Repo Buyers…You Need to be Ready

Westcoe Realtors, Riverside California…A quick note to just keep everyone on the same page with regards to purchasing a bank owned property in our Riverside area.  It is really important that every potential purchaser understands the following, since it can either make or break your purchase and subsequent escrow.  Failure to fully “get” the following will simply lead to massive frustration on the buyers part, and potentially missing out on the best home purchasing market we have seen in over a decade.

Simply put…YOUR MARKET FOR WELL PRICED REPOS IS HOTTER THAN ANY MARKET WE HAVE EVER SEEN, AND UNLESS YOU ARE PREPARED TO COMPETE WITH THE MULTITUDE OF OTHER REPO BUYERS ON YOUR OFFER TO PURCHASE, THESE GREAT BUYS WILL PASS YOU BY.

I don’t care what the newspaper, radio, or late night TV may be telling you about the real estate market, but here in the greater Riverside area, all of our agents working with bank repos are receiving multitudes of offers on most of their well priced repos…and by multiple offers, I mean approximately 10 offers (on average…some considerably more, some less) on each property.  It is a feeding frenzy at the entry level pricing range, and unless you are prepared to “step-up to the plate” when you make your offer, you are destined to see other buyers get the property you want.

What we mean by this is the following:

1.  On the well priced repos, the price is already discounted relative to other properties on the market…YOU CANNOT CUT THE BANK LOWER JUST BECAUSE IT IS A REPO.  The banks aren’t stupid in this area, and you will get killed by other buyers who understand this concept.  Save your “price cutting” for the repos that are overpriced…the well priced ones need to be accepted at their face value.

2.  Offering full price but asking the bank to pay thousands in costs is not a full price offer.  The bank works on net dollars, and trust me…they know the difference between a full price offer, and a full price offer where the buyer is asking for $10,000 in costs.  Like I said…if the bank is smart enough to price the home well, they are smart enough to pass on your $10,000 request for loan costs.

3.  BE PREPARED TO OVERBID ON REALLY WELL PRICED PROPERTIES.  As noted earlier, when there is an average of 10 offers on a property, someone is going to bid over the list price to get the property.  In many cases, banks are deliberately pricing some homes lower than what the market will bear to encourage competitive bidding by buyers…so don’t get locked into the list price as the ultimate price.  Have your agent run comparable sales for the home, and if that data shows the property for sale is worth more than the list price, then so be it….you may have to pay more than the list price.

4.  Psychologically, you must get past the thinking that this is a down market and therefore you can wield a big sword when it comes to buying a home.  That may be true in the upper range price levels, BUT IN THE LOWER PRICE RANGE, THIS PRICING DECLINE HAS MADE HOUSING AFFORDABLE AGAIN FOR A LOT OF PEOPLE…YOUR COMPETITION.  Think about it…10 buyers and 1 seller…what do you think the seller is going to do?  Of course…they will take the highest offer from the most well qualified buyer.

5. Lastly, if you are freaking out that you are paying too much for the home, remember the following two things:  1) Take a look at what your potential new neighbors paid for their home a few years ago if you think the current repo price is too high…and 2) in 5 years you will laugh at feeling like you paid too much for your home.  This market is no different from other markets…they all rebound eventually.

Good luck, and if you really “get” the above, you will find your house purchasing process much more sane and less stressful…if you don’t “get” the above, then prepare yourself for a long and frustrating process…because the ones who do understand what is happening will continue to buy the houses you want.