Foreclosure in 20002>Question Details

Edwina, Home Buyer in Alexandria, VA

Regarding foreclosures; what is the average list price vs. average sales price (or a rough estimate)?

Asked by Edwina, Alexandria, VA Wed Apr 2, 2008

I'm looking to buy in Washington, D.C., on Captiol Hill. I'm looking at a REO property that's listed for $549k, has been on the market for over 150 days, and is owned by Countrywide. The property appears to be in good condition. In D.C., all vacant properties are assess a property tax at 5% (2.5% levied every 6 months) on the assessed value. March 31st, $20k was assessed in taxes on the property.

Is an 75%-80% offer unrealistic? How do I find out how much was owed on the property when it was transferred from the former owner to Countrywide.

Thanks!

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Answers

5
You're getting a lot of good advice Edwina.

From a statistical standpoint, the average property in some stage of foreclosure (including REOs) sold for about 77% of the estimated market value, according to data we accumulated throughout 2006 and 2007 at RealtyTrac. So going in with an offer at 75 or 89% of asking price, especially for a property that's been on the market for 150 days, is reasonable. The bank is probably sitting on a depreciating asset, and has "carrying costs" to keep the property on its books every day they don't sell it. As Jeffrey said below, it doesn't matter at this point what was owed on the house when Countrywide took it back; that's history. You want to look at what other homes in the neighborhood are listed for, or what similar homes in the area have sold for recently. To protect yourself, you want to make sure that even at 75% you're not actually over-paying. A good local agent can probably help you with both valuations and negotiations.

As my grandmother always said, "If you don't ask, you don't get." Good luck!
2 votes Thank Flag Link Tue Apr 15, 2008
Mr.Jeffrey David gave a great answer to your question Edwina. Remember,it is still a buyers market. Go over the over with your real estate agent and send it in the offer. I would highly advise you to send in your offer with very good comparables sales within the past three -six months. That will show Countrywide that you are a ready,willing and able buyer

Also,you can go to my website at http://lanrefolayan.point2agent.com and click on the link "Housing Values". Then click on "Real Property Database Search" and then click on "Search Real Property Sales Database". Hope this helps. Much of luck to you.
1 vote Thank Flag Link Wed Apr 2, 2008
It really does not matter what was owed but what the current asking price is and how it relates to the current market. And although banks are not in the business of selling real estate they are still looking to sell for the right price.
Saying that, I still would not hesitate making an offer and seeing where it takes you. They do negotiate and will look at offers, whcih also includes contingencies in the contract (mtg, closing date, etc.). I can tell you that you will also need to be ready to talk. Their first counter-offer will be very close to the asking price. Do not get upset, come back with your counter and keep working it until either they stop or you decide that your offer is as high as you want it to go without you regretting its purchase at a higher price.
1 vote Thank Flag Link Wed Apr 2, 2008
I certainly defer to the local real estate professionals in the DC area....but throw this comment in so Edwina can explore this discussion with the local RE Pros.

Many REO properties are intentionally priced very low, and can over list price. While I am not in the DC area, I have seen several banks e(HQ all over the country - including Countrywide) employ this strategy in several markets. Even if you, as a buyer, pay over list price, it may still be a great deal. Don't get hung up on getting a discount off of the asking price.

I have seen comps support prices substantially higher than the asking price for REO properties, but the banks want a quick sale and contain their carrying costs. So, the bank lists the property very low - to get the quick sale.

Banks frequently pay the buyer agent commission, so it is in your best interest to hire your own buyer agent. I have seen REO properties listed in an MLS that is not the primary MLS which covers the geography of the property. Buyers might believe that they must then work with the REO listing agent, when such may not be true. The buyer can ask their buyer agent to contact the REO listing agent. Does the REO asset manager know the properties are not listed in the primary MLSs? Who knows?

Good luck in your search. A good buyer agent will help you understand the comps in your area without regard to ask price.

Deborah Madey - Broker
Peninsula Realty Group - New Jersey
Deborah@PeninsulaFirst.com
732 530-6350
0 votes Thank Flag Link Tue Apr 15, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Hi Edwina,

The information the others have shared is true. It is a buyer's market and banks do not want to hold onto property. That is not how banks make their money. That being said, they are less likely to deal in more popular neighborhoods where property moves more quickly... like the hill. Depending on how it's priced, it could still become a multiple offer situation.

Also, I wanted to let you know that there have been a lot of properties hit with the new higher tax for "vacant" property in D.C. that were actually mistakenly classified as vacant. For example, according to the new tax rules, properties that are listed for sale are exempt from the increase for the 1st 8 months they are on the market. Apparently some of the DC tax office people didn't understand that and things got mixed up. It's become quite a mess for a few buyers and sellers who are/were under contract and is taking some time to sort out. This could apply to the property you are interested in, so it's an important thing to figure out.

As far as making your offer and figuring out the tax implications, I would highly recommend getting a buyer's agent to represent your interests in the process. Short sales and foreclosures may seem like a good deal, but they can also take a lot of time and you still want to be sure you are negotiating wherever you can and that the house is in good shape, etc. The seller (even if it's a bank) traditionally pays the commission, so it really is to your advantage to get representation on your end of the deal.

Hope that helps!
0 votes Thank Flag Link Tue Apr 15, 2008
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