the property well, get traffic through the home, and ultimately get the offer, you could still see a succesfull transaction above the price of the foreclosed home. I do agree with previous answer in which buyers are focusing a lot on price. Yet, often enough foreclosed on homes are not in the best of condition. So price your home accordingly and good luck.