Home prices went down by 25% from peak?

[jimmyle]

Some body paid $635K for the following house and now it is listed at $539K. I think they are lucky to get $500K for it. I have seen numerous examples like this in Mira Mesa.
http://yahoo.prudentialcaliforniarealtyonline.com/details/start.aspx?Results=true&propid=0090076025695
Wouldn’t it be nice if price for this house drops to $400K in one or two years, which according to all the data presented in this website is entirely possible.

[jimmyle]

I meant some body bought it at $618K, not $635K. So the drop is about 20% not adjusted for inflation.

[Bugs]

The bank is a motivated seller. They “must-sell”, and they must sell right now. Their problem is that there are two other active listings of homes in the same size/age range in the area; one at $545k and another at $557k. Tha bank has priced this home so that if there is to be a sale among these 3 homes their property will be the one to sell.

At this point, nothing else really matters. The loan on this property is/was $520k, and it costs them money to carry a vacant house. Not counting the costs to foreclose on the house, they’re probably losing ~$3,500/month on this loan (taxes, insurance, maintenance fees, etc). For every 3 months it sits on the market their losses increase by $10k. They can’t afford to be wishy-washy in their marketing.

[an]

It’s a REO property. I think it’s entirely possible that it will see the same trajectory of decline in the next 1-2 years since this and next year will see the largest loan reset, which would cause a higher foreclosure rate. Which means banks will price REO property more aggressively. We’re no where near the bottom and there’s no reason to think the trajectory of decline will flatten out. We’ll just have to wait and see. A house 2 doors away also got a NOT. It was auctioned off a week or 2 ago. I doubt that there’s any taker since it was the 2nd that was foreclosing it. Anyways, if that property went into REO, then you have 2 similar property 2 doors away competing against each other. The question then would be, which bank is more serious to sell.

[jimmyle]

I didn’t know there is another foreclosure near by. I love to see these foreclosures. My fiancee said that I am an “ambulance chaser” because families get evicted in these cases.

[no_such_reality]

I thought REOs didn’t need the same disclosures are regularly sold houses. A greater discount is needed to cover the uncertainty and lack recourse in the event of major issues or patch camoflaged repairs.

In non-REOs are going for $550K, then $430-$450K is about right for dealing with the REO.

[sdrealtor]

NSR,
The discount is no where near that high at least for the time being. In fact, buying an REO has some sex appeal to many people and it is not that unusual for them to sell for equal prices.

[no_such_reality]

SDR, I would agree, however, historically, it is that high and there was a reason for it.

We’ll get there again, but as you said, right no, buying REO has a sexiness to it, when they’re done shearing the sheep, REOs will go back to being business as usual.

[SD Realtor]

Yep REO pricing is not near what it should be but it will come down eventually. I represented a buyer for an REO recently and while the release of liability documentation that they sent the buyer was quite substantial. It is not that they are released from the disclosure process. However, because they did not occupy the home, they have no clue about the disclosures so they have nothing to disclose. They do submit documentation to the buyer releasing them 100% from any future findings be it mold, any faulty construction, code violations, pretty much EVERYTHING…

Buyers of REOs should know this.

SD Realtor

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