Q. I am considering buying an REO foreclosure home. Do REO foreclosure homes sell for less than regular homes?
The answer is YES, in general. Listing agents for banks tend to price aggressively and lower the price consistently until they find a solid offer. The more important strategy is how you and your agent will manage the offer if there are multiple offers. You have to be clear on what you see as the “value” of the home and set your limits clearly with the help of your agent. I have seen buyers get into bidding wars for many emotional reasons and end up paying more for the home then they might ought have. But if they are happy? Then does it matter?
Whether it is a short sale or REO, patience and the clearest view of value wins out. The market is very dynamic and it takes homework, and a strong negotiator, on your behalf, from your agent. I would also add that if you find a private owner with equity, you can many times get a lot more for your dollar (repairs, closing cost paid, etc).
One of the first priorities to establish – are you looking for a deal or a home? From there, go shopping. You may change your mind either way about what is ultimately important. I believe there is a lot of pressure on buyers when their friends ask about their recent home purchase. Everyone wants to be able to come off as a savvy purchaser, taking advantage of a down market, and reply, “Yeh, I got this great house for X dollars under market!” It is possible, but not always true.
Got a real estate question? Talk to CJ!