Walnut Creek bank owned homes, foreclosure homes for sale, and REO properties fill the news every day. These are homes that have been lost by previous owners in foreclosure and have been returned to the bank where they now sit as part of a ”shadow inventory” of unsold homes.
Some of these homes will be sold on the courthouse steps while others will be snapped up by investor pools. However, many are listed for sale with many more soon to be entering the market.
Typically, bank-owned homes for sale are in below average condition and come with few, if any, of the disclosures you would expect to find in a traditional Occupant-to-Buyer transaction. In addition, many of these homes are sold in “As-Is” condition and without pest or roof clearances. In spite of these limitations, home buyers often see these “distressed properties” as potential bargains and view them as a great opportunity to get a home in a good neighborhood for a below-market price.
Walnut Creek Bank Owned Homes – a good deal?
But are they a good deal in the long run?
A typical Walnut Creek ranch style home
We took a look at all of the single family homes sold in Walnut Creek California from May 1, 2010 to May 1, 2011 and divided them into two categories – traditional sales and bank-owned REO foreclosure sales. The results may surprise you!
Of all single family Walnut Creek homes sold during this period, 302 sold in a traditional private sale to a Buyer. The sales of Walnut Creek bank owned homes or foreclosed homes numbered 44. This ratio by itself is quite unusual - neighboring communities such as Concord have an almost 50/50 ratio of foreclosed homes vs. private sale transactions!
Of those Walnut Creek homes sold by private owners, the highest sale for that twelve-month period was nearly two million – $1,980,000 – and the median price for these non-foreclosed Walnut Creek homes sold during that period was a respectable $710,000.
Walnut Creek bank owned homes sold during this time had a median price of only $518,000 and the highest priced foreclosed home to sell was $1,525,000 – still quite a lot of money, but far off the mark of homes sold in a traditional transaction.
But, before we come to any quick conclusions, we are lumping Walnut Creek homes of many sizes and with many differing amenities into only two groups. We would probably expect bank owned homes – even Walnut Creek bank owned homes - to be in inferior condition to those lovingly cared-for Walnut Creek homes for sale brought to market by an eager, private seller. We need to level the playing field - or selling field - field for all of these Walnut Creek homes that sold in the past year.
Well, one way to do that is to calculate the price per square foot for each group. This way, if one group had larger homes or better appointed homes, it would not skew the data. This should narrow the variables to condition and desirability – and perhaps marketing - when comparing Walnut C reek homes in these two categories. This would be the best way to determine the true difference in buying a Walnut Creek foreclosed homes versus buying a Walnut Creek home presented by a private seller.
The price per square foot of a Walnut Creek foreclosed home, on average, was $290. The average price per foot of a private sale Walnut Creek home was $355 – a 22% increase over the similarly sized Walnut Creek bank owned home! In addition, it took one-and-a-half times longer to sell a foreclosed home than a non-foreclosed Walnut Creek home – even at these reduced prices!
Now, as I said, we would expect the price to be lower for a bank owned home, as anyone who seen one will attest! They are generally dirtier, in need of paint and landscaping, and – worst of all - vacant! Sellers typically place their home on the market in model-home condition, especially in a challenging market such as the one we are in now. Lawns mowed, lights on, sparkly and smelling of potpourri.
Still, it appears that if you are not afraid of cleaning, re carpeting, and painting – and perhaps replanting an under-watered lawn - a bank owned home may be a good way to get into the East Bay real estate market on the cheap. And Walnut Creek bank owned homes are a great place to start looking!
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Too many buyers focus exclusively on the sales price without taking into account condition. On REO’s, typically condition is poorer than on conventional/equity sales and the costs of repairing to livable condition can bring the price to a level near equity sales. That’s where having a good agent can be difference between overpaying and getting a great deal.
This is now also happening in Spain. A lot of people over here are having problems with the bank, kinda of like what startet the economic crisis 3 years ago in the US, I think.