Buyer Expectations For Foreclosures Will Cost Many Money!
April 8th, 2009 Categories: Brandon, First Time Home Buyers, Foreclosures/ Bank Owned, Riverview
Recently I had a buyer find a house they wanted badly. The house was a foreclosed property and had been on the market for a while. The bank had originally listed the house for $159,900. It was not a house that I recommended to my buyer clients at that price.
After roughly 30 days, the bank dropped the price to $139,900. Better, but I continued to feel it was not priced properly. After 80 days, the house was re-priced to $119,900. Another $20,000 decrease. At this time I thought we had a property to market. I sent the listing information to several of my clients and I got a phone call requesting a showing. At the same time, I selected 3 more foreclosures I thought were of good value and scheduled showings.
Sure enough the client and his wife loved the property. I pointed out that the roof would need replacing and that could give us a little additional room to negotiate. I suggested we price in down by twice the cost of a new roof and be happy if we are met half way.
My client insisted that we offer in the $80’s and pay no more than $95,000 because of the repairs required on the house. I immediately searched for a foreclosed house that was pristine, in his price range. I found a two year old home described as “barely lived in and with upgrades galore.” Yes, he and the wife loved it. Basically a new roof and new everything. It was the same size house and listed at only $11,000 above the older “needs repairs” house.
What was he willing to pay (not offer, but pay)? “No more than $100,000.”
That led me to provide him a study to share with all buyers in the market for a foreclosed home.
This study was based on homes listed in Riverview and Brandon Florida for a list price between $90,000 and $150,000 since the beginning of 2009. Here is what we found.
|
List Price |
Sold Price |
Price p sq ft |
% Ratio |
DOM |
|
$120,660 |
$119,247 |
$74.83 |
97% |
48 |
List price is the final list price on MLS
Sold price is what the buyer actually paid
% Ratio is the ratio of the list price to sold price. (Based on actual square footage prices)
DOM is Day On Market
What do these numbers tell us?
Banks on most of the properties are getting their price. List price decreases with Days On Market, but does not necessarily open the door for further price reductions. Price per square foot is a starting point to understand value, but not the final point. Property condition, neighborhood, supply and other attributes help to determine price.
What can the buyer walk away with regarding this information? First, don’t set yourself up for disappointment after spending a lot of time finding the right house and lose your excitement or the home by unrealistic expectations. Banks are not desperate as we all may think or as the media reports. In the study area 41% of all sales were bank owned properties that closed on average 48 days or less. That is a hot market for the banks and they don’t need to come off their price except on very special circumstances. Your real estate agent can help you understand those circumstances.
We have specialized in finding great foreclosed properties and will gladly find or review foreclosures for you. Give us a call or email us.
If you would like a copy of this stuy in Excel spreadsheet form let us know. It contains each and every foreclosed property in Brandon and Riverview along with the list price (study price of $90,000 to $150,000), sold price and days on the market as well as other helpful information. Drop us an email and request “Foreclosure Study 1/1/09 to 4/8/09. We will be glad to send you the report.
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I have read a few of your posts and they are all interesting and informative…keep up the good work.