Foreclosures and REOs

Continuing on the topic of getting a deal, there is a lot of talk about foreclosure and bank owned properties (REOs) these days. People often think this is the best way to get a good deal.

Occasionally there are good deals to be had, but more often the properties are in disrepair and banks are not very open to negotiation. Their definition of TLC and yours could be worlds apart! Be prepared to invest both time and money, and be aware you are buying the property in 'AS IS' condition.

Banks also take their own sweet time. Even though our purchase agreements specifically state that 'time is of the essence', it's not uncommon to wait weeks to get a response during which time they collect multiple offers. Where negotiation usually is part of coming to an agreement, banks most often just accept or reject an offer...so make your best offer up front if you are making an offer on a bank owned property.

The best deals are still most often made buying from a 'real person' rather than a bank. They tend to be more motivated to sell, their properties tend to be in better condition and they are usually more willing to fix issues that may come up in an inspection.

Getting a deal

With all the buzz these days about foreclosures and the current buyer's market thoughts often turn to the deals that can be made.

It's a great time to be buying, but don't expect to buy for a price way below list price. In any market, list price is an indication of what a seller is willing to accept at that point in time... current market conditions have likely already been taken into account, and the current price may have already been reduced from original list price.

In any market, some properties are overpriced and some properties are priced below actual value. Before making an offer, do a comparative market assesment to get a sense of the property's current value... it could be that you're getting a good deal even at full list price!

Year-to-date average sale price in the 13-county Twin Cities metro area is 95.4% of list price. This means the metrowide average sale price for a home listed at $225,000 is about $215,000.

Keep in mind this is the metrowide average, and market conditions can vary significantly from community to community. Click here to find out current market conditions for 125 Twin Cities communities.