Real Estate Advertising Tips

In our area, the reo's aren't priced radically lower than the "regular" listings. The homes that are priced the lowest are the "short sale" listings, but they're such a hassle, they ought to be even lower!

I heard that the 'short sales' are affecting the comparables especially when homes are not selling fast in the area. If the most recent sale are from the 'short sale' then I can see a problem in that area.

Some REO listings are priced better then the comps; some are not.  However, when you buy an REO you're buying it "AS-IS" with no disclosures or warranties.  Often an REO is missing appliances, heater/air conditioner, pool pump plus you have no idea what kind of condition any of the systems are in.  So even if an REO is priced well, its always best to check the condition of the property and budget the necessary cash you will need to make the property habitable.  You can get a great buy on an REO, but do your homework.

 I don't think Short Sales should even be considered as comps.  So often a seller and or his agent, just picks a number out of the air with no justification, to list the property in order to get activity.  We avoid them at all costs, after having some clients negotiating for months trying to buy these properties-  then after waiting all that time, the bank can just say "no."  In the meantime, interest rates have gone up, and that buyer has probably missed out on a number of other great opportunities.

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As a mortgage broker, this very issue is in the process of slowly killing one of my deals.  I am fighting with the lender (a losing battle, most likely) tooth and nail.  All of the comps on my appraisal are actual, arms-length transactions that support one value ($430,000 - which is precisely what the client paid for the home about a year ago.)  The lender, unfortunately, is relying on an AVM and an appraisal that is including REO sales and listings, dragging the estimated value down to $375,000.  I actually only need a value of $405,000 to make the loan work, but I am not making any progress.  Great, timely post! 

Shannon and Trevor - thanks for your feedback.  To be honest I am not too familar with short sales but did learn a little by reading Shannon's post at http://activerain.com/blogsview/395414/Short-Sales-Some-Advice

Paul - great points.  We have actually been looking at some investment properties and discovered some of the exact points you discussed with foreclosures (missing appliances, needs work, etc.)

Steven - wow, that really hurts.  I hope it works out in the end for you.

Misty - The Foreclosures and Short-sales in our market are the comparables and sellers will have to lower their prices as more of these homes become the basis of value.  I don't like it, you don't like it... but it is what it is. 

The banks make loans based on credit, down payment, payment history, and a few other factors... including comps.Unfortunately, if a few houses in the area are sold thru short sales or short payoffs then it indirectly impacts a "regular seller". If his neighbors home recently sold for 50k less then it would be a factor they'd consider when recommending the loan.