Bank owned home at PGA West, La QuintaBanks don’t want to own homes that they’ve foreclosed on and so they generally price them to sell. Early on in the mortgage meltdown we saw banks give many properties away at well under market values.  Banks have gotten a better handle on pricing over the last year or so and now most bank-owned homes are now selling for close to the banks list prices. Most of these properties are still a very good buy, but I suggest to clients that we examine each property on a case-by-case basis to find the best low hanging fruit.

Our team recently ran the numbers for bank owned properties sold during the last six months. We limited our stats to those properties sold for $100,000 and higher. Of 846 properties sold by banks the average sale price was $256,836 and the high price was $2.5 million. The list to sale price percentage was pretty interesting and we’ve broken them down by the time each property was on market before being sold. Note that these time periods include the contingent periods during escrow.

Bank Sale Prices Versus List Prices By Time On Market

  • 0-30 Days on market: 101.94% of list price (198 sales)
  • 31-60 Days on market: 99.06% of list price (149 sales)
  • 61-90 Days on market: 97.04% of list price (85 sales)
  • 91-120 Days on market: 96.75% of list price (85 sales)
  • 120+ Days on market: 95.59% of list price (329 sales)

These sales represent $203 million in bank owned sales over the last six months. That may sounds like a lot except that 3,648 properties were sold during these six months of which only 719 were bank owned equaling 23% of total sales.

Bottom line with bank owned properties is the offering price will generally be within 5% of the actual selling price at worst case. Entry-level properties (under $300,000) will have the most competition and generally sell for at or slightly above listing price dependent of how many offer the bank receives.

Only 13 Bank Owned Luxury Homes Sold Last 6 Months

Luxury homes (those above $1 million) will likely have a little more room to negotiate. In the last six months only 13 of these 846 bank-owned properties were sold for over $1 million with the average sale price of these luxury homes being $1.5 million.

Data is from the Desert Area MLS for the six month period ending 9/1/11 including the cities of Indian Wells, La Quinta, Palm Springs, Indio, Palm Desert, Bermuda Dunes and Rancho Mirage.