Hi Lookyloo,

Have you found that San Ramon/Danville home at 60% off the list price yet? On the very local level I service (San Ramon/Danville/Blackhawk/Alamo/Diablo) market sales have significantly improved in July and August. Buyers are out there and sellers are receptive to offers. Price reductions of 10 to 15 percent are not unusual. Short sales and REO's are also moving as lenders start understanding how to handle this unusual market. The federal bailout of Fannie and Freddie is also improving lending rates. This is a dynamic market as buyers, sellers and lenders start working with each other to get homes sold. I would encourage anyone looking in premiere locations to contact me or your Realtor to get a full understanding of where we are right now and what options are available right now in your favorite areas. Please don't expect the 60 percent reductions ...... those homes SOLD at a 20 - 25 percent discount but, hey, that's a great price in this ever-changing market. I hope this paints a realistic picture in this exceptional Buyer's Market.

Let's go home hunting!

One thing to keep in mind is that a well priced home will sell regardless of the market. So homes that are sitting for a long time as a REO basically means that it is either overpriced, in a bad location, or in very bad condition. My point here is that you may want to reconsider offering on a home that is already priced low and not selling. Unless you plan on staying in the home for a long time it probably would not be a prudent investment.

Clearly the Short Sale and REO are two different items. The Short Sale very likely can be on the market for a very long time as offers are brought in and attempts are made to negotiate with the Lender(s) for an acceptance. One of the problems with the short sale is the length of time it may take for the Lender(s) to review and assign negotiators. What I have experienced personally is a short sale transaction where the buyer just cannot wait and is forced to select another property. There is a window of opportunity as the short sale subject property has negotiator(s) assigned and before the property is sold by the trustee as a foreclosure. This is where discounts off the "listed" price become realistic as the lender will take a shot at clearing more funds than they may receive from a foreclosure. Each lender is different and there may be advantages to the Lender to allow the property to go to foreclosure due to particular accounting practices.
An REO is much more clear, most REOs in the Danville that are in this price range move quickly as they are typically priced very competitively compared to like properties in the same neighborhood. An REO that doesn't move quickly has a serious problem with the price/value relationship. Good luck! Do not fear the short sale, there may indeed be extraordinary value there.

Hello,

It can really depend. The banks are motivated to sell the inventory, but at the same time they are looking to ensure that they can recoup as much as they can. When presenting and offer, any offer, having a list of comparables and well as a letter indicating why you are offering below asking (does the property need work?) will be a good idea to help support your offer price.

Until there is something in writing, nothing can be negotiated. I would suggest you work with your Realtor to put together the offer, your reasoning for the offer price and see what happens.

Lisa Cartolano
Alain Pinel Realtors

It depends on the bank, the negotiator,the time of month, and their "broker's price opinion". I have successfully presented comparable sales to negotiate a lower price. All you can really do is try, fwrite the offers and counter offers, with patience, ind out what the bank's lowest possible price is. Then you can decide if it is low enough.

Thank you...all great answers and good info. My problem is I sold my house in July last year, right before the big drop (WOOHOO!), and have been renting since. Now I'm a little tired of renting, and am starting to surf the market. Can decide if I want to extend myself and buy a really nice pricey home (dangerous, but deals are abound!), or settle and buy a cheapo ranch home in the San Lorenzo area (fully paid in cash) and be rent free....decisions, decision....
Thanks again. You'll probably see more of my inane questions in the near future. :)

I work in So Cal where there are also Million $ homes that have gone REO. When you see long time periods on the market (at least in our MLS) it is usually the CDOM or cumulative days on market that hit these highs. In the case of some homes, this long marketing cycle is the result of:
1. Seller sees he is getting into trouble and lists his home (usually too high) to try and pay off the bank and get some moving money. And the home does not sell, so......
2. Seller defaults on his loan and is now serious about getting out from under the home, so he reduces his price (usually not enough) and tries to sell again. And the home does not sell, so.....
3. Then 90-180 days after he defaults, the bank files a notice of default (NOD) and seller drops his price again. Now he is in a 111 day foreclosure cycle, but still not willing to do a short sale, and the home does not sell, so.....
4. The seller gets close to the end of the NOD period or may even waits until the Notice of Trustee sale is recorded, panics and decides to do a short sale. He lowers the price way down, after all now he is not going to get anything anyway, and gets an offer submitted to the bank for short sale. If the bank is willing to consider this offer, it will usually postpone the Trustee sale while it reviews the package, which could take 60 - 120 days. If the bank denies the short sale, then.....
5. The bank forecloses on the property and it becomes an REO. Many REOs take 30, 60 even 90 days to get on the market (the banks are really backlogged and have procedures they need to follow) and then the property is re-listed by the bank's realtor as an REO. In our MLS, the property has to be off the market 90 days (I have heard rumblings they are going to increase this, but I am not sure if they have), however in this scenario lets assume that the bank make it on the market in 75 days, so the CDOM keeps counting.

Here is the math: 60 days + 90 days + 90 days + 60 days + 21 days + 75 days = 396 days CDOM on the first day of the REO listing. A good realtor can give you the history of what has happened in this time period, but the most important question is, WHAT IS THE RIGHT PRICE FOR THE HOME TODAY?

To get that answer, and to negotiate the best deal possible, you need to work with a great Realtor who knows your area. I don't, so I can't give you the information you need. I do, however, know a great agent with over 20 years experience in your area and I would highly recommend, if you are serious about buying, that you speak with her. She is a top level negotiator and knows Danville like the back of her hand. Let me know if you would like her name and contact information.

Keep looking and I am sure you will find a great home, at a great price and negotiate a great deal. And Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty

These are all good answers. I'm going to approach this question from a differnt angle. The old adage really does ring true ..Location, Location, Location. If a buyer expects to pick up a REO or short sale at 50 - 60% off the listing price in a highly desirable location (say Danville), that person is not being realstic. One thing I have learned in real estate, both parties have to get something out of the contract. No one party will get everything they want. Banks are anxious to sell their inventory and they do rely on agents to provide real, current sales information. Any property that is still available after a year is simply overpriced. An experienced agent will bring both parties together and a both parties will be pleased. If a sale is not made, one of those parties is unrealistic. It's the agent's job to set realistic expectations via copious data to both parties. I hope this adds to the discussion. I'm always available to discuss these kinds of questions further. It really is a great time to buy!

I have sort of a different take. If a house is on the market as either a short sale or REO with no offers for a year... there is something wrong with that list price. Banks will assure themselves homes are bought at market value. Obviously list price is NOT at or under market value or people likely would be buying. A list price that gets no offers for a year, or doesn't result in a sale, is a wrong price. ALL my short sale listings with the exception of one multi-million dollar property, has multiple offers... the bank gets an appraisal and almost NEVER will sell it less than "market value" but appraisals do account for a declining market at times, so may be slightly lower than today's market, as they know closing may be months away... I'd say don't be afraid to make an offer, but know what market value IS... what have homes actually sold for , and when, in that general vicinity?

I can see you getting away with anywhere between 15-25% off but once you start going beyond 50% the bank might as well drop the price 25% themselves and get major action and unfortunately even though these homes look like they are sitting with no action for up to a year in the background there has been significant lowball offers coming through. What you need to do is align yourself with an agent that builds a relationship with the selling agent so they can feel out the situation before any offers are put in. If I can help further you can reach me at ajcohen@apr.com or 925.819.2747.
Thanks,
AJ Cohen