Expert: Dick Dennis - 5/16/2010

Question
Hello Mr. Dennis,
My question is about the selling price of a house being increased.  I have been watching this house sit on the market for over 6 months and it was priced at $85,000.  Suddenly this past week the price was INCREASED to $100,000!  Along with the increase there is a note saying "Approval Letter From Bank for $100,000. Buyer walked away, their loss can be your gain! Investor Dream House."  Can you help me understand what this means?

Answer
You wouldn't believe it when banks tell us that they don't want to foreclose or keep their inventory of foreclosures, would you? But that is what's happening in select locations, Denika. That house is obviously an REO, a bank owned house.

Banks are just like you and me when we try to sell properties. Let's face it, the person at the bank who is in charge (actually it is not the bank but the "servicer" who works for the bank) has the same problem we would have . . . how to find a sellable price. Plus the hierarchy at the bank may be putting pressure on the servicer. Further, the real estate agent who has that listing may have come in with a higher broker's price opinion (BPO), which the servicer quickly latched onto and moved the price higher to match it or exceed it if they want a buyer to make an offer. Of course, there is that possibility that the house went through some extensive cost in repairs, which is a very valid reason for raising the price.

Or . . . the whole thing just might be a ploy to get someone to pay at least the $85,000 it was priced. Yeah, you know what I mean . . . when the buyer comes in and makes a lower offer, so if the buyer is going to make a lower offer, then let them do it at a higher asking price rather than the $85,000. So, if you have interest in that house, Denika, my suggestion is, and if you don't want to pay more than $85,000, STILL come in with a lower offer than the $100,000.

Keep this in mind, Denika, there are pullenty of houses out there that banks want to get rid of and buyers still rule the roost. So, if you're going to make an offer, keep what I have said here in mind . . . and be prepared to walk just like the other buyer did. I do wish you well.

Dick Dennis
dixiedee13@aol.com