People think foreclosure property is sold for pennies on the dollar. Foreclosure homes generally sell lower but it’s generally due to specific conditions. The biggest variable determining the sale price of a bank-owned property is the local market. In a strong market, there are more potential buyers (more demand). When there are more people prepared to buy you’ll find interested buyers at each price range.
There are however reasons why bank owned property or foreclosures can sell lower than a normally owned property and here are some reasons why:
- property disrepair / damage
- sold ‘as-is’
- vacant and dirty
- few or no appliances
- often buyer ‘conditions’ aren’t accepted on an offer
- offers can be left open to encourage competing offers
- no ‘real property report’ (RPR) warranties or seller liability
You can sometimes buy a foreclosure for less than its loan balance but that doesn’t mean the bank will sell the foreclosure for less than market value. A foreclosure price will generally reflect the value of the homes around it but because of the reasons listed above, it will sell less than a well-kept home in ideal condition.