Bank Owned Homes in Brentwood Ca 94513
Sometimes the pricing on Bank Owned Homes does not seem right and I wonder where they came up with the number. The important issue is not how they price it but what you pay for a Bank Owned Home. Here is a post form an agent on how it is supposed to be done.
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I did a presentation in front of my BNI group on banks and how they price these Las Vegas REO homes for sale. I started out the presentation with a question for the group. I wanted to know how the general public perceives bank pricing. One response was “throw darts!”
It definitely could appear that darts are thrown in order to achieve a price but it isn’t that simple.
When a home goes in default (one or several payments are missed) is actually when the pricing process begins. The banks (or servicers) begin to order pricing reports in the
form of appraisals,BPOs (Broker Price Opinions) or AVMs (Automated Valuation Models).
The timeline of foreclosure in Nevada could be as expedient as 4-5 months and can drag on for several years (for whatever external reasons such as bankruptcy.) During this timeline, the servicers, lienholders (or investors) are ordering these reports.
They look at several things when pricing a home:
- Condition of Property
- Comparable Homes Listed & Sold
- Declining, Stable or Appreciating Market
- Average Days on Market
Most of these reports will support one another over the foreclosure time frame. How an asset manager for the servicer or bank will react to the reports is subjective. Many reports will ask for pricing depending on marketing time & condition. In fact, many reports want 4-6 different prices such as:
- 30 day distressed as is
- 30 day distressed repaired
- 90 day as is
- 90 day repaired
- 180 day as is
- 180 day repaired
Declining markets also cause a host of confusion. If it is determined that a market is declining at 10% every 6 months and the asset manager wants it gone in 3, they may list it 5% lower than the 30 day distressed price. This is in anticipation of further deteriorating markets and to get the asset off the books in the time frame they would like to.
If the home is determined to be ineligible for financing, they may pick an “all cash price” (as is value).
And so on and so forth……..
The important thing to understand when purchasing a Las Vegas REO home (or any other home for that matter!) is to remember list pricing is NOT a firm price. Low list prices may be set to attract multiple buyers and cash offers and a home may go WELL over that list price. High list prices may mean the bank has time to sit on their asset (haha). It is important to work with a Las Vegas real estate agent who is familiar with the market and can pull comparables when it is time to write an offer.
As you can see the decision isn’t made by one person – the REO listing agent. Or by the asset manager’s dart board. It is a complicated process which causes confusion to buyers and even other real estate agents. I guess I can call it “the is what it is” factor.
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I knwo some of the REO pricing here makes NO SENSE whatsoever....just seems to be part of the business.
No dart board about it. It is so important to get an asset price right from the beginning. Listing low and generating a multiple bid situtaion is common in the market I work, and seems to be an effective marketing strategy.
I honestly think it depends on the bank and the asst manager. But each home is different. A good local knowledge is needed to price right. I don't think some people pricing are getting good advise.