On the weekends the curious come out. In Serrano they wait for an open gate so they can scoot in unnoticed. They drive through Ridgeview Village admiring the charm. Maybe they wander through Waterford. Often they have a list of open homes and they are checking them off as they go – doing their best to avoid eye contact with real estate agents. Some are very casual while others are truly on the hunt.
Most of these homes can be grouped into (3) different types of sales – REO | Bank Owned Sales – Short Sales – Traditional Sales.
So let me ask the question again. Which home sale purchase type is right for you?
All Homes for Sale – This is where the casual buyer begins. Some of the yard signs may say ‘bank owned’ or ‘short sale’ but for the most part it is not always obvious. This gives the perception that the market is homogeneous, like milk – smooth, consistent, predictable – you know, find out the price and make an offer. Right.
OK | Chart Check – I know you can read but just so we are all on the same page; in the month of June there were 228 homes for sale, 84 pending sales, and 74 closed escrows. In addition another 102 homes came on the market for sale.
REO’s | Bank Owned Homes – notice anything different? DEMAND – DESIRE. With only 17 homes for sale and 16 additional homes added, buyers had to compete like crazy for these homes. For every one of 18 pending sales, I would venture to guess the listing agent received an average of (3) offers – some more- some less. Talk to anyone that has been involved in trying to buy a clean, bank owned home in El Dorado Hills and they will tell you that it’s competitive. Price drives these homes because asset managers usually list homes at, or just a little above market value. The banks have no interest in a long dance. They want to close the deal now!
Check out the green bar – homes for sale. It just keeps going down. Everyone talks about the shadow inventory but it really must be hiding because I can’t see it? (yes this is a topic for more discussion but let’s just keep it simple shall we?)
Shorts Sales – Have you ever had a long distance romance where both parties were only partially committed? SHORT SALES ARE FLIRTS. In the month of June, 54/228 or 23% of the inventory fell into this type. So are you going to avoid 1/4 of the inventory? You will if you don’t have the stomach for uncertainty. The prices on short sales are usually below market value which makes them enticing. Just like a long odds bet, you should have less emotionally invested because your chances for success are low – yeah, but when they hit – BONUS!
Traditional Sales – There were 157 traditional sales on the market in June. That’s 68% of the inventory – surprised? Over 2/3 of the homes on the market are traditional sales? So what’s the catch? Why don’t more traditional sellers attract homebuyers? You can actually deal with a real person instead of some cold, heartless institution…right?
PRICE! PRICE! PRICE! Traditional sellers are emotionally invested. They have put a lot into their homes and believe that it’s a better value than an REO. You know, often times they are right, but the challenge is getting a traditional seller to come within range of market value. Often that takes time, so in any given month, fewer traditional sales take place keeping inventory high and the rate of sale low.[hr]
Take the time to understand the (3) types of homes on the market before you start making offers. Knowledge is POWER, and the more you understand the different types of sales, the more POWER you will have out in the marketplace.