Outer Banks Foreclosure Pricing

Aug. 28, 2009 - PRLog -- List Price
You must understand the pricing structure. I am sure you have heard stories about people buying foreclosures for 30-50 cents on the dollar. While this is true it doesn't mean you should make an offer for half of the list price. Typically, the savings will already be built into the asking price of the Outer Banks foreclosures.

A house that was once for sale at $300,000 with the original owner and is now a foreclosure listed at $150,000 won't sell for $75,000. In fact, the odds are it will sell for more than the list price of $150,000. The savings are already factored into the sale by the bank.

It is helpful to understand the chain of command on foreclosures.  Foreclosure bank/sellers hire a third-party Asset Management (AM) company somewhere in the US to administer the sale for them.  This "AM" then contracts with a listing brokerage here in on the Outer Banks to list the foreclosure for sale in the MLS and represent the bank/seller in the sale.  

The Listing Agent on the Outer Banks then completes a series of market analyses for the AM to determine the proper, current fair market value of the property, so foreclosure asking prices are not just a stab in the dark from the bank/seller.  The Listing Agent must complete periodic market analyses for the AM during the course of the listing so they make sure to keep the pricing competitive amongst the rest of the MLS-listed comparable properties.  

When a foreclosure hits the market at a drastically reduced price there are usually buyers waiting in the wings for the opportunity. Properties like this usually go Under Contract to be sold in less than a week with multiple offers in a bidding war.

Price Reductions
Not all Outer Banks foreclosures hit the market at a drastically reduced, discount "super saver" price. Foreclosures can come on the market listed at fair market value and even higher (again, depending on the market analysis of their Listing Agent).  After a property has languished on the market for longer than the banks' protocol allows, they will reduce the price to try and stir up interest in the property.

Some banks will use a series of scheduled price reductions until they generate an acceptable offer. Others will wait until the time comes for them to cut the price and they will hit it with a drastic price reduction. This last technique usually generates multiple offers and can result in a sale price higher than list price.

Pricing Strategy
Let's say you find the perfect home on the Outer Banks and it is a foreclosure property being sold by a bank. Do you make a low-ball offer or do you make an offer for more than the list price? The answer is: it depends.

The first thing you need to find out is how long it has been on the market and, if they have made any price reductions, how much were they for and how often did the price reductions occur.

If the property has been on the market for 90 days and the price has stayed the same then the bank will be more willing to seriously look at a low offer. If the property has only been on the market for a month then it will more then likely be a disappointment for you to write a low offer.

If the price has been reduced drastically, either through a series of price reductions or one giant price reduction, you likely will have to move fast and aggressively, going in with your "best and highest" terms and price up front.  

If the bank/seller has multiple offers or even just one offer and they are ready to counter, they will often make a 24-36 hour call to all Offerors for their respective "best and highest" offers at once, from among those that they deem suitable in terms and pre-qualification or proof of funds.  Other Offers without suitable terms or qualification will be rejected at this point.    

Once those Buyer-side counters come in, the AM on behalf of the bank/seller will choose one from among them that they will now negotiate with.  The AM might come back with a higher counter offer or might take that Buyer's best and highest price.  It differs property to property.  

Once the AM accepts a Buyer's Offer--all price and terms suitable to the bank/seller--the AM will give the Buyer 5-10 days to obtain any and all inspections the Buyer deems appropriate, at the Buyer's cost, and report back to the Listing Agent as soon as possible whether the Buyer wants to go Under Contract on the property or walk away.  

If the Buyer wants to remain in the deal, the Contract and all bank Addenda are then signed by both parties and the closing process begins.  Being prepared gives you excellent chances of success and you can start by searching all of the Outer Banks foreclosures for sale here. http://www.outerbankshome.com/real-estate-news.html Be sure to check out the mapping feature with the satellite images of all the foreclosure properties for sale. If you have any questions about any of these Outer Banks foreclosures just give us a call at 800-647-1868.

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Helping people buy and sell Outer Banks real estate http://www.outerbankshome.com from Corolla to Hatteras Island including Nags Head, Kitty Hawk, Duck, Southern Shores, kill Devil Hills, Colington, Manteo and everywhere in between. For help call Shore Realty at 800-647-1868