I e-mailed a client of mine yesterday to share the news of two bank-owned (REO) listings that had just hit the market in Sudden Valley. Both looked interesting to him, so he wrote back and asked of each, “What could I buy it for?”

Not at all an uncommon question from ANY buyer, not just buyers of bank-owned real estate. Of course the answer is “It depends.” The best one could hope for is that, somehow, I happen to be best friends or even family to the particular asset manager who’s handling the liquidation of the home for the bank. I might get him to slip with a hint about the rock bottom price he KNOWS the bank will accept.

But that’s not likely. It’s not likely the asset manager is even in WA State.

What I CAN do is look at data that shows what other bank-owned properties are selling for, and give a report on the statistical odds of a sale at any given price. At the end of the day, though, the only way to tell is to put pen to paper, write an offer that utilizes every one of the Ninja Tips and Techniques for strengthening that offer, and see if the seller takes it. I’m sorry, but it’s really no more mysterious than that.

Let’s back up a second, though, and take a look at that current bank-owned-property-sales data off the NWMLS:

Bellingham and Sudden Valley REO Stats, October 18, ’09:

*CDOM = “cumulative days on market”

If you look at the last two figures in the table, the list price and the sale price of the average Sudden Valley and Bellingham REO, you realize that, on average, these properties sell for very close to full list price. 98.19% to be precise.

But there are certainly outliers. There are those that sell for well ABOVE list price. The two most expensive properties on the list, for example, closed at over 110% of list price!!!

There are also ones that sold for a deep discount, as low as 84.91% of list. That was a listing that started at $305K, eventually dropped to a list price off $265K, and sold for a mere $225K. Of the 40 bank-owned homes that sold in the last six months, exactly 1 out of 10 sold for less than 90% of list price.

I was recently involved in the sale of a bank-owned property that closed for over 118% of list price, and it appraised for 119.5% of list price!!!

So my advice to my client who’s curious to know what either of these REO’s would sell for? Two things:
1) Decide if one, both, or neither is the home you’ve been waiting for all this time, and if the answer is yes, then…
2) Offer a price on your favorite of the two, that balances your happiness if the seller accepts it, with your disappointment if you lose it to someone else.

What advice would you give him?