There is fierce competition to buy a home today
There is a feeding frenzy in the home sector that I haven’t seen in a long time. Yes, competition is always fierce for a good deal, but today we are seeing up to 30 or more offers on a foreclosed home. Real estate agents tell me that people are bidding up the prices and in some cases paying up to 20% more than the bank is asking. Is it possible that the same buyers are all bidding on the same house? As an example, let’s say you are bidding on a home in Los Felix, Ca or it could be Any City in the USA that has an abundance of foreclosures. More than likely you are bidding on other houses in that same area right? I know I am. As an investor, I have offers on several houses because I plan on buying a lot of them. So if there is 15-20 and in some cases many more foreclosures in you’re market then you and other buyers (you’re competition) are probably bidding on all of them? And who benefits, the realtors, and the banks that are selling these foreclosed properties. Also, the banks are dispensing their inventory of foreclosed properties at an even steady pace to avoid flooding the market, which is keeping the prices high. After all, it’s in their best interest to keep prices high. The banks are already taking huge losses on these foreclosures. And is it bad for prices to stay high? What is high? Prices are already down 50-75% over the height of the market depending on the area. I read one article that indicated that prices in an upscale area have fallen 50%. Any way you cut it, you’re getting a tremendous buy. The banks holding back properties and releasing them slowly helps create stability in the markets. It goes back to supply and demand. Market Value is defined as what a buyer and seller are willing to agree too. I am sure the homeowners in the neighborhoods where foreclosed homes are being sold at rock bottom prices are very happy to hear about the bidding wars. The prices that are set in the sale of a purchase create a “Sale Comparable”. The Sales Comparable is what Banks, Realtors, Buyers and Investors look at when they come up with respective value. The higher the property sells for the higher the future comparables, which establishes the future prices.
