Sarasota Foreclosures – What Do You Offer?

I recently received two inquiries this past week about two different Sarasota foreclosures, and both happened to be Sarasota luxury homes listed over 1 million. There has been so much press about great deals in foreclosures, “it’s a buyer’s market”, “slashed pricing” etc. etc., that buyers are getting very excited to acquire their own great buy… which is great to see! Obviously, everyone wants a great deal, and YES, it is absolutely an unprecedented time to buy a home due to drastically reduced pricing and phenomenal interest rates in the low 4’s, but some buyer’s perception of the market, and more importantly what they can offer to actually successfully acquire a foreclosure home, is a bit skewed.

I received an inquiry where the buyer wanted to offer 35% of the listed value on a bank owned home over 1 million. One must understand the process before drafting an offer. The bank has already done their homework before listing a home. They have usually acquired 3 written broker price opinions as to the value, and they usually list the home price in line with their price reports. Many times, they price below those numbers to move the home fast. The key is they already figured the numbers, and priced accordingly. There is a threshold that they will negotiate off that number if necessary, but it is almost never a drastic reduction. Maybe 1-10%, maybe a shade more on a high-end home. Some banks will not even entertain and counter on offers at 20% below the list price…they just counter back at full price.

In fact, the average list to sale price is usually only a few percent, and in price ranges under 200k, they often sell over list price due to multiple-offer competition. As the price range rises, the spread between list price and purchase price becomes a little larger, but it is not a free-for-all ….at ANY price.

Here is a real life example:

A potential buyer wanted to put an offer in on a property listed over 1M. They indicated they wanted to offer 65% less.
Here is the recent sold data for bank owned Sarasota foreclosures over 1 million:

1502 Siesta Drive:
Original List: $1,950,000
Sold for $1,750,500
Day on the market: 17
Terms: Cash sale
% change List to Sold Price: 10% reduction

3749 Founders Club Drive
Original List: $1,025,000
Sold for: $ 900,000
Day on the market: 182
Terms: Cash Sale
% change List to Sold Price: 12% reduction (at 182 days on the market)

The bank would be asked to accept 65% less than list price, when the last two most recent sales were 10% and 12% respectively, and the subject home is already discounted. Here is what is important to understand in foreclosures. The “deal” that this buyer is looking for is many times already accounted for in the list price, as the home is listed below market value. Anything else that comes off the price is bonus, but a buyer should not expect any drastic reductions from the bank in the negotiation process.

Here is the reality for List Price to Sold Price ratios for Sarasota County Foreclosures in the past 30 days:

Price: Under 100,000
# of sales: 101
Average Days On Market: 43
Ratio: 97% of list price

Price: 100k – 250k
# of sales: 47
Average days On Market: 35
Ratio: 98%

Price: 250k – 500k
# of sales: 18
Average days On Market: 82
Ratio: 97%

Price: 500k – 1M
# of sales: 4
Average days On Market: 64
Ratio: 85%

Price: 1M +
# of sales: 2 (needed to go back 3 months)
Average days On Market: 97
Ratio: 89%

As you can see, the deals are already built into the price.  As you get to higher end, the ratio is a bit more flexible, but understanding the market is the key to acquiring your Sarasota dream home at the right price.  If you are interested in a Sarasota foreclosure deal, contact me and we can discuss your situation!