There are many REO specialist Realtors out there myself included. If anything do yourself a favor and hire a REO Agent to assist you through this process. Worst case scenario you may learn something about REO's that normal buyer agents may not be aware of.
Attorney / Broker
New York City
The price that they paid for it-The balance due on a loan- NONE OF THAT IS RELEVANT>
The price is based on what an appraissal or a buyers price opinion suggest that this is a price at which his property will attract offers!
At this point the bank should consider "what the market will allow for a sale price." The property will be listed through a real estate company that will recommend a price that is an accurate reflection of the current market.
The bank will have real estate agents give price opinions and an appraisal will be done on the property to determine the market/list price. Sometimes homes are listed for less than what the bank had to pay due to the condition. It all comes back to the current market value.
The real answer to your question is based on the market. The price of the home is based on the best guess of what that home will return in today's market.
Bank are interested in SELLING properties and minimizing their losses. They want to sell as quickly as possible because it costs them money to carry them property.
Just as with a private seller, as a buyer, what the seller purchased it for really doesn't matter when your Realtor is working with you to develop a reasonable offer. Your interests will be served better if you have your own Realtor WORKING FOR YOU! The Realtor that has the listing wokd for the SELLER.
I recently sold a home on Michael Dr. in Brooklyn. If I can assist you in evaluating this property OR helping you locate other properties that would suit your needs, please give me a call at 440-487-2193 or e-mail me at email@example.com
Keller Williams realty Greater Cleveland
Great question. REOs (Real Estate Owned) have become a very hot topic of late and with good reason. They have become so prevalent, if you don't know what they are or how they differ from a traditional listing, it can be a very frustrating process.
The short answer is that generally speaking the amount they loaned or lost from the original buyer has very little to do with whtat they will sell it for. It may have an impact on the original list price, but eventually will typically bring it back down to a reasonable market price. Generally speaking they are the least flexible during the first 30 days of the listing. After that many will do systematic reductions to the listing price after so many days on the market or a specified number of showings or offers or the like. EVERY LENDER IS DIFFERENT!
By and large the bank has some type of property valuation done (BPO = Brokers Price Opinion, Appraisal, Automatic Valuation, etc.) to determine the Fair Market Value (FMV) of the property. Different lenders use different types, but the key is, they all have the value of the property determined by some method. Once that value is determined they typically list the property in that price range regardless of the amount that was previously owed. Some list properties aggressively to try to sell quick. Others will list it based on awful or inflated values and can sit for a LONG time!
Banks, unlike individual owners, have a very mechanized approach to selling real estate. It is almost a completely numbers drinen system which requires very little "thought" and their part. Typically they will hold fairly close to their original list price (for approximately 30 days). They did pay someone to give them an opinion of the actual market value after all. But many BPOs are done without access to the inside of the home, and that can mean the difference between a house's actual market value being $300,000 and being $100,000.
Nearly anytime a bank is involved in the deal, it will take a bit longer to get things done, but many times it is worth the wait.
There is one other tidbit that can factor into their price. PMI companies insure a property to protect the e
I hope you found this information helpful. If I can be of any further assistance, let me know. I'd be happy to help if I can or get you in touch with someone in your immediate area to help you through this.
Many homes are sold for much less than the bank was owed. The original purchase price is not a factor either.
Each property stands alone how bank determines the value. Management reviews files from BPO, pictures, narrative, outstanding loan amount, including any unpaid taxes, insurance, mortgages including 2nd lien, closing costs, realtors fees, 3rd party assest mgmt company, expenses of securing property, change of locks, and much more.
Banks are not in business make a profit just recoup expenses .