In the last 3 months I have shown 100’s of homes.  The buyers with whom I’ve worked rightly want a good value.  I’ve been asked several times about short sales or bank-owned homes.  The perception is that they’ll be able to “make a killing” on these kinds of real estate purchases.  But is it true?

I’ve negotiated on several bank-owned homes and short sales as well.  Here’s what I’ve noticed:  The bank-owned homes start at a higher price, and when you bring a low offer they counter back slightly.  They don’t seem to mind if you walk away after the counter offer.  They’ll leave the house priced the same for a few more weeks and then reduce the price and hold to the same pattern if another offer comes in.

Short sales are different.  The sellers are happy to accept a lower offer, but their lienholders rarely agree to a dramatic reduction in price.  Therefore the transaction fails after spending weeks, even months trying to obtain lienholder approval.

I know my experience is merely antecdotal, but do the statistics support what I’ve just recounted.  If you look at sales price as compared to the listing price in King and Snohomish counties, you’ll see that for all homes sellers reduced their price by 3%, bank-owned homes by 2.6%, and short sales by 4.7%.  Bank-owned homes were less flexible than the general market.  The best prices were with short sales, but only by less than 2%.

This means that on a $300,000 home you might negotiate a better price on a short sale by about $5,000.  Is this really worth  the months and the hassle?  I say no.  It can be argued that home prices can easily come down another $5,000 in all those months in the general housing pool.

There are a couple of good practices to insure that’ll you’ll get a good value on your next home.  Firstly, do your research.  Look at lots of homes.  When a good value comes along you’ll readily recognize it.  Secondly, have your agent do a market analysis on a home before you place an offer on it. 

A good agent can easily save you thousands of dollars by the time you close on your home.  You will do much better with a good agent rather than a short sale or bank-owned property.