I hear from buyers frequently that are interested in buying a foreclosed home / bank owned property. Sadly, in the under $750,000 market, the competition is brutal. Many times those with 20% down or more will trump those entry level buyers with FHA or VA financing. Even with a strong, high down payment offer, the process is very challenging, listing agents are inaccessible, and offers go into an email black hole.

If you are frustrated, you are not alone. Buyers and agents alike are very discouraged. This video animation done by SanDiegoCastles, is a tremendous illustration of the consumer frustration that abounds.  If you ever need help in San Diego, Kris Berg is your gal.  Love her!

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.

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