Today a new house came on the market in the subdivision Rick and I live in. That in itself would not grab headlines because houses are added to the Spring Texas real estate market all the time. What caught my attention about this particular new listing was its low, low price. The 2-story house with 2,764 sqft has a list price of $149,900 ($54.23 sqft). With other similar homes in the neighborhood selling for between $66 – $68 sqft, I immediately thought this house has to be a foreclosure. Sure enough in the listing details under disclosures was the word foreclosure.
Priced at 18% to 20% less than similiar homes, this foreclosure is a DEAL and might even be considered a STEAL. That is it would be if it sold for full list price. But the house is not going to sell for list price. It will sell for much more than list price.
What? More than list price? How can that be is what buyers want to know. Rooted in the minds of buyers is the belief that because the house is a foreclosure the bank should be willing to accept less than list price. A foreclosure selling for more than list price is just unthinkable.
Welcome to the pricing game deployed by numerous banks. The game is played by the banks setting the list price of their foreclosed homes artificially low. The low price quickly garners interest from lots of buyers lured with the possibility of getting a steal or at least a deal. In a matter of a few days, the bank receives multiple offers on the house. The bank informs all interested buyers to submit their best and final offers. The bank informs the buyer who submitted the highest offer that he is the winner. Did the winning buyer get a steal? No. Did the winning buyer get a deal? Yes, but not as great of a deal as what he initially was planning on.
With the immense competition between buyers, all whom want to get a deal, winning the foreclosure pricing game is not an easy task. Although you can increase your odds of winning by getting a buyers agent who understands the rules of the game and more importantly knows the secrets. Without the help of an experienced Realtor, get ready for a buying experience as frustrating and as unsuccessful as the buyer in this video.
A big thanks to Missy Caulk. As I discovered this video on how to buy a bank owned home on her Ann Arbor Real Estate Blog.