Foreclosures Making it Tough for the Traditional Seller
Even in a tough market for sellers, there are still those that must sell due to personal circumstances. Whether it’s a divorce, job relocation, or financial strain – there are still homeowners with equity, that find themselves in the position of having to sell and in this market, that can pose some challenges.
I come across articles all day on the Internet and share with you those that I find most interesting or those that in which I feel compelled to share my 2 cents. This article on foreclosures and pricing from early December on CNN Money, was sent to me by a past client that is selling a home out of the area. She is also a buyer in Orange County and sees the significant impact that foreclosure pricing has on her view of traditional, or equity, sellers.
It creates an interesting dynamic for her – she is both a buyer and a seller in this market. That dual role allows her a tremendous clarity in the ability to position her listing. She knows that she must price it to compete with the distress 
inventory in her marketplace.
As a buyer, she is also seeing that the although distressed inventory in our marketplace is not always in great condition, the best deals are often in that sector of the market.
As stated by CNN Money, “In California, the median price for an REO listing was $259,000 during the week of November 10, 23% lower than the non-REOs on the market according to Trulia.com.”
With REO’s in the state priced 23% lower than the traditional seller, it definitely puts the price pressure on equity sellers. You must price to compete.
That being said, I have noticed (and discussed here) that traditional sellers do seem to get a higher price per square foot ultimately. The possible reasons? Full disclosure from the seller about past problems, often superior condition, less competition with other buyers because many investors target foreclosures, and the ability to have a timely response to an offer as opposed to the lengthy one in short sale circumstances.
Bottom line – look at your competition. Are there distressed properties in your sector of the market? You may have a bit of an edge as an equity seller, but buyers are looking for a good deal. If you want to sell, you must be perceived as a good deal with pricing that is competitive.
About the Author | Linsey Planeta
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Linsey Planeta
I think the California market is worse than we have here in the Ann Arbor MI area – but areas around Detroit are pretty Bad. I seen my average price fall like a rock over the last several month as foreclosure listings in very good condition are offered for sale at 25 percent or more below the similar homes offered by traditional sellers. Days will go by when I don’t show anything but foreclosure and bank owned homes. The upside is for buyers. As the prices base at new low levels, qualified buyers can get great homes for half price! I am excited for them. Especially, the nurses, teachers etc. that have a modest income that were priced out of the market. Yaeh for them!