Brandon Nelson

How REOs and Short Sales Affect the Market

How do REOs affect the overall real estate market? Well, more and more, in my experience, they can steal the thunder from non-distressed, “regular” listings by either coming on the market markedly below market value, or if they’re not selling they can suddenly drop the price through the floor and garner a flurry of offers. (The first three REO offers I helped clients make this year were 1 of 4, 1 of 4, and 1 of 7 offers on the properties, respectively. We ended up getting two of those three.)

So if you’re a seller, and suddenly your neighbor’s house with the same view and similar size and layout comes on the market as a lower-priced REO, is that going to steal some buyer-traffic and interest away from your home? Very probably.

If you’re a buyer, and you see an REO in the neighborhood you want to be in, offering 3% closing costs and a 2-year home warranty with any acceptable offer, are you going to focus your attention on that home? Very probably.

Now, there’s no need to panic. We’re not talking Martian invasion here. But it certainly warrants knowing your neighborhood stats and whether distressed home listings and/or sales are ubiquitous enough to affect your buying or selling strategy.

Let’s look at some numbers:

• Total number of detached single family, sold REOs in the past 6 months, in B’ham and Sudden Valley: 51.
• Total sales of non-REOs, same time frame, same areas: 557.
• Highest REO sale price: $675K.
• Lowest REO sales price: $99.8K.
• Average REO sale price to list price: 99.68%!
• Average sold REO price per square foot: $134.14.
• Average sold non-REO price per foot: $161.88.
• Total number of active REO listings right now: 22.
• Average price per foot: $126.83.
• Total number of non-REO listings right now: 489.
• Average price per foot: $199.91.  

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This entry was posted on Sunday, January 31st, 2010 at 11:25 pm and is filed under Market Info. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Jeff Green wrote on February 3rd, 2010 at 12:00 am

   This is a timely REO article! I needed this kind of information. Thanks for sharing. Looking forward for more updates.

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