The current Colorado Springs real estate market has improved dramatically from the early 2000s, when the real estate market was full of foreclosures, short sales, and distressed properties. However, these kinds of listings are still a part of the Colorado Springs housing market. If you’re trying to sell your home and you’re competing with a Bank Owned home, you need to know how to effectively compete.
What is a Bank Owned (or “REO”) Property? A Bank Owned home is one where the homeowner basically forfeited the house back to the bank. When a bank owns a home, it means the owner went all the way through the foreclosure process. Ownership was transferred from the former homeowner back to te bank. However, banks aren’t in the business of owning homes. Banks would vastly rather own loans, not actual property. Because of this, bank owned homes often sell for less than market value. This may not be “fair” competition to your lovely home, in your eyes, but to a buyer this may look like an “awesome bargain.” In our neighborhood, specifically, we saw a bank-owned property sell for almost $50k less than what comparable homes were selling for.
Competing on price, alone, against a bank owned property when selling your home can be extremely difficult. Luckily, there are ways to compete and win with bank owned homes.
How to Compete against a Bank Owned Property
As daunting as it may seem, bank owned homes might be one of the easiest types of homes for sale in Colorado Springs to compete against for three reasons.
ONE: Banks are stingy when it comes to paying agents. Not only do they typically pay a buyer’s agent less than they might expect, they often reduce the commission paid to the listing agent as well. This means the bank owned homes are not only usually marketed poorly – there’s no marketing budget for the listing agetnt! – but buyer agents are not highly motivated to show the home. Let’s face it – there are a ton of agents out there who didn’t earn a single paycheck last month. If you offer a buyer agent commission of 3% or higher, I guarantee more agents will go out of their way to sell your home.
TWO: Banks don’t like to negotiate or make repairs. Remember – the bank doesn’t have local connections and isn’t invested in the property. They are unlikely to budge on terms or to fix anything found in a home inspection. When you’re competing against a bank owned home in Colorado Springs, offering incentives like a home warranty or being willing to pay for repairs and closing costs can make a big difference.
THREE: Bank owned homes usually aren’t in great shape. The previous owners were forced out, and often that means they didn’t leave the house in good condition. Sometimes, they trash the house out of anger and frustration on the way out. You can make it clear that your home is clean and in good repair, decluttered and welcoming to home buyers in Colorado Springs. Make sure your Colorado Springs Realtor® puts a ton of great pictures online, in the MLS, and in other advertising. In my experience, home buyers will almost always opt for a “perfect” home over a cheaper project home.