Pricing an REO
As bank owned properties (REOs) continue to increase in the real estate market, selling them becomes more difficult and costly for the bank. The most important factor for the bank to consider is how long they want to hold that property. The length of time a bank is willing to hold a property should be directly related to the price a listing broker establishes for that listing. In today’s market, the price of the property is the key to selling, or not selling, that property.
When we work with banks to market their REOs, we have an honest conversation with them about their expectations and criteria for each property. How long do they want to hold it? What is their bottom line for a sale? Will they offer financing? What is the monthly cost to carry the property? We want to understand their objectives, but we also want them to understand that today, price is everything in selling properties.
We were a little amazed recently at the pricing of a property that was recently taken back by a bank. We were working with a client who wanted to purchase the property with a short sale. The house was under construction and had not been completed. Before the foreclosure, the listing agent had priced the property at 1.3 million. There were several offers on the property between 1.1 and 1.2 million. The bank did not accept an offer and took the house back through foreclosure. The new agent, hired by the bank to market the property after the foreclosure, priced the property at 1.8 million.
What amazed us was the fact that the house didn’t sell at 1.3million, and the new agent priced it at 1.8 million in a market that is still heading down. We figure that the bank must want to be in the business of owning partially built houses that no one can finance in the middle of winter. Doesn’t that sound like a good business?
We work to sell REOs by pricing them effectively. We want to move those non-performing assets off a bank’s books and return cash to the bank so they can go about their business of making money. If you have REO’s in your portfolio that need to move, or you are interested in purchasing a bank owned property, contact The NW REO Team. We will help! 1-800-545-6096. www.NWREOTeam.com
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