This week I submitted two offers for REO properties for two separate clients. One was a single family 3 bedroom 2 bath home in Santa Clara that was listed at $400,000. The home was in poor condition but the price reflected it. My experience with REOs (bank owned properties) is that they are seldom i good condition, so a little extra work was no big deal for my client.
We submitted an offer at $407,000 and there were 4 other offers at that time. In this Santa Clara neighborhood alone there were 3 other bank owned properties on the market, the next lowest in price was $461,000 and needed just about the same amount of work.
The response from the seller was a highest and best counter in the form of an email. For those of you who are unfamiliar with this strategy, the seller comes back to all the interested parties and asks them to submit their highest and best offer. We responded knowing that this home was under priced and offered $420,000 as our highest and best. That was 3 days ago and are still waiting for a response from the bank.
The other property was in the San Jose East Valley. A 3 bedroom two bath home listed at $225,000. There are a number of REOs (bank owned homes) in this part of San Jose. Most need quite a bit of repair and have unpermitted additions, converted garages and all sorts of code violations. A unique characteristic about this San Jose REO is that it only had a garage conversion that could easily be converted back. Other than the garage conversion the home was very close to move in ready and was certainly the best home in that area of San Jose for the price.
This San Jose REO received a total of12 offers. We are currently awaiting response from the bank. This experience is very common as active buyers in Santa Clara County that are targeting these REO deals have slim pickings for homes that do not require too much repair. As a result, they often get quite a bit of interest when priced low and will often sell at market prices. This is not to discourage you from trying, rather to set your expectations on pursuing REOs.