Historically, Las Vegas REO’s are priced using an appraisal and 2 to 3 BPO’s (Brokers Price Opinions) which are about the same thing as a Sellers Comparative Market Analysis.  The bank takes this information and determines what they think they can sell the home for. It does not matter if they foreclosed on $10,000 or $1,000,000 note as they are going to try to get the most out of the home they can. 

If they make money then they will. Generally, they loose money in today’s market. 

After listing the Las Vegas home with their real estate agent REO specialist if the property does not sell in a few months (2 to 3) they will review the file and drop the price of the unit further to spur an offer. 

The above is what WAS the general standard procedure of REO departments in the Selling Banks here in Las Vegas until recently!

Now the Banks are moving into a new strategy. They are still establishing the price the same as the example above but now they are listing the Las Vegas homes with the REO agent at about 20% below what they think it will sell for. 

This new listing will then generate immediate offers and multiple offers. The bank then has their agent send out a notice of multiple offers and this starts a bidding war between the buyers.  The reason the Banks are using this strategy is that the home sells almost immediately which means they do not have extended carrying costs (about 1% per month according to the National Bankers Association).  By creating a bidding war they end up sometimes making more money than if they had priced the home at retail.  They have a choice to accept the offer they believe they will make the most money on and has the best chance of closing.

Sometimes the banks will collect offers for weeks before they answer. Sometimes they will only answer what they feel are the best offers.  They just allow the other offers to laps.

The Selling Banks are using every strategy they can in order to optimize their net income on the property!  No longer does it matter what the bank asks for an REO as it has no relationship to what the Las Vegas home will sell for.  To find what a home is worth you must now look to what the Las Vegas homes are selling for of like kind and condition in the neighborhood you find the REO in.  That is the price REO properties are selling at and their true value.

This means that the ask price may very well be below what the Seller will sell their Las Vegas home for.

If you have a question about the Las Vegas real estate market? Please send it to me at Max@MaxSellsVegas.com