How dare I make such an outlandish claim!
This is my local expert, contrarian, point of view.
This article is for all of you foreclosure-chasers in the bay area:
Before I start:
- Foreclosure = REO = Bank Owned… all are terms that mean the same thing and are used interchangeably.
I’m a Realtor, and 90% of my clients in this market are buyers. If you are a buyer, you know that in today’s market regular sellers are few and far between.
In fact if you compare the market this winter to 2011 and 2010, you’ll find that there’s 25%-50% less homes on the market, and about 2-3 times as many buyers looking for these homes.
What do all of these buyers want? Not surprisingly, they all want a “Deal”.
And EVERYONE knows that “foreclosures = good deal”… right? They are after all, “distressed” properties, so they “MUST” be good deals since they’re sold at a discount. … right?
To confirm that, lets look at the current situation again:
- There are half as many listings out there
- The majority of the listings out there are either foreclosures or pre-foreclosures.
- There are 2-3 times as many buyers out there.
- The majority of these buyers are specifically looking for a foreclosure.
It doesn’t take a PhD in Economics to analyze the supply and demand.
And it definitely shouldn’t surprise you to learn that currently, a typical bank-owned home (priced in its realistic value range), is getting 3-6 multiple offers, driving the price above market value.
So while everyone is hungry for foreclosures, often times, they miss out on some of the best deals, which can come from regular everyday sellers.
Why is that? – Because most of the regular sellers that are selling right now, are ones that HAVE to sell for one reason or another. That means that these sellers are extremely motivated, or they wouldn’t be selling when prices are low.
Even if regular sellers start out “testing the market” and pricing their home $100K over market value, with a little bit of patience you’ll outlast the test period and can scoop up their home at a great price.
So the choice is yours … you could chase foreclosures, get into multiple offer situations and bid up the price, or you can look for the best deals objectively, and see the deal before it is in plain site.
Now I’m not saying that you should ignore foreclosures. I’m saying that buying a foreclosure should not be your goal… your goal should be trying to buy the right home for the best possible price.
If you have any questions about foreclosures or anything else related to real estate… or if you are thinking of buying or selling a home in the bay area, CONTACT ME today for a free consultation!