Adventures of being a home Buyer in this Market

Here's a recent story I was involved with.  It has to do with a Bank Owned/Foreclosure/REO (all three of those terms are basically interchangeable. REO the most commonly used term by Realtors. It stands for Real Estate Owned, meaning it is property that the bank owns). A lot of people out there hear about REO's but don't really know how they work. Well unfortunately in Sacramento, the REO's are a large majority of our market because of the high volume of foreclosures in recent years. Well, the banks aren't the greatest at dealing with selling properties. Once they foreclose on the house they have an appraisal done on the home to figure out the value and then list the property with a real estate agent. However, one very recent trend is the asset manager for the bank is deciding to list the properties for much lower than the values that the Realtors & appraisers are suggesting to them. One particular property was listed near $170,000, much lower than its true value. Within 4 days the listing agent had received over 30 offers. The recent sales in the area supported a much higher price. Eventually the winning offer went for $220,000.  As part of the buyers' loan process, they are required an appraisal by the bank that is going to be lending them the money.  The appraisal came back at $222,000! That is over $50,000 than where the bank decided to have it listed at. This is one of the major factors right now with so many properties having multiple offers over list price. Many of the banks are not taking the time to understand each property & market & have the home listed correctly.  It's an adventure out there for each buyer on every bank owned home. You can't trust the list prices right now.

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October 19 2009 - Sacramento
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