REOs are popular - particularly if you're a buyer with a whole lot of cash who can outbid the other prospective buyers. But it doesn't necessarily mean that REOs are a good deal. Take this example in San Clemente...
137 Avenida Adobe, 92672
Asking price: $389,000
Previous sales price: $44,687 (bank)
Previous sales date: 6/9/09
| Beds: | 2 |
| Baths: | 2 |
| Sq. Ft.: | 1,190 |
| $/Sq. Ft.: | $327 |
| Lot Size: | 1,199 Sq. Ft. |
| Property Type: | Condominium |
| Style: | Contemporary/ |
| Stories: | 2 |
| Floor: | 1 |
| View: | Ocean |
| Year Built: | 1973 |
| Community: | San Clemente Southeast |
| County: | Orange |
| MLS#: | F1814687 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 83 days |
There is only one photo with the listing. The previous sales price prior to the bank repo was $500,000 in 2007 - in other words, $420 per square foot for the 25-year-old condo. Obviously, that sales price was not sustainable and now the bank is asking $111,000 below the sales price from two years ago.
But is the current asking price actually a good deal at $389,000? We seem to be programmed here in So Cal, particularly Orange County, to assume that anything below $400k is "cheap" by comparison to the many expensive properties.
But let's look at the 1999 sales price - a decade ago, this property sold for $157,000.You might believe real estate was at least a bit overpriced then, which is a fair argument. But for our sake here, we're going to assume that sales price was a totally fair price back then. For the current asking price of $389,000 to be the "true" value of the property today, the property would have had to appreciate by about 9.5% per year, every year in the past decade from 1999-2009.
Bubble or no bubble, nearly 10% per year is incredibly high. Still, we wouldn't be surprised if someone eventually steps up to buy it for (almost) that price.
1 comments:
What I've heard is if a bank gets an offer for a property and the cash buyer is lower than the highest offer which is a financed deal, the cash buyer typically will win the deal.
The banks don't want to risk the deal will drop through and find comfort in knowing its "for sure" with the cash buyer.
Maybe others in the industry can add their inputs..Thanks.
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