Question about how the Sale Price of a Bank Owned / Foreclosure is determined.

Asked by Cablekc, Santa Clara County, CA Mon Jun 22, 2009

Owner can't afford the house anymore and the Bank takes ownership of the house and puts it up as a Bank Owned / Foreclosure house.

When a Bank-Owned/Foreclosure house goes on the market, is the price that it's set to sell at based off of how much is owed on the remaining Loan that is owed to the Bank?

or

Is it based off of something else?

I could totally be wrong on this....but I always thought that the Bank would set the Sale price of the Bank-Owned Foreclosure House at how much is left on the Loan so that they can simply try to get the loss off the books....in this case the Sale Price would start at $750k.

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Answers

2
Norman Aless…, Agent, San Jose, CA
Mon Jun 22, 2009
Hi Cablekc,
Banks have an Asset Manager either in house or they " job " it out who orders a BPO ( which is like an appraisal) it is very detail oriented to come up with a price and thats the price the bank wants. Even if $750K is owed on the loan and the BPO says comparable homes right now are going for $450k then thats what the bank wants. Buyers set the market always have and always will, it is what someone is willing to pay for a property, thats what makes the worth of a home. Earlier in the market when prices were declining these reo's would get new BPO's either monthly or when the bank really wanted the property off it's books. Now almost all reo's have multiple offers on them so the banks are really happy with the way things are so don't be surprised by an increase in listing prices at the low end.
Hope this helps. If you have any further questions feel free to contact me.

Regards,
Allyson
408-705-6578
DRE# 01397256
allyson@homes byallyson.com
1 vote
charles butt…, Agent, san jose, CA
Wed Apr 25, 2012
The bank sets the price of the home at Fair MArket Value.

In most cases when the bank takes the house back i foreclosure, the reason is because more is owed on the house, than the Fair Market Value of the house.

If less was owed to the bank than the Fair Market Value, the owner could have sold the house and avoided foreclosure and the damage to their credit. Also the seller could have recovered their equity in the home.

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address; charlesbutterfieldbkr@yahoo.com
DRE#00901872
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