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I found a house in Maine that hadn't had any activity in 2 years. NOTHING. I put in an offer and some other couple came out of the woodwork and started a bidding war. It was the first week of the financial meltdown. I bid a second time, but then stopped because God only knew at that point what was going to happen. I think in the long run they got a good buy, but short term, they paid too much. It started out at 750k two years ago and it went now for 500. Still isn't at the bottom up in NE, but it's headed that way.
I've had that happen so often... just when a client finds the perfect house.. that's been sitting there with no activity.. along comes other folks and bam... here comes multiple offers. It's almost like the interest acts as a lightening rod that goes up like antennae of some sort and people just hone in on it. On the other hand, sometimes it still sits there... the people who are "sort of interested" walk away and a few days later, it's got an accepted offer. It seems to happen quite a bit.
Ok so, if prices do fall further ... obviously even more people are going to bid and consequently, there will be more bidding wars.
So if the only solution is to not participate in bidding wars ... how do you buy a house at all? Because every seller is going to want to get the best price and you're always going to risk a bidding war ... unless you just don't do anything at all.
This is where working with a Realtor can save you time and frustration. Yes, there will be bidding wars.. especially of bank owned properties. The low prices are set simply to attract interest and bid the price up.. so that it's closer to market value. The low price is below current market value - if it was too high, the house would just sit there or sell in a slower time frame. Banks are tired of their losses, so they want to sell quickly.
Only buyers determine the price they are willing to pay. The rest of the industry watches, assists, keeps track of sales and helps with getting information to the buyers. Your realtor can tell you what the comparable sales have been in the area. If the recent sales are much higher than the lower price, well you'll need to figure out (sometimes realtors can refer contractors to take a look at a property) what it would cost to bring the home to market condition... if, indeed it needs any work at all.
Just because there are bidding wars doesn't mean you shouldn't jump in. A good Realtor can help you strategize how you can best proceed. Sometimes, if you don't get your offer accepted, ask to be in "back up" position.. That way, if the first buyer backs out (for whatever reason.. many times it has nothing to do with the condition of the home, then you'd have a shot at it. If you want a house, and it is priced well, and you know what your top offer can be - taking into account approximate repair costs, etc... then go for it. Yes, it is still a buyer's market.. Seems like prices have back peddled at least a couple years in some places...
The good, pretty houses are still selling quicker than most and still have a strong demand. The huge, ostentatious homes seem to be sitting there, for the most part, but there are HUGE discounts on some of them.. sometimes between $100,000 and 300,000K for the larger ones. Interesting times. Happy hunting. What you don't want to have happen is that interest rates begin to rise to the point that the price of the home you can afford has to be less in order to afford the iextra nterest payments...
Just to note, she isn't buying at auctions. She is looking at banked owned properties. These more often than not are put on the market just like other listings.
Exactly. Thank you.
BTW ... there's now six offers on this property. And this one was NOT priced outrageously low. The list price was right in line with recent sales in the neighborhood.
Just to note, she isn't buying at auctions. She is looking at banked owned properties. These more often than not are put on the market just like other listings.
Same difference... banks reduced the price beyond what is the comp because they want to unload it... homes on the market are still at comp prices or slightly below... and they ARE dropping... If you want to compare buying foreclosed homes to non-foreclosed homes and saying they are the "same"... you will need to grow another brain...
Same difference... banks reduced the price beyond what is the comp because they want to unload it... homes on the market are still at comp prices or slightly below... and they ARE dropping... If you want to compare buying foreclosed homes to non-foreclosed homes and saying they are the "same"... you will need to grow another brain...
Bank owned properties are the only ones that have actually sold in my neighborhood. There's only one private listing and it's $100K higher than market value so ... bank owned homes ARE the market right now.
As I previously mentioned, this property was not slashed below market price. IMO, this property is listed in line with recent comps, perhaps slightly higher yet ... there's still six offers on it.
I've been trying to follow your situation, sheri, but I'm confused.
You have 2,200 sqft houses selling for $200-250k, but rents are $1,800 a month? Most of the homes are bank-owned, only 1 private listing in the area? That all sounds very strange, and way different from my neck of the woods. Rents here are half of that, the comparable home prices would be twice that, and probably 90% of the listings are private, slowly creeeeping down in price.
I've been trying to follow your situation, sheri, but I'm confused.
You have 2,200 sqft houses selling for $200-250k, but rents are $1,800 a month? Most of the homes are bank-owned, only 1 private listing in the area? That all sounds very strange, and way different from my neck of the woods. Rents here are half of that, and the comparable home prices would be twice that.
It is strange, mostly because these same houses sold for $550K just two years ago so ... lots of people defaulted and bank owned is now the name of the game. Anybody who's trying to do a private sale more than likely owes too much to sell in this market so ... many of those people pulled their houses off the market months ago.
One guy is trying to sell a 1600 square foot house for $350K but, it hasn't moved because most of the bank owned homes have sold for $100K less. To wit:
The 2200 square foot house recently sold for $255K and, while one 1300 square foot home sold for $215K a couple of months ago ... another 1300 square foot house just sold for $230K.
Three other 1500-1600 square foot houses have sold for 265K, 240K, 245K respectively since August. There's also a 1900 square foot short sale under contract for $260K. Two other 1500 square foot houses that are in the worst condition are listed at $230K (I believe this may be under contract) and $200K ... the cheapest one being the most trashed.
The property I bid on, which is also bank owned but in good condition, is nearly 1900 square feet and was listed at $245K which, based on the other sales ... is pretty much in line with the above mentioned comps.
Yet there are 6 offers on the property already ... and it's only been on the market since last Friday.
Same difference... banks reduced the price beyond what is the comp because they want to unload it... homes on the market are still at comp prices or slightly below... and they ARE dropping... If you want to compare buying foreclosed homes to non-foreclosed homes and saying they are the "same"... you will need to grow another brain...
Great, another "misinformed" poster who is obviosly hoping the market continues to tank. You need to "grow another brain" and get in touch with reality. Just curious, what state do you live in and do you currently own? Not ALL bidding wars are on foreclosed homes. We just had one sell, after 3 offers, and it was "seller" listed, 30,000 in price drops since it's original list 15 months ago. At least 3 people thought it was priced fairly, even in this market. And the list at the point of 3 offers?- $520,000. Comps have been selling at this price for nearly a year now, soooooo.... Grow a brain yourself. We're in the Chicago Western suburbs, in case you want to know.
Yet there are 6 offers on the property already ... and it's only been on the market since last Friday.
You are putting way to much weight on this single property in terms of analyzing the real estate market. Just as you find this property nice others obviously do too. Obviously price isn't just about square footage and the bank may have under valued the property as they tend to appraise foreclosures loosely.
You may have found one of the few houses that may hold its value, I wouldn't know.
But in a few years from now the environment is going to be much different. Prices in the surrounding neighbors will be less and prices to the North and South will be a lot less. All of this will put downward pressure on your neighborhood even if a single house doesn't sell in the next 2 years. Anyhow, if the prices have already declined 40% then you're likely to see another 10~20% depending on the neighborhood etc. In terms of rent vs price ratio, the prices still have a bit to go down (assuming there isn't a big decline in nominal rents).
It is strange, mostly because these same houses sold for $550K just two years ago so ... lots of people defaulted and bank owned is now the name of the game. Anybody who's trying to do a private sale more than likely owes too much to sell in this market so ... many of those people pulled their houses off the market months ago.
Well, there you go. I'd jump on one of those in a heartbeat. You're going for the low-low-low hanging fruit, so shouldn't you expect competition for that in any sort of market? That tells you what that property is really worth during the fourth week of October, 2008. But if private sellers aren't recognizing that, then we cannot legitimately say we've reached a "Bottom", can we?
Home prices by private sellers are insanely sticky. This is my first foray into real estate, and one of my first 'lessons' has been that the R/E market is far less efficient than the equity markets or commodity markets. Anyway, best of luck to you!
Last edited by le roi; 10-30-2008 at 09:00 AM..
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