High End REO Listed With An Agent
I found an REO SFR listed with a realtor for 4.9M , it's being on the market for about 3 months now and they just recently lowered their price from 5.6M to 4.9M. I called the realtor and he told me that the house has being on the market only for 1 month (total lie). I checked all the comps and I came out with a 3.1M price tag, but with today’s hot market here in California it's hard to know if the comps are right or not, specially with such a high end house.
Anyway my question is what do I do next? Call the bank and offer them 2.5M all cash, open a 60 day escrow and try to find a buyer myself? Will they even talk to me, if the house already listed with an agent? Any other suggestions?
I haven’t done any deals personally myself, but I spend a lot of time on this website studing and very eager to get my first deal.
Any responses will be greatly appreciated.
Alexander.
8-)
As a Realtor I can tell you that you cant always go by the comps if the market is HOT!
Say you run comps on a property and the comps come out to 1.0M but it is in a very hot area. It is typical to see the price way above what it is really worth. Here I would just go with my gut feeling on what I wanted to pay for the property.
One thing I have learned is that if the price you offer doesn’t embarrass you. You are paying too much. LOL
If you call the bank more than likely they tell you to calling the listing agent, which is true in, most cases and they would force you to make the offer through the agent. If you want to make an offer 2.5M the listing agent has to submit that offer for you no questions asked.
Hope that helps!
If i am wrong someone please let me know. Thanks[ Edited by rocketcityrealtor on Date 05/27/2004 ]
Thank you for the quick response rocketcityrealtor. To be quite honest with you an offer for 2.5M doesn’t embarrasse me. Should I even try to call the bank and explain to them how much money they’re loosing each month on having this house unsold?
Any other suggestions anyone?
Alexander,
Being in San Diego I will agree with you that our maket in Southern California has been one of the hottest in the country for some time now. I also applaud your willingness to jump into the REI arena with both feet. There is no doubt you are doing this when you are thinking about multi-million dollar property for your first investment. There are a few things to consider:
Many successful investors in our area believe that we are at the top of the cycle and a downturn is imminent in 2005. Bruce Norris (Riverside County) has very compelling data to support this theory. He also says that when the downturn starts, the high end properties will get hit the hardest.
I have no way of knowing what your financial reserves are and it is none of my business, quite frankly. However, should you be successful in buying this property and it sits on you for three months or more, you'll need to be prepared to take the mortgage payments out of your financial reserves.
It also depends on your REI goals and your business model. Good Luck.
Dave
Problem is that the real estate agent is probably working with the bank. Banks these days utilize agents to move their REO's. What I mean by that is that the bank most likely contacted a title company, or the real estate agent directly and got a BPO (broker price opinion). In some cases companies will work directly with the bank providing these BPO's for free as a means of deriving business.
It wouldn't hurt to make the offer to the bank on the short sale, see if they will accept it, and move forward from there.
I may have an investor who would be interested in picking up the property.[ Edited by foreclosurenewby on Date 05/27/2004 ]
Quote:
On 2004-05-27 16:13, rocketcityrealtor wrote:
As a Realtor I can tell you that you cant always go by the comps if the market is HOT!<font size=-1>[ Edited by rocketcityrealtor on Date 05/27/2004 ]</font>
I'm confused by this statement. Aren't "comps" simply a listing of other "comparable" homes in the target area? So if the house in question is listed at 4M and the comps come back around the same price - doesn't that mean that the house is priced about right (this excludes a fixer)?
Alternatively, if they come back low and you find a similar house in the same area for 1M less you're looking at an overpriced home aren't you? I realize there are exceptions here but isn't this generally the case?