Real Estate Owned Foreclosures - Pricing

[Tyler Standish]

Hi,

I am new to the real estate investing world and am trying to learn as much as possible before making an offer. I have read conflicting information on the deals you can get on REO foreclosed properties. In some instances, I have read that banks are desperate to get rid of these homes (especially those that have been on the market for 3 months or more) and would be willing to take offers as low as 70-80% of the list price. Other things I have read said this is simply not true, and REO foreclosures often sell for more than the list price. Can anyone who does this type of real estate investing give me some ideas as to what is typical in these situations?

Thanks!

[Eric Egeland]

Many banks/asset managers have certain guidelines they need to follow.  

The initial list price could be underpriced or overpriced depending on how the list price was determined. More aggressively priced properties tend to draw multiple offers & the overpriced properties will burn some market time.  

In most cases if a property is not priced appropriately the seller will reduce the list price over time (generally every 30 days or so) rather than just accepting an offer with a large percentage off of list price. Some sellers that are more flexible can override some generic guidelines, but the vast majority have a limited percentage off of the current list price that the can work with. As an REO listing agent, I can say that 99.9999% of the time, an offer coming in 70-80% off of list would be rejected.

That offer 70-80% off of list could very well be a fair offer if something was grossly overpriced, but in almost all cases the seller would continue with price reductions over time rather than just gap down in price.