I work with many potential home buyers that are just starting their search. Many of them are from out of the area or live locally and are looking to own instead of rent but, unfortunately, many find out that their price range makes it a real challenge to find something that works for them. As many feel priced out of the market, most think that their solution lies in finding a short sale or bank owned homes. Many new buyers have read about the deals to be had in the distressed home market and have the perception that short sales and bank owned homes are priced significantly below market value. While it may be different in other parts of California and the nation, the South Bay is different. It is important for buyers who are only focusing on foreclosure “deals” to keep a few things in mind.
- Demand is still strong in the areas of the South Bay, especially in the cities of Manhattan Beach, Hermosa Beach, Redondo and Torrance and buyers need to understand that both short sales and bank owned homes involve the lender having an appraisal or BPO done to determine the market value and it is their goal to get as close to market value as possible.
- Many of the homes that are priced below market value are priced as such due to their condition. Many short sales and bank owned homes are in very poor condition and are priced accordingly but not necessarily “deals”.
- The short sale “list” price is often unrealistic and is the realtor’s attempt to get multiple offers far over their asking price. Eventually most of these drastically underpriced homes sell for close or even over asking price.
- Southern California and the South Bay is a very savvy market with and if something is priced well below market value people will know about it and there will definitely be competion. Even in this market there are often multiple offers with prices well over asking price.
Bank owned homes and, especially short sales, can often be a good opportunity. Due to the frustrations and delays in buying a home that is a short sale often many other potential buyers simply don’t have the patience and therefore less competition. It’s possible to find something and end up with a home priced a bit below market value but there are opportunities in non “distressed” sales as well. Despite what the news reports there are no secret “foreclosure deals” with homes selling at 50% of their value. Keep in mind that most often a home is more than simply an investment and if you’re only searching foreclosures you’re potentially missing opportunities.
Keith Kyle is a licensed Realtor, short sale specialist and Top Producing agent with South Bay Brokers in Manhattan Beach. He serves his clients throughout the South Bay and his websites KeithKyleHomes.com, ManhattanBeachLuxuryRealEstate.com and FindYourSouthBayHome.com offer the most comprehensive real estate destinations in the South Bay with free MLS access, current home listings, open houses, recent home sales information and more. Keith can be reached at 310-251-2344 or by email at info@KeithKyleHomes.com. For more information on the South Bay, visit my Beach Cities Real Estate blog.