REO agents using low prices like chum to attract buyers
June 17, 2011
Recently I’ve noticed a trend with bank-owned listings. It seems the listing agents are pricing their foreclosures way lower than the bank would ever accept in order to cause a feeding frenzy to ensue.
I liken it to chumming to attract sharks or larger fish. Once the sharks or home buyers and investors have arrived on the scene the biggest shark or buyer with the highest bid wins.
The point being the price is nonsense and is only used as a tool to attract or cause a frenzy of activity. Ultimately, the majority of buyers lose when bidding on REO’s. Only the savvy buyer who understands the game has a chance.
I’m going to crunch some numbers and see if this theory holds true. I’m going to check out recent sales in one geographic area and compare the list price vs. sale price for both traditional sales and bank-owned properties. If my theory is right there will be a significant difference between the two types of listings.
Having this information available could help foreclosure buyers understand what sort of offer is necessary to have a fighting chance at winning in a bidding war. Give me some time and I’ll have the data up.