I believe currently there is a very unique situation in the housing REO market! This is from my own experience currently working with my Agent who specializes in REOs.
Most old timers that have been in the industry for 20 some odd years have a train of thought that Short sales are better deals and allow bigger discounts but this is not completely true from what we are experiencing. Currently the banks after failed auctions are on life support!
Today foreclosure market is flooded I repeat FLOODED with foreclosures mostly purchased with subprime and most at peak prices which I know you already know from reading your previous posts.
The homes being listed right now after auctions failing are coming back on the market lower than the failed attempt at the court house at a discount rate about 35-25% below the first loan taken out on the subCrime loan. We currently have purchased a rental property for 29% below current comps after negotiating for a month as the only offer submitted. The bank needs to sell! They don’t want the property sitting so they are the most desperate position and have bigger pockets then your neighbor’s home purchase in 2003 – 2006.
Currently there is a home that we have fallen in love with that we intend to live in for the next 10 years is a week away from being accepted at 32% percent below current comps. With these homes there absolutely not home warranty included and completely sold as is so a very good home inspection is a life and death decision for us. Also it is very difficult to find an agent who understands the REO process and also there is a chance for the agent to not get the commission they are looking for! Hence the reasons they are avoiding showing them to their buyers.
If you really want to work with an Agent who understands the REO market Google Leo Nordine out if southern CA. This guy understands where the REOs should be priced before the haggling starts. Read his comments in the LA times recently in August about the market.
He recently told me are you sure you want to buy right now? That’s a good listing agent!!
