Dean’s Analysis
Noticed the jump in sales last month of bank owned homes, called REO’s. I’m not surprised in the increase as a bank is not interested in being a property owner. They need to sell the home, or “asset” as quickly as possible so they can go out and loan more money.
Yet to sell a house quickly in this market is relative to two fundamentals. The house has to be the nicest house for sale and it has to be competitively priced. I like to say “It’s a beauty contest and a price war”.
And lenders are not interested in spending money to “beautify” a property. So their only option left in this market is to win in the price war.
A recent reporting from RealtyTrac, an industry watchdog, recently reported these two statistics:
(1) An short sale (a homeowner selling and avoiding foreclosure) home sold for 15% less than fair market value.
(2) An REO sale (foreclosed and now lender owned) home sold for 34% less than fair market value.
On average, REO homes are selling for $88,830 below fair market value. Is their any question why home prices continue to drop.
Call me with questions/comments.