Another comp question regarding an REO property.

Asked by chiguy773, Chicago, IL Sat Jun 4, 2011

I have my eye on a 2 bed 2 bath condo, its an REO and I feel it might be priced a little high. Other 2 bed 2 bath foreclosures in the area have closed for significantly less, however the square footage on those units were also less. I've tried pulling my own comps online but can't seem to find any similar foreclosures with that amount of square footage. Should I submit my offer based on what other similar smaller units have sold for? I noticed that a lot of times sq footage isn't even notated on condo listings and those that are listed tend to be overstated rather than disclosing the actual size of the unit. Any advice would be greatly appreciated.

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Philip Sencer, Agent, Chicago, IL
Sat Jun 4, 2011
BEST ANSWER
Why would you 'assume' an REO property was priced correctly? How long has it been on the market? I do BPO's for some of these A-hole banks and the way they arrive at 'value' is often a joke because they have very rigid criteria/parameters that must be adhered to regardless of whether or not it really pertains to the specific property in question. It's sort of trying to put a square peg in a round hole sometimes. It just does not fit, but is hard to impossible to explain it to them.
Write an offer based on what you think is a good value for YOU either based on comparables or not. If it is too far off the list price the bank may very well reject it or they may counter. If it is priced too high it will be reduced over time. Perhaps your timing is not right. Often that is more important than the exact price offered. This is not an exact science.
0 votes
Ranj Mohip, Other Pro, Chicago, IL
Sun Jun 5, 2011
Every condo's square footage is listed in its condominium declaration. You will have to go to your county's recorder's office to view it.

As for pricing, current comps, amount of previous loan, and market time all affect the pricing. Using an agent will be a great benefit to you--they are professionals at this.

Attorney Ranj Mohip is a Chicago real estate attorney. The information in this answer is general information and is not intended as legal advice. Further, answering this question or otherwise contributing as a member of Trulia.com does not create an attorney-client relationship. Remember--consult the best real estate attorney in Chicago or in your respective area.
1 vote
Lucy Antanov…, Agent, Chicago, IL
Sat Jun 4, 2011
If you are afraid to overpay for an REO property I could help you to figure its fair market value. I have an extensive experience in appraising in conjunction with being a realtor. I know the criteria that banks require from an appraiser to come up with their opinion of value for a subject property. It is not just getting comps based on GLA but also recency of sale (90 days), proximity to the subject, same market area, similar equitable utility, interior upgrades, condition, etc. When all the factors are taken into consideration with appropriate adjustments made, appraiser comes up with subject’s fair market value. But like someone correctly said REO subject’s fair market value and how much bank is willing to take in loss maybe different. Knowing property’s current fair market value is just a piece of mind for you.
If you provide me the address of the property I’d be happy to find the most comparable data for it in MLS. I could also help you to find out the history on the property. Please contact me for a free consultation at 773-316-0208 or LucyA@conlonrealestate.com
1 vote
Michael Hobbs, , Chicago, IL
Sat Jul 2, 2011
Good Morning,
The world of REO and distressed assets is wide and deep.
Your feeling might be right. Nonetheless....
When you say REO, in your words, does that mean it is now bank-owned and the owner lost it? If so, then the property will soon be listed by an REO broker who works with the property.
When you say REO, in your words, does that mean an agent has it listed and the property is distressed but still owned by the original mortgage holder. If so, it's a different situation.

I definitely suggest you work with a Realtor who knows distressed properties.
If you seek to go it alone, then the experience you are having is typical, it is very difficult to do 'home analysis' without being a member of an MLS. Our firm does provide a number of valuations and appraisal reports for interested buyers who want to know anyone of several pieces of information: the best price to pay, a likely price to pay or the strongest price to pay when they are seeking properties.

Additionally, in our many years of experience in distressed asset valuation, although there appears to be no rhyme or reason, in actuality there is but to the untrained eye, it is hard to see or decipher.

Good Luck and this market is a great one for buyers,
Michael

Michael Hobbs
President
PahRoo Appraisal & Consultancy
Web Reference:  http://www.pahroo.com
0 votes
Matt Laricy, Agent, Chicago, IL
Sun Jun 5, 2011
Get a good buyers agent to help you out. Foreclosures are very competitive right now. You need to make sure you know what you are doing, and what better way than hiring a good buyers agent. It doesnt cost you anything, and this way you will know how to structure your offer.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
mlaricy@americorpre.com
708-250-2696
Web Reference:  http://AmericorpRe.com
0 votes
Bill Eckler, Agent, Venice, FL
Sun Jun 5, 2011
Hapaboy,

Great job doing a thorough investigation. We would recommend submiting an offer based on your information that supports a less than asking price offer. Be sure to submit along with it detailed information and a narrative that explains your offer.

The worst that can happen is they''ll decline the offer or counter it. If the lender does not accept your offer and your research information is correct, the home will likely be on the market for a while longer...until the bank accepts the local market activity and drops the price. If this is the case, you can have your agent monitor the property for price decreases and persue it at a later date.

Good luck,

Bill
0 votes
chiguy773, Home Buyer, Chicago, IL
Sun Jun 5, 2011
Thank you everyone for the great advice!
0 votes
John Potter, , Cook County, IL
Sat Jun 4, 2011
Comparing REO prices is futile. Basically the bank wants their loan money back. How much they are agreeable to lose is not a comparable subject. The only thing you can do is make your offers. Most likely the bank will not want to accept this loser. Why would they.

If you could find out how much the loan balance is and submit a cash offer the bank maybe most receptive. That loan balance has nothing to do with market value so comparisons of REO's is nonsensical.
Web Reference:  http://uneappraisals.com
0 votes
Evelyn S. Fr…, Agent, Chicago, IL
Sat Jun 4, 2011
Hi Hapaboy,

The first thing I would recommend is to work with a buyers agent, it's at no charge to you. Why would you go through the hassle of trying to figure it out yourself? Unless you have access to the local MLS the information you find online will at best be limited, erroneous & outdated. Allow yourself the experience & expertise a buyers agent brings to the table. It's FREE!

Moving on...Other factors to consider when conducting a CMA is condition, location proximity to subject property, days on market (sometimes determines the marketability) and of course size, as you mentioned.

If you have been able to determine condition, size and proximity of the others to the subject property and you still feel the comps can be used to substantiate your offer, go ahead & submit. The worst that can happen is the bank will say no. If so, resubmit...just hope someone more eager & willing doesn't beat you to it.

Good luck!
0 votes
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