Serhiy Onyshchuk / Realty One Group Preview – Northwest WA Real Estate, Call 425.610.SOLD (7653)

From the blog:

– What’s the fastest way to get downtown?
– Are you driving or walking?
– Driving.
– That’s the fastest way.
An old joke

Home buyers contact me via this website all the time. I regularly schedule appointments to show homes. Usually, we meet at the house that the buyer is interested in.

Occasionally it happens that the buyer gets lost and calls me for directions. What’s my first question? “Where are you at right now?”

When deciding on how much lower (if any) to offer on a bank-owned home that is listed for sale, the answer is similar.

“Where is the listing price at right now?”

It’s sort of natural to feel that you got a good deal if you got a certain percentage off of a listing price. Wrong! It’s not about the listing price but what similar homes sell for now!  It’s like comparing to how much your neighbor paid for a similar house.

You may negotiate a 10K off of a 200K house. But if similar homes homes recently sold for 180K, you didn’t get a 10K (5%) discount. You overpaid 10K (5.5%)!

I watch for new home listings on the MLS daily. As soon as a great deal appears on the market, I let my buyers know. Most good deals are bank-owned homes. That means that they are already priced better than what other similar home sell for.

If my buyers like the house and want to write an offer, it’s not uncommon that I recommend a full price offer or even more. Here are just two examples:

  1. Over a month ago a bank-owned home in Lake Stevens was listed for 199K. The following day we offered 201K (We had been beaten before and the buyers liked the house). Guess what? We were beaten again. A month later I found out that this Lake Stevens house closed for 220K. And guess what? At 220K that was still a pretty good buy.
  2. A HUD home in Marysville was listed for 164K. I called another buyer of mine. By the time we got to see the house later that day, there already were  six real estate agent’s cards on the counter. Immediately, we offered 165K. The offer was accepted. I guess, we beat others by acting quickly. Now, here’s the main point. When an appraiser came to value the property he appraised this Marysville house at 175K! Now, if you’ve been in the business of selling/buying homes for a while, you know that practically the appraiser’s main job is to make sure that the real value is not lower than the contract price. Appraisers know the contract price and in most cases arrive at the same number. This appraiser couldn’t find comparables (similar homes) that sold this low, so with all the adjustments he had to value the home 10K more than the contract price!

This doesn’t mean that all bank-owned homes are priced competitively. Some are overpriced. Some are in such poor condition that doesn’t justify the price. By all means, submit offers, negotiate! I’ve done that as well!

However, if you ask me, I’ll check the market value carefully. And I’ll take that smoking deal for the full listing price rather than that bragging point of negotiated 10K, if the home is still overpriced.

Photo CreditAttributionSome rights reserved by silverfox09




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