A common reason for having a house listed for more than the current owner paid for it is, simply, because that’s how much the owner needs to get if he wants to get out unscathed (without sacrificing his credit rating and his bank account). Like everywhere else in bubble developments, many owners in Bressi started with 0 to 10% down, usually with interest-only loans, sometimes with option ARMs, some of them refinanced or took out additional loans.

If you see a house listed for 799k that was purchased for 715k, the seller probably owes 700+ on all his loans combined, and he needs 40k to pay broker commissions. There’s no point in making an offer of 650k, because it would require a short sale, and it wouldn’t go through unless he defaults and ruins his credit rating (precisely what he’s trying to avoid now). He will probably default sooner or later, but you have to wait.

Your agent should be able to pull loan information on any house you’re interested in, it should tell you if low-balling has a chance to succeed, or if it’s hopeless.