Savvy Buyers Snapping Up Under-Value Homes

By Alicia Lanier, REALTOR

Grim housing news aside, there are Silicon Valley buyers who know a good investment when they see it and, as a result, it’s not unusual to again be seeing multiple offers on a bank-owned property or other home that is priced under comparable homes in a neighborhood.

Last week I heard about a colleague who received … count them … 100 offers on a bank-owned property he had listed. And I have personally represented clients this summer who either participated – or were scared off by – multiple offer bidding on a property. Part of this results from the skyrocketing number of foreclosures, which can be a real bargain for buyers who have been previously sidelined by pricey homes in the Silicon Valley. Amazingly, in some San Jose areas, we are now seeing single-family homes under $200,000.

Before running out and chasing foreclosed properties, make sure you are pre-approved and have sufficient money available to put down a reasonable deposit; you need to be pre-approved by a reputable lender; your offer should contain reasonable, straightforward contingencies and the offer should specify a closing date that is within a reasonable amount of time. The combination of these factors can position you as a stronger buyer in the eyes of the bank. And use a real estate professional … this is no time to go it alone.

Also, be aware of the pitfalls! Determine all fees associated with purchasing the property. There may be hidden fees like liens, unpaid taxes, penalties, etc. to contend with. How low will they go? Lenders may not be willing to negotiate the price down from market or close to market. This is especially true in areas where home values have fallen further than lenders want to acknowledge. Be prepared for a counter offer. Because the sale of bank-owned properties are becoming increasingly popular and therefore, competitive, we are seeing cases in which banks are countering at an amount that is above the original list price. These actions can discourage some buyers who thought a bank-owned property automatically meant a bargain.

TIP: Coldwell Banker has just published a new Guide to Purchasing Bank-Owned Properties. Contact me today for your free copy. I’ll also be happy to provide you a free list of bank-owned properties (complete with photos and details) for any Silicon Valley neighborhood or community … just ask!

Alicia Lanier is a REALTOR, e-PRO, and member of the Coldwell Banker Sterling Society which places her among the top 11% of agents internationally   Contact her at Alicia.Lanier@cbnorcal.com or 408-491-1634