Are you seeing more over-priced foreclosures in your market?

Question

I'm just curious. The last few spreadsheets that I've made had a handful of new foreclosures that were priced at 95%+ of the average owner resale comps. Wondering what's up?

Also, I found some recent sold foreclosures that seemed like below average deals. One sold for $98,000 with an average resale of $110,000 and another sold for $70,000, with an average resale of $85,000.

I'm in Houston and I am talking about single family foreclosures
Anyone else seeing this in there market?

Drew Friestedt · Answer

Auction pricing is still the same in chicago, with the only exception being that BofA has opened the flood gates.  Auction pipeline is up 200% in one month since BofA got back into the market of doing foreclosures.  We are analyzing the data now looking at monthly and year over year changes.

But to answer your question, pricing at auction in Chicago is the same as always, just more of the same.

Jerry D. · Answer

I am I. Houston also and am seeing the same thing.

Robert Dobbs · Answer

My first real estate deal was in Alief, Texas.

Back in, I think around the 1986-87 real estate, oil crisis "bust combo"

A three year old US Home condo, yeah I remember on Turtlewood Court, originally worth about $40,000 and the real estate agent begged me to "put in an offer". I told her $9500 just to get rid of her, she called me the next day and told me the "oil-field relocation services company" that owned the condo accepted my insane offer. Yikes!

I didn't have 10k, so I learned fast how to "scramble for dollars"!

Thank you Houston, Texas (suburb, Alief, TX) for my 1st real estate transaction.

The Houston economy was so bad, I talked a local bank (who was a client of mine) into making me this very small loan and I would put up the condo as collateral. They made an exception for me (I guess because I was their group health insurance agent, and I bought the VP lunch? LOL!) for such a small amount

They did the loan for me, and within 6 months, the bank was out of of business and then I was making payments, I think to the FDIC, until I sold the property a few years later!

I can only imagine the "wild swings" in Houston real estate since 1987.

If those Houston REOs are not selling at listed pricing, "keep pounding" those banks with much lower offers!

Good luck!

Bob

Misty McMillan · Answer

Unfortunately the price points for REO's are all over the board based on what bank owns it, what the appraisal has come back at, what the agent feels its worth on their BPO and what the second opinion BPO states. Each bank has to sift through all this and come up with a price. Usually the appraiser wins. Unfortunately that value is likely too high since they do not have all the info that the listing agent has including any inspection reports. Sometimes the banks just simply cannot price any lower due to their back end % requirements.

Dale Osborn · Answer

There have been some recent REOs sold here at some very low prices. I am hoping as the banks are forced to bring out their shadow inventory of homes that the prices will drop even more. This makes it a good time to pick up some cheap properties to hold through the rough times of the next 4-5 years and then possibly look at reselling them.

I missed a VA sale of a home for $34,900. Person that bought it put it back on the market a few weeks later after fixing the broken window and doing some cosmetic painting for $79,000.

Andrew Fortune · Answer

Got it. Thanks for the clarification Chris.

I only deal with REO's and everyone I work with refers to them as foreclosures. They are marked as foreclosures in the MLS. I never really differentiate REO's from forclosures. I will now though.

Thanks.

Chris Martin · Answer

These are REOs, not foreclosures. Pricing on foreclosures is usually based on payoff amounts plus court costs (trustee fees, etc.) Pricing on REOs is generally based on what a broker thinks the property will get.

Andrew Fortune · Answer

My sold prices are based off of all the owner resales in the neighborhood sold within the last year. More of the new foreclosed properties listed on our MLS are priced close to the recent owner-resale sold comps.

Chris Martin · Answer

I think you are talking about REOs. The foreclosure pricing hasn't changed where I am at all. Are your "sold" prices based on foreclosure sales at the courthouse or (what I suspect) bank sales to an investor for resale?

Bienes Raices · Answer

Yes, and also approved short sales that seem to be at or higher than the market price. And the ones that will cash flow are in bad neighborhoods, right next to a major highway, etc.