BiggerPockets

I saw another post talking about California REO's... It was saying banks were not accepting any less than 90% of the current list price.

Seems too high to me...

I thought 90% was quite high...

But what they also said is that amount is based on the new lowered (depreciated) values... So homes may have been selling at 100k more only a year or so ago.

Still... Today's value is what they are worth... Not 2 years ago value...

So 90% still seems way up there to me... Especially when some are saying California has not reached the bottom yet.

Heck, I can't remember the last time I bought ANY house at 90% of its value!

Take care!

75%-85% sounds about right.

Also if the have a loan that is 80/20.
Usually the 20 will be forgiven and the 80 could become 75.

maricelaLugo :superman:

It's in a free fall cause it's a second home for most people. People can't really afford a second home in the Bay Area, it's usually out of the Bay Area, like Stockton, Los Banos, where you see a lot of forclosure. Median home price in Santa Clara County is 750K.

Tracy and John-- I agree with you both.

Short sale pricing is tricky, though the banks DO try to accept 90% CV, 90% CV at the beginning of negotiations isn't the same as 90% CV 3-4 months later because of the steadily declining market. You'd do well to put in a clause in the contract that drops the offer by a certain percentage each week the property is on the market.

Banks sell short at 80-90% of current market value. The trick is to get the bank to sell it for 80% of distressed value and resell it for 90% of retail value.

You know the value is determined by the BPO agent. I know the "GURUS" talk about being there for the BPO and influencing it if possible.

Well, the BPO is the most important factor. BUT here's what the GURUs don't tell you.

The hard part is influencing the BPO agent to value the property as a distressed 30-60 day value. There is a lot of pressure on the BPO agent not to use distressed properties (REOs/Foreclosures) in their comps. If they do, they are guaranteed a "Quality Control" audit. They are scored on their work and may not get more BPOs from the clearing house if they do not maintain a certain score.

What can you do about this?

Maybe nothing just be aware of it.

Try talking about the home owner's hardship and how they REALLY need this deal to go through. You've got to give the BPO agent a reason to buck the system.

*******************************
BIGGEST TIP OF THE DAY........
If you wait till the BPO agent arrives at the property to try to influence the valuation,........ You're too LATE!

She has already got comps and has formed an opinion about the property's value.

You've got to tell the bank to have the BPO agent call you 24-48 hours before. Talk to the BPO agent, build rapport. Ask how many BPOs they do. Ask for an email so you can use their service in the future. SEND her a friendly email ASAP and enclose some area comps for her convenience.

Good Luck!

In SoCal areas (LA & OC) most properties under $417,000 are selling at, above or close to list price. The banks are listing properties quite low and attracting multiple offers...unless the places is a real dump and no bank will loan on it. Honestly, I don't see that many deals. I think most people buying single units are owner-occupied, not investors. I think the only real deals are when you can get them directly from the bank but you've got to have very deep pockets and buy in bulk.

Also, the BPO is KEY! I just had a deal get rejected because the agent who did the BPO was on drugs or something and gave the bank a value way too high.

I have to agree that in (OC,IE) the shortsales go for 75-80% current value.

I work for a company that does short sale flips and we get good money for 15-20% margins

If you are in California, check out Senate Bill 1737 which makes it illegal and a possible suspension of a RE license if the agent inflates the BPO with the hope that it will go to REO and they will get the listing. It is also illegal for the agent to send anyone who is NOT licensed to just take pictures for them and then submit their report as their own BPO. If either is the case, you can challenge the BPO and get a new one. Good luck! Mike- interested in a negotiator position earning more, using your loss mit experience?