REO vs. uninformed buyers

[Jay M.]

Hello All,  I have a question regarding bank fantasy pricing vs. buyers totally overpaying. 

This is the scenario. Bank bought back foreclosure, loan amount was for $208k a couple years ago. Buyer realized he overpaid by approximate value of two brand new trucks....and walked without doing a stitch of work. Bank is pricing it at approx. $245k. Market ARV is realistically $270k. It needs about $80k worth of work and that doesn't include any margin or profit. Realistic buying price is about $136k vs. bank asking price of $245k...and that will give you 20% profit if you're lucky. (I'm in construction, I know pricing)...

This has been on the market for 6 months.  My question is this..........  What will give first in this situation.  Will the bank realistically price it eventually or will some uninformed dreamer cough up the money again and lose $80k?

[Kyle McCorkel]

@Jay M. The banks always price their properties for the uninformed primary home buyer. I frequently see those kinds of numbers where if I were to do the math my offer is less than the banks asking price. Many times it sells like that to the uninformed buyer! Sometimes it is an uninformed investor, or an investor that doesn’t value their time. So they will get it for $10k more than me and either blow the budget on the rehab or do all the rehab themselves to “save money”, while spending 6 months working on the property and paying themselves $5/hour.