MYTHS ABOUT BANK OWNED REO FORECLOSURE REAL ESTATE

MYTHS ABOUT BANK OWNED REO FORECLOSURE REAL ESTATE
There is so much garbage in the media about foreclosures and short sale that it is turning into the real estate folk lore.

Author: Carl Medford, a practicing Realtor with Prudential California Realty in the San Francisco Bay Area

Beginning in 2007, foreclosures rocked the real estate world. Like an out-of-control freight train, they began decimating the market, peaking in 2009. Myths and rumors began propagating like mushrooms as consumers struggled to understand the new reality. Although many misconceptions have come and gone, we still encounter five myths on a regular basis.







1. There is going to be a flood of new foreclosures to the market.

This rumor has appeared every year since 2008 and has been routinely debunked. However, recent announcements that the Feds reached a settlement over the robo-signing scandal have reignited speculation. The idea is simple: Since the cork is now out of the foreclosure bottle, we’ll soon see another flood of REOs inundating the marketplace.



My personal opinion: don’t hold your breath.



Banks have learned that if they control inventory, they can affect local prices. By releasing homes in measured amounts, they realize higher prices than if they released a glut of homes. In addition, they’ve learned that if they can mitigate their losses by agreeing to a short sale, everyone wins.



2. You can go directly to a bank to buy a foreclosure.

Every few weeks I’m asked how to buy foreclosures direct from a bank. Someone knows a friend being foreclosed on and they want to step in and grab the house before it hits the market. Don’t we all? In reality, banks have a simple system – they first offer properties on the courthouse steps. The rest they assign to asset mangers who then hire local real estate agents to put them on the market along with all the other homes. Want an REO? Pay cash at the courthouse steps or get in line witheveryone else when they hit the local MLS (Multiple Listing Service).



3. You can get a killer deal by submitting lowball offers on foreclosures.

You would think this myth would be dead by now. Unfortunately, like Elvis sightings, it just won’t go away. Here’s the truth: Banks want REOs sold in 30 days or less, so they typically appear on the market priced slightly under comparable properties. If the property doesn’t sell quickly, the bank will lower the price after about 30 days. Lowball offers are ignored and are, quite frankly, a waste of everyone’s time and effort. You might get a deal by offering a lower price on a foreclosure that’s been sitting on the market for more than 90 days, but remember that there are good reasons it’s gone unsold for so long. And even if you have cash, your lowball offer won’t be accepted —seriously.



4. You can’t use foreclosures when doing an appraisal.

Or short sales, for that matter. That is no longer true. In fact, in many neighborhoods, that’s all that’s there. Therefore, foreclosed or distressed sales represent the actual value of homes in the area and HAVE to be used to appraise other properties. Don’t like it? Get over it. Times have changed and the ways neighborhoods are valued have changed as well.



5. Foreclosures are only affecting the bottom end of the market.

This used to be true. However, while foreclosure rates on the lower end of the market have actually decreased, they’re actually increasing on the upper end. According to Daren Blomquist, vice president of RealtyTrac, the market share of foreclosed homes under $1 million is shrinking, but those among properties valued over $1 million are rising – up 115% since 2007. And foreclosures on properties valued upwards of $2 million have increased by 273%. While some well-known jet-setters have melted down and lost everything, others are choosing to strategically default. They see it like liquidating a poorly performing portfolio – they have enough resources to cut their losses and move on. Historically, banks have been reticent to foreclose high-end homes and absorb a large loss, but defaulters are now forcing their hands and mansion foreclosure rates are moving on up.



Myths control behavior, and this has never been truer than in the housing market. Savvy agents will work hard to educate their clients, debunk myths, explain market trends, educate with solid facts – and actually close transactions.




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(Mapped)
Price: $300,000
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Listing information courtesy of MICHAEL SAUNDERS & COMPANY.
MLS# A3947340
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 1
Partial Baths: 1
Square Ft.: 860

5912 MIDNIGHT PASS RD C 207, SARASOTA, FLORIDA 34242
(Mapped)
Price: $305,000
2/2 in the "C" building at Surf and Racquet. Great opportunity to get your foot in the door at one of Siesta's best short tern rental condos. Located in the heart of Crescent Beach. Awesome ammen ...
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Listing information courtesy of RE/MAX ALLIANCE GROUP.
MLS# A3941197
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 830

5911 MIDNIGHT PASS RD 304, SARASOTA, FLORIDA 34242
(Mapped)
Price: $305,000
Short Sale" approval of lender may be conditioned upon gross commission being reduced. Reduced commission will be split 50/50 between listing and selling brokers. If you are looking to own a peice of ...
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Listing information courtesy of ERA WATERSIDE REALTY.
MLS# A3942769
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1447

5855 MIDNIGHT PASS Rd 520, Sarasota, FLORIDA 34242
(Mapped)
Price: $309,000
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Listing information courtesy of MICHAEL SAUNDERS & COMPANY.
MLS# A3927452
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1056

SARASOTA, FLORIDA 34242
(Mapped)
Price: $309,000
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Listing information courtesy of ERA WATERSIDE REALTY.
MLS# A3951253
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1271

1700 MIDNIGHT COVE II PL 322, SARASOTA, FLORIDA 34242
(Mapped)
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Listing information courtesy of ERA WATERSIDE REALTY.
MLS# A3915311
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 860

1200 E PEPPERTREE LN 403, SARASOTA, FLORIDA 34242
(Mapped)
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Listing information courtesy of SIGNATURE SOTHEBYS INTERNAT'L.
MLS# A3953565
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1200

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(Mapped)
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Popular Peppertree Bay! Great Gulf View at a Low Price! Watch beautiful sunsets from this turn-key furnished condo. Very spacious 2 bedroom, 2 bath condo located on the 4th floor, east of Midnight P ...
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Listing information courtesy of PEPPERTREE BAY REALTY INC.
MLS# A3950547
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1247

8779 MIDNIGHT PASS RD 402H, SARASOTA, FLORIDA 34242
(Mapped)
Price: $325,000
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Listing information courtesy of SIGNATURE SOTHEBYS INTERNAT'L.
MLS# A3952435
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1303

1122 S MOONMIST CT M-1, SARASOTA, FLORIDA 34242
(Mapped)
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Listing information courtesy of COLDWELL BANKER RES R E.
MLS# A3953746
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1120

161 VISTA HERMOSA CIR 26-A, SARASOTA, FLORIDA 34242
(Mapped)
Price: $329,000
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Listing information courtesy of COLDWELL BANKER RES R E.
MLS# A3953751
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 949

225 HOURGLASS WAY 101, SARASOTA, FLORIDA 34242
(Mapped)
Price: $329,900
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Listing information courtesy of MICHAEL SAUNDERS & COMPANY.
MLS# A3952503
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1271

9393 MIDNIGHT PASS RD 401, SARASOTA, FLORIDA 34242
(Mapped)
Price: $330,000
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Listing information courtesy of COLDWELL BANKER RES R E.
MLS# A3952393
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1380

5855 MIDNIGHT PASS RD 511, SARASOTA, FLORIDA 34242
(Mapped)
Price: $330,000
Come and enjoy the tranquility when you walk into this bright, and cheerful condo. Kitchen and baths redone, clean and neat. Fabulous views of the bayfront and downtown.This complex offers many amen ...
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Listing information courtesy of MICHAEL SAUNDERS & COMPANY.
MLS# A3950825
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1165

1700 MIDNIGHT COVE II PL 332, SARASOTA, FLORIDA 34242
(Mapped)
Price: $330,000
Well established community with tennis,deeded beach access,covered parking assigned, barbeque area, boat docks convenient location to restaurants,shopping etc.
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Listing information courtesy of KEN BRAND LIC R E BROKER.
MLS# A3928243
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 1
Partial Baths: 1
Square Ft.: 860

5830 MIDNIGHT PASS RD 39, SARASOTA, FLORIDA 34242
(Mapped)
Price: $339,000
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Listing information courtesy of ERA WATERSIDE REALTY.
MLS# A3928671
MLS: MFRMLS
Bedrooms: 1
Bathrooms: 1
Square Ft.: 728

6157 MIDNIGHT PASS RD D12, SARASOTA, FLORIDA 34242
(Mapped)
Price: $339,000
Best Value Bay Oaks Townhouse on Siesta Key. This property has been beautifully and tastefully remodeled with a brand new kitchen with stainless steel appliances and granite countertops.Large rooms w ...
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Listing information courtesy of KEY REALTY.
MLS# A3928919
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Partial Baths: 1
Square Ft.: 1192

914 BEACH RD 419, SARASOTA, FLORIDA 34242
(Mapped)
Price: $339,000
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Listing information courtesy of COLDWELL BANKER RES R E.
MLS# A3933018
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 1
Square Ft.: 753

225 HOURGLASS WAY 104, SARASOTA, FLORIDA 34242
(Mapped)
Price: $339,900
Enjoy the serene lagoon view from every room of this adorable beach retreat. An enclosed lanai runs the width of the condo, and can be accessed from the Living Room and both bedrooms. This first floor ...
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Listing information courtesy of MICHAEL SAUNDERS & COMPANY.
MLS# A3952150
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1271

6154 MIDNIGHT PASS RD D-13, SARASOTA, FLORIDA 34242
(Mapped)
Price: $340,000
You will have plenty of room in this 2 bedroom 2 full baths free standing gulf side of the road villa. Completely turn key furnished with new dining room furniture and a new lanai was put in. This lar ...
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Listing information courtesy of RE/MAX TROPICAL SANDS.
MLS# A3952935
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1064

6150 MIDNIGHT PASS RD V 5, SARASOTA, FLORIDA 34242
(Mapped)
Price: $345,000
Short Sale. Active with Contract. Pre-approved price. Lowest price for Island House which is the best rental complex on Siesta Key. Owners net 90% of income! Over the past 4 years income averaged ove ...
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Listing information courtesy of DOCKSIDE GROUP.
MLS# A3949496
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1101

925 BEACH RD 308, SARASOTA, FLORIDA 34242
(Mapped)
Price: $345,000
BEAUTIFUL VIEWS OF THE TURQUOISE GULF WATERS FROM THIS THIRD FLOOR TWO BEDROOM UNIT.LOCATED DIRECTLY ACROSS THE STREET FROM THE WHITE SANDS OF SIESTA ...
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Listing information courtesy of MICHAEL SAUNDERS & COMPANY.
MLS# A3924870
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 1
Square Ft.: 753

1302 SIESTA BAYSIDE DR 1302D, SARASOTA, FLORIDA 34242
(Mapped)
Price: $347,900
Looking for your Florida Vacation Home, something with rental income potential? You have found it! Located on the Bay side of Siesta Key with Deeded Beach Access. Sold Turnkey Furnished. All you need ...
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Listing information courtesy of KELLER WILLIAMS REALTY.
MLS# M5821092
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 1
Square Ft.: 1110

8977 MIDNIGHT PASS RD 518, SARASOTA, FLORIDA 34242
(Mapped)
Price: $347,900
Paradise Found! The Best View is ALWAYS from the top floor! Enjoy spectacular waterviews from every window! Experience the sunrise over the Intracoastal Waterway, and sunsets into the Gulf of Mexico. ...
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Listing information courtesy of 398MLS.COM.
MLS# O5079148
MLS: MFRMLS
Bedrooms: 2
Bathrooms: 2
Square Ft.: 1233

5912 MIDNIGHT PASS RD 105, SARASOTA, FLORIDA 34242
(Mapped)
Price: $349,000
Ground floor unit in Sarasota Surf & Racquet Club. This 2 bedroom, 2 bath turnkey furnished condo offers easy access to all the amenities in this gated resort community. No need to worry about stair ...
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