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1. 99.7% of the sold comps in my area are selling for pre-2004 prices (mostly 2000-2004 pricing). The majority of those sales are short sales and foreclosures.
2. If you look at the active listings, only the short sales and foreclosures are priced at pre-2004 numbers.
3. The "regular" comps that have sold have been priced to compete with short sale/foreclosure pricing.
4. With short sales/foreclosures, you have an institution computing a fair price, not a seller that is still clinging to the idea of how much he/she could have gotten in 2005.
This leads me to conclude that unless you find that rare non-distressed property that is priced to compete with short sales/foreclosures (which are everywhere and only on the increase), you are overpaying if you don't go the distressed property route.
Stila is absolutely correct. The banks are basing their prices on statistical data, real comps (not the ones the seller and seller's agent pick and choose to their advantage) and appraisals. Only a realtor would not believe such common sense.
Also, the banks are actually interested in actually selling the property. Your average Joe Shmoe seller is mostly interested in ignoring offers that are not full-price (in other words, they are actually not interested in selling).
What is the average seller basing his or her price on? Emotions, greed, a bloated sense of worth, memories of 2005, and on and on.
If you are house-hunting and not seriously looking at short sales and foreclosures, you will most likely end up overpaying.
Since when did we all move into your area? The problem with your theory is that not everywhere had a run up in prices or turned into foreclosureland. What works for your area probably doesn't apply for the rest of your state (bet I can guess your state too... one of four). And it can't be extended to other regions of the country.
There are very few foreclosures or short sales in this area of DFW. Homes are starting to sell well with the spring selling season upon us. Not every area has a high amount of foreclosures and when you see one here it's usually a major POS.
1. 99.7% of the sold comps in my area are selling for pre-2004 prices (mostly 2000-2004 pricing). The majority of those sales are short sales and foreclosures.
2. If you look at the active listings, only the short sales and foreclosures are priced at pre-2004 numbers.
3. The "regular" comps that have sold have been priced to compete with short sale/foreclosure pricing.
4. With short sales/foreclosures, you have an institution computing a fair price, not a seller that is still clinging to the idea of how much he/she could have gotten in 2005.
This leads me to conclude that unless you find that rare non-distressed property that is priced to compete with short sales/foreclosures (which are everywhere and only on the increase), you are overpaying if you don't go the distressed property route.
Thank you for saying what I have been thinking this whole time. The area that I am looking to buy in has been hit hard by foreclosures and I've noticed that new foreclosures coming onto the market are being listed lower and lower and lower. To the points that you are describing in your post. Thank you for your post and telling it like it is.
Stila is absolutely correct. The banks are basing their prices on statistical data, real comps (not the ones the seller and seller's agent pick and choose to their advantage) and appraisals. Only a realtor would not believe such common sense.
Also, the banks are actually interested in actually selling the property. Your average Joe Shmoe seller is mostly interested in ignoring offers that are not full-price (in other words, they are actually not interested in selling).
What is the average seller basing his or her price on? Emotions, greed, a bloated sense of worth, memories of 2005, and on and on.
If you are house-hunting and not seriously looking at short sales and foreclosures, you will most likely end up overpaying.
I believe in most places up to 50% of home being sold are distressed sales (short sales or foreclosures). So the OP has a point.
However, we looked around for 5 months at homes in the upper scale neighborhoods in the Orlando FL area. Heathrow, Alaqua Lakes, Magnolia Plantation, Longwood FL area. Tried a couple of short sales. Looked at a couple of foreclosures.
When we saw a home that was just listed in January and the home was priced 35K BELOW a similar short sales home list price, we jumped all over it. This house was only on the market for 2 days before we made them a solid offer (93% of list price). We finally settled on 95% of list price. Keep in mind the listing price was already 35K below the short sale price.
It was a quick transaction. We closed within 35 days. The previous owners were affluent and had just relocated down to Naples FL. They just priced their home at 2003 prices and got a quick sale.
That short sale home that was similar to the one we just closed on sold for 15K more than the home we just purchased and we got the corner lot, all the updated appliances, granite, stainless steel and a heated spa. The owners also threw in their fancy $2000 LG washer/dryer that was just purchased last year.
So yes, do look at foreclosures/short sales. But if a regular home sale comes up and is priced aggressively, I'd rather do business with the regular sale because there are much less hassles. We tried a foreclosure that was purchased for 1.1 million in 2006. There was a bidding war and the bidding actually started at 625K and they had multiple bidders up to 725K for a home we were interested in. This was a home that needed about 50-100K in repairs also. The investors all know about prime locations and start these bidding wars on these properties.
After we moved in, our new neighbors were all saying we got a great deal. They also said the previous owner (who is a ligation lawyer) was thinking about backing out of the contract because he thought he had sold it at too low of a price. I told them, those previous homeowners should find themselves lucky to unload a home in 2 days. We wouldn't have considered the home but it was priced so aggressively, we had to look at it.
It makes sense that a bank would come up with a fairer price than an emotionally attached seller; how I wish there were buyable distressed properties in my area!
how I wish there were buyable distressed properties in my area!
That's the key. There are still tons of short sales/foreclosures in the Orlando FL where my second home is located.
But if I were buying a home to live in, even if it's a "steal", I'd be leery of purchasing a home that's around another 10-50 distress properties. What you eventually end up is living in a neighborhood of investor homes and having to deal with renters all the time.
Those rare foreclosures that pop up in a prime area tend to get gobbled up within 1 week and there is a biding war for that property.
1. 99.7% of the sold comps in my area are selling for pre-2004 prices (mostly 2000-2004 pricing). The majority of those sales are short sales and foreclosures.
2. If you look at the active listings, only the short sales and foreclosures are priced at pre-2004 numbers.
3. The "regular" comps that have sold have been priced to compete with short sale/foreclosure pricing.
4. With short sales/foreclosures, you have an institution computing a fair price, not a seller that is still clinging to the idea of how much he/she could have gotten in 2005.
This leads me to conclude that unless you find that rare non-distressed property that is priced to compete with short sales/foreclosures (which are everywhere and only on the increase), you are overpaying if you don't go the distressed property route.
Quote:
Originally Posted by chanelavec
Stila is absolutely correct. The banks are basing their prices on statistical data, real comps (not the ones the seller and seller's agent pick and choose to their advantage) and appraisals. Only a realtor would not believe such common sense.
Also, the banks are actually interested in actually selling the property. Your average Joe Shmoe seller is mostly interested in ignoring offers that are not full-price (in other words, they are actually not interested in selling).
What is the average seller basing his or her price on? Emotions, greed, a bloated sense of worth, memories of 2005, and on and on.
If you are house-hunting and not seriously looking at short sales and foreclosures, you will most likely end up overpaying.
Quote:
Originally Posted by 2bindenver
There is no "one" right rule. Each area, sub-area, neighborhood is different. Each should be evaluated thoroughly, prior to making a buying decision.
Only a troll, looking to stir the pot, would believe such nonsense.
2b, I think we are being tag-teamed...
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