That’s a great question that most new Outer Banks buyers might not even know to ask. Even though it is counter intuitive, it’s a fact; the average list price to sales price ratio is much higher for bank owned properties. A few reasons for this will be addressed here. Keep in mind that the only person who sets the sales price is the person paying for the property. A seller can price their property at what ever price they want but it will not sell until a buyer sees the value. The closer a property is priced to the buyer’s buying threshold the higher the list price to sales price will be.
Asset managers (those folks who are responsible for selling a bank’s foreclosure property), are usually better at pricing property than private owners. Unlike the typical property owner, the asset manager has no emotion attached to their decision making process. Their main goal is to cut the bank’s losses. Before they make a decision about a marketing price these asset mangers will receive more than one opinion of value on the property. Often times this includes a professional appraisal. They also ask for information about the property’s market segment; are prices going up or are they going down? This helps them logically determine what price will generate buyers. Often times the private owner sees value in features of their property that buyers will not accept. For example, an Outer Banks seller recently thought that dark paneling walls actually added value because they are easy to clean. In reality, dark paneled walls reduce value in the eyes of most buyers today. The bank’s asset manager also requires regular updates on their property activity and their property’s market segment. If a property is not receiving showings and/or offers then they’ll lower the price to entice buyers. On the other hand, if the house is receiving tons of activity they will be less likely to negotiate on the price. Oftentimes these asset managers are more aware of market conditions than private sellers.
Private homeowners are generally not as aggressive with their pricing because they can use the property while it is on the market. If you are seriously looking at properties today, don’t expect to purchase a bank owned property for much lower than their asking price. Over the last few months, sales prices were close to 94% of asking price on bank owned homes. Private sales were selling for less than 92% of asking price. Have your Realtor provide you with a market analysis on the property you would like to purchase prior to making an offer. This will give you a target price prior to beginning negotiations.