Buying a foreclosure property is different than buying a typical owner occupied residential property. Buyers of foreclosure units are faced with more uncertainties and risk. Because of the added risk, foreclosure properties generally sell a stretch lower than their asking price.
Typical residential property sells at 1 – 3% lower than the current list price. But don’t confuse “current list price” with “original list price.” Normally a house sells when it’s priced right and received less attentions when it’s priced too high. In other words, if a property is priced 10% higher than it should be, it won’t encourage offers, and if it does get an offer, it’s -10% off asking price. More often than not the seller will reject the offer, or counter back at a price close to their asking price – the house doesn’t sell.
This same dynamic happens with foreclosures but the margin tends to be greater. Because of perceived additional risks, offers are generally lower. Tracking foreclosure sales in Red Deer I’ve found they sell approximately 7 – 8% lower than their “current asking price.” And remember, not 7% lower than there “original list price.” They generally won’t receive attention until they are priced with 5 – 9% of what they are worth.
This is an important fact to remember when planning to buy a foreclose, and I’m mentioning it because I’ve witnessed buyers lose a property they liked saying, “… if I’d known what the other offer was I would have paid more.” The info above should give you an idea of how to position yourself especially if there is more than one offer on a particular foreclosure.