Buyers in the market today are looking for deals
By Gene Wright
With all the hoopla in the newspaper, on TV and the Internet stories talking how much the
value of real estate has gone down during the past few years, buyers in the market today are without a doubt looking for deals. And with the flood of distressed real estate,
buyers are typically either looking at a short sale that more money owed on the loan than what the property might be worth
or a foreclosure property that a bank owns. In California during September, 45.5% of the escrows closed were either an REO (Real Estate Owned, usually by a Lender, (24.2%). or short sales (20.3%) and In a few markets the distressed property ratio is much greater.
Even though numerous foreclosed properties, and are typically called REOs. Fannie Mae, HUD and Freddie Mac),
prices them at the market value and can have multiple offers, buyers typically expect to buy them 10-20% under their asking price. Additionally, they often ask for the
s help with closing costs and other seller concessions. Also this is the situation for a large number short sales, while buyers typically have unrealistic expectations when it comes down to price reductions. As a matter of fact, there is an intense demand for these distressed properties while this portion of the real estate market is extremely competitive. More than half of the transactions in distressed sales receive multiple offers.
Just about all lenders, including, Fannie Mae, HUD and Freddie Mac endeavor to use the current market value in pricing these properties they have foreclosed on. The question most often asked by many buyers is: "If the property has been priced at the market, why is it still for sale?" Of course, the answer, is that not every property sells quickly, while buyers may not see the value in what a property is listed for. I always suggest to the buyers that they "make an offer." For In the final examination, a property is only worth as much as what someone is willing to pay for it.
Sellers (typically encouraged by their real estate agents) list their homes on the pricey side, thinking they can come down on the price later if they receive get any offers. A problem with this kind of strategy is that many times the longer a property has been sitting on the market, all the harder it becomes to sell. Buyers begin thinking of the property as being over-priced or worse, believe something could be wrong with it's not selling. And most often in real estate a first offer is typically the best offer, an agonizing lesson learned by many sellers. It is often a long time until the sellers receive an offer as good that first offer, which they may live to regret countering of flat rejecting
When it comes to a foreclosure that a lender owns, it might have been for sale at a lower price than when a buyer first saw it some time back. Odds are the original asking price was set while the former owner was attempting to do a short sale. Itís possible that a short sale didn't work out, and now the lender has priced the property at a fair market value.
Sellers often depend on what's called a CMA which stands for Comparative Market
Analysis, when considering a buyer's offer. BPO, stands for Broker Price Opinion, a type of appraisal or comparable. Itís essential to know that an appraisal, BPO or CMA are only one personís estimate or opinion of value. In the precarious market we're in, a property's value comes down to just one thing and that's: the amount a qualified buyer will pay for it.
When it comes to sales of homes located nearby, both buyers and sellers need to understand that things are not always as they appear. If they haven't seen a home on the inside which sold and they donít have the details regarding the home and it's sale, it might not be prudent to use the particular home as a valid comparable.
Another potential issue exists and that is as activity increases, many sellers and even REO lenders get a feel that the real estate market has begun to improve and
typically price their properties at more money as a way of testing the market. This only result in slowing the market down again. Until distressed properties become an insignificant part of properties on the market for sale, sellers should price their properties to sell, while they might also consider offering buyer incentives.
Until the consumer confidence gets better and buyers realize properties they have an interest in are selling quickly,
sellers need to compete for buyer interest. If it's been a month or more and a property has not sold, odds are it is priced too high for the present market. And, if quite a few offers come in at a range under the asking price, then the property is most often priced too high for the present market. In this market, it is prudent for a seller to pay close attention to what a buyer thinks the value of their property is.
But, there is an upside to every story while this one has no exemption to the rule. In the market of today, there
historically low interest rates, appealing prices, sellers that are motivated along with an abundant supply of properties. Affordability for housing has never been this good. And although real estate is always cyclical, and the cycle we're in has been really tough, over the long-haul the value of real estate will go up in addition to bestowing the one thing everyone need, which is a place to live. In fact, a huge majority of individuals have created their personal wealth through holding real estate. So, my one line of advice to each potential buyer is: "Now's the time to be buying".