Can You Steal a Bank Owned Home?

By Rebecca Williamson · August 17th, 2009

San Mateo County REOs

Many times San Mateo buyers, especially San Mateo first time home buyers, come in with the idea that they can get a great deal by underbidding REOs (bank owned homes). Unfortunately, it’s not so simple. REO properties actually sell on average for a higher percentage of their original list price than traditional properties do. (Traditional properties being owner occupied or investor owned properties not in distress, meaning no short sales either.) For this statistic, we are comparing the original list price, or the price the home was priced at when it first entered the market with the price the home ultimately sold for in San Mateo County.

Show Me the Numbers

Over the past year San Mateo County REOs have received an average of 98.73% of their original list price, while traditional San Mateo County sellers have received an average of 92.32% of their original list price. (Please see the graph above to see a month by month break down of percentage of list price received for San Mateo County bank owned properies (REOs) in blue and San Mateo County traditional sellers not in distress in red.)

Why Are REOs Getting a Higher Percentage of Original List Price?

For the most part, banks do their due diligence to know what each property is worth. They order 2-3 broker price opinions (BPOs) where local real estate experts (Brokers, Agents, etc) take a look at the property, compare it to other recent sales and give their opinion of what the property would sell for in its present condition in today’s market.

Also, banks are not emotional. This is strictly a number crunching business decision. They are not in the business of owning property. They are in the business of lending money and they don’t want to own the property for longer than necessary. Does that mean they are going to give the property away? As the numbers prove, no. What it does mean is that banks usually price properties where the market will bear. On average, bank owned homes in San Mateo County are priced to sell.

Can You Still Get a Deal on an REO in San Mateo?

If you are looking for a deal, REOs might be it. They are usually realistically priced and can present a value that may not be there with a traditional seller. But just remember that the bank is only going to accept a price that makes financial sense for them.

Want to Learn More About Buying REOs in San Mateo County?

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