The REO Truth.
There is a common misconception that Bank Owned (REO) Properties sell for $100,000 below list price.
Have a look at the following statistics taken from the East Bay Regional Multiple Listing Service.
Contact me for other sales stats you'd like to see.
10/01/10 - 12/31/10
Privately Owned Detached Homes (Under 2,000 sq. ft.*)
| City | # Sold | Average List Price |
Average Sales Price |
Average Over/Under List Price |
|---|---|---|---|---|
| Berkeley | 79 |
$602,320 |
$615,950 |
$13,630 |
| Oakland | 271 |
$393,616 |
$395,960 |
$2,344 |
| Alameda | 41 |
$548,165 |
$536,165 |
$12,000 |
| San Leandro | 78 |
$351,289 |
$345,164 |
$6,125 |
REO (Bank Owned) Detached Homes (Under 2,000 sq. ft.*)
| City | # Sold | Average List Price |
Average Sales Price |
Average Over/Under List Price |
|---|---|---|---|---|
| Berkeley | 8 |
$302,245 |
$294,687 |
$7,558 |
| Oakland | 177 |
$157,980 |
$157,074 |
$906 |
| Alameda | 3 |
$391,566 |
$388,300 |
$3,266 |
| San Leandro | 41 |
$283,303 |
$282,524 |
$779 |
* I used homes under 2,000 sq. ft. to reduce the impact of high-end homes on the statistics. They skew the average sales price for privately owned homes upwards.
Surprise!
REO properties sell closer to list price than privately owned property! A recent trend in REO's is that they are no longer selling on average for MORE than list price. I believe a large part of that is that REO sellers are now pricing at market rather than below market.
What Gives?
Instead of looking at list price vs. sales price, we should compare average sales price:
| City | Private Avg Sales Price |
REO Avg Sales Price |
Difference |
|---|---|---|---|
| Berkeley |
$615,950 |
$294,687 |
$321,263 |
| Oakland |
$395,960 |
$157,074 |
$238,886 |
| Alameda |
$536,165 |
$388,300 |
$147,865 |
| San Leandro |
$345,164 |
$282,524 |
$62,640 |
The table above shows that the average sales price for bank owned properties is significantly less than the average sales price for privately owned homes in these East Bay cities!!
To be sure, there are often condition issues with REO homes that drive down the sales price. However, if you keep an eye out for the ones in good condition, you can find a deal!
Here's the Truth!
What makes an REO property a good deal is the low sales price!
To be blunt, if you shop for REO property expecting to buy it for 100K less than list, you are wasting your time.
Contact me if you want to stop wasting time and finally find that killer deal you've been looking for.
If you are not ready to work with an agent, sign up for my free, no obligation REO email listings, then drop me a line when you are ready for my help.