Foreclosed Homes in Florida Priced Too Low

There are three ways a foreclosed home can be priced by the seller. I will post three mini-blogs on Too Low, Too High and Just Right. Here is the first . . .

Too Low - Sellers that get bad information from the appraiser and real estate agents, will either price too low or too high. Some sellers price low because they are up against a clock when it comes to selling properties. Don't fall into the trap of offering less on a foreclosed home that is priced too low. These homes receive multiple offers. We just finished one where we had 12 offers. Of the 12 offers 8 of them were higher than the listing price, 2 of them were lowballs and 2 of them were at the listed price.

Offering More Than List Price - If you are an investor, then you have the luxury of making offers on many properties until you get lucky, so you may not have to offer more, because you can wait. I tell my investor clients to make their offers based on the numbers after calculating rent and expenses. It is a pure black and white decision.

If you are going to live in the home, you need to consider when you need the home and how much you want this home. If you need a home fast, and you love the home you are looking at you will need to offer more than list price on homes priced too low. But even more important is
FINANCING. If you are a cash buyer, you have a huge advantage over buyers that still need to finalize financing. I've seen banks sell homes for 20% less than the highest offer, simply because the guy offering 20% less was all cash with no financing contingencies whatsoever.

Do Your Homework - When you do offer more than list for a home, make sure you have spent time with your real estate agent discussing comparable sales in the neighborhood and whether the local market is increasing or declining in value. This latter issue is huge. If you are considering a market that is declining in value, I often advise clients to rent for 6-12 months. If you are in a market that is increasing in value, you must consider beefing up your offer.

Smiles or Tears - The saddest thing we see, is when a buyer has their heart set on a home, but they refuse to offer more than list price. Here's a perfect example. I was working with a couple that thought I was trying to "rip them off" because I was urging them to offer $82,565 on a home foreclosure home listed at $77,000. And here's why . . .

The listing agent had already acknowledged that there were multiple offers. The listing agent can NOT tell me or anyone else what the offers are. All she could do is tell me there were other offers. My clients only wanted to know what the other offers were so they could offer more.

My clients also wanted to know how I came up with $82,565, so I explained. After reviewing comps in the area and taking into consideration my clients' immediate need for a home, I thought $82,500 was a fair offer. I boosted it up $15 just in case someone else came up with that same round number I did. By the way, we always recommend our clients offer just a little bit more than any round number . . . just in case there is another identical offer.

Deal or No Deal - Finally, my clients decided to use another real estate agent because that agent put together a contract at the $77,000 list price. I think you already know what happened. There were 7 offers on this property. My former client's offer was the lowest. The home sold for $82,000, and there was one offer at $84,000. If they had offered $82,565 as I suggested, they would have been living in that home now.

Next - I will be writing about Too High and Just Right. I will also be writing about the importance of Cash v. Financing offers.

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